DENY, DELAY, DEFEND

CNN recently aired a great story that detailed the strategy two major American insurance companies have adopted in responding to certain automobile collision cases. The strategy is known as DENY, DELAY AND DEFEND. According to the article[and a piece that aired on 360 with Anderson Cooper], major insurance companies, led by State Farm["Like a Good Neighbor"] and Allstate[the "Good Hands People"] have utilized a take it or leave it approach when dealing with car crash cases where the injuries are soft tissue[i.e. not broken bones]. As a result of their tactics, insurance company profits have soared. The insurance companies however, have tried to keep all this a secret - for understandable reasons. If the general public knew the company profits were soaring, they might want a break in the premiums they pay. And the insurance companies don't have any interest in reducing premiums. In fact, premiums continue to rise, according to the story.

In an affadavit filed in a New Mexico case where Allstate is being sued, one of the company's former lawyers was blunt about Allstate's strategy. The idea, he said, was to make fighting the company "...so expensive and time consuming that lawyers would start refusing to help clients."

According to the CNN article, both State Farm and Allstate hired a consulting firm, McKinsey & Co. to help them boost profits in the 1990's. McKinsey focused on the soft tissue cases as a way to increase company revenue. One of the McKinsey documents recommended that Allstate put boxing gloves on those famous "Good Hands" to send a not so subtle message to the claimants who insisted on going to court. Jim Mathis, a former employee of both State Farm and Allstate said the strategy was clear: Deny the claim; delay settlement and defend the case in court. According to Mathis, "...as long as the public allows this to occur, the insurance companies get richer and people... will not get a fair and reasonable settlement. Interestly, Allstate, when asked to comment on the story, sent an email that indicated it would not "...have any real opportuntity of being successful in getting you[CNN]to do a balanced report." I'm sure Allstate would be find a much more understanding venue on the Fox News Network, which is widely known for its fair and balanced reporting.

I won't dispute that some soft tissue cases are meritless and shouldn't tie up the courts. The claimants aren't really injured and are just looking for a quick buck. Those cases however represent only a small percentage of soft tissue cases. Some soft tissue cases have valid injuries and should be treated seriously by the insurance companies. In light of the overwhelming success the insurance companies have had with their scorched earth strategy however, it is unlikely that their approach will ever change. And the people who do have meritorious claims end up getting screwed.