STATE FARM AND ALLSTATE GETTING RICHER

In a follow-up to a recent post, I saw some interesting news about State Farm and Allstate. Despite all the rhetoric and Chamber of Commerce driven nonsense about lawsuit abuse, seems that State Farm and Allstate are doing just fine. State Farm reported that its profits jumped 65% in 2006. Profits were down the previous year because of large payouts resulting from Katrina claims. That certainly makes sense. The part of the article that did catch my eye were the details, as reported by Crain's Chicago Business, about the auto insurance profits. State Farm paid out $1.25 billion in dividends to auto-policy holders. Some of those profits are an result of the DELAY, DENY AND DEFEND tact State Farm has taken when it comes to defending auto claims. [See the February 27, 2007 post]. The formula is pretty easy to follow: 1) use a scorched earth policy in defending ALL auto claims; 2) exhaust legitimate claimants so they eventually just give up and; 3) reduce payouts and increase profits.

Allstate, another practicioner of DELAY, DEFEND AND DENY also reported that 2006 profits nearly tripled, to $5 billion dollars.