Monday, February 19, 2007

Allstate's Good Hands' Boxing Gloves

From the Sun Herald:

Allstate's use of McKinsey also has led to litigation and even a book by Santa Fe, N.M., attorney David Berardinelli, called "From Good Hands to Boxing Gloves." Berardinelli told Lexington (Ky.) Herald-Leader reporter Brandon Ortiz in July 2006 that Allstate forced policyholders to accept 65 cents on the dollar as payment or face protracted litigation.

The Allstate-McKinsey connection made its way into Money magazine on Feb. 13 after an investigative report on CNN about Allstate's treatment of policyholders.

Tales of policyholder mistreatment by insurance companies occasionally make headlines, then fade. But the pattern hasn't changed, Marr said. In shaping up their claims operations with the help of consultants, insurers have learned that outcome-oriented investigations improve the bottom line.

He represents 70 Oklahomans whose homes were subjected to the most severe category of tornado, an F5, on May 3, 1999.

No matter what the catastrophe, he said in one interview, "the objective is the same: You go find an expert that's bought and paid for and you go get them to give you a report that justifies denial of the claim. Period.

"They represented that these engineers came up here to do an objective and fair assessment of these homes. And they got quite the opposite. Not one report agrees with the policyholder on the nature and extent of the damage. They all sided with State Farm."

A jury found in May that State Farm "intentionally and with malice breached its duty to deal fairly and act in good faith" with policyholders through the use of Haag Engineering Co. and independent adjusting firm E.A. Renfroe.

The same companies worked for State Farm after Katrina. Haag and Renfroe deny any bias, but State Farm did suspend its business with Haag after the Oklahoma verdict.

That was too late for Coast policyholders. One of the same Haag employees who testified for State Farm during the Oklahoma trial, damage and failure consultant Timothy P. Marshall, completed a Hurricane Katrina Damage Survey about a month after the storm.

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