Insurance industry giant, Allstate Insurance Company, has been trying to keep damaging documents behind closed doors for years. That door will be opened as a Kentucky judge recently ruled that the company must reveal secret documents showing that it hired a company to help it save money by delaying and denying valid claims in order to save money.

What the documents contain

The documents that Allstate is trying to protect have become known as the “McKinsey reports”. Fifteen years ago, Allstate reportedly hired the McKinsey Company, a New York consulting firm, to show them how to increase their profits. McKinsey did just that, but their tactics weren’t very consumer oriented.

The reports basically show how Allstate could save nearly $700 million and increase their stock price by delaying and denying policyholders’ claims – for no reason whatsoever. The most damaging part of the reports involved two analogies where McKinsey said that:

• policyholders who accepted lower settlement offers were “in good hands” (Allstate’s slogan), but those that fought the settlement offer should get Allstate’s “boxing gloves”, and
• Allstate should take an “alligator approach” to claim payments and settlement offers – meaning that the company should just “sit and wait” in the hope of frustrating policyholders to accept less or simply go away.

The Illinois insurer has fought hard to keep the approximately 12,500 documents / power point slides a secret since they were written – and has even defied court orders to produce the documents claiming that they contain trade secrets that could damage the company if made known to the public.

Unfortunately, only a few of those documents were introduced into evidence in a recent Kentucky case and those are the only documents that the judge is ordering to be made public; the remaining documents would not be made public. Allstate said it plans to appeal the judge’s decision.

The devil is in the details Industry analysts say that even though the public knows about the documents in general, making the details known could be devastating to the insurer, which according to Yahoo! Finance, is the second-largest U.S. personal lines insurer, only behind State Farm Insurance Company. Allstate sells auto, homeowners, property/casualty and life insurance products in Canada and the U.S.

If your insurance company has avoided paying your valid claims, they may have acted in bad faith. To contact an attorney whose practice focuses on bad faith insurance litigation, click here.