Allstate Insurance Company has released 150,000 documents prepared in the 1990’s by the McKinsey Company that have been a source of controversy for several years. The moves came after Florida banned the insurer from writing any new business in the state unless they turned over the documents.

A long time coming…

After several years of doing everything it could to keep the “McKinsey documents” under wraps, Allstate has finally released 150,000 documents that it said contain important trade secrets. After a great deal of hassle – and paying over $4 million in fines for not complying with court ordered subpoenas – Allstate has published the documents on their website, www.allstate.com .

What are the McKinsey documents?

In the mid 1990’s, Allstate reportedly hired the McKinsey Company, a New York consulting firm, to show it how to increase profits. McKinsey allegedly told Allstate to avoid paying claims, and when they do pay – pay less. Due to McKinsey’s help, the insurer allegedly saved over $700 million and increased their stock price.

The most damaging part of the documents are two analogies where McKinsey said that, 1) 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 2) 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.

Trade secrets

Allstate maintains that the McKinsey documents also contain trade secrets that are confidential. Yet, in a statement on its website, the insurer also plays down the documents, saying:

We continue to believe that the documents deserve protection as containing trade secret and confidential proprietary information and that our actions to protect them from general disclosure have been appropriate. However, because of the need to address misunderstandings resulting from the growing misplaced focus by our critics on very small pieces of the whole, we have decided to make the documents public.

When aired in the unbiased setting of a court of law, allegations about the documents have been shown to be without merit. Most recently, some of the documents were seen and explained in context to a jury during a two-week trial in Kentucky (Hager v. Allstate). The jury unanimously ruled in Allstate's favor in deliberations that lasted less than two hours.

Only time will tell

The controversy has taken on a shroud of secrecy because of Allstate’s refusal to make the documents public – angering judges, regulators and consumers alike. Only time will tell what the documents reveal about Allstate’s dealings with the McKinsey Company many years ago.