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Jason R. Schultz P.C

Allstate's Profit Scheme under Fire


Posted on Jan 24, 2008

Allstate has said those documents -- along with others that Florida regulators are seeking in their investigation into how the company sets insurance rates and pays claims -- are trade secrets. What's so important that Allstate would risk so much?

According to an attorney who has seen the report from consultant McKinsey & Co., it advises Allstate on how to improve profitability: pay less on claims and take a longer time to pay those claims.

'The documents describe, in graphic terms, a scheme devised by Allstate and McKinsey & Co. to essentially turn the business of insurance into a zero-sum game,' said David Bernardinelli, a Santa Fe, N.M., plaintiff attorney involved in a case against Allstate. He says he is the only person outside Allstate to have seen the report.

An Allstate spokesman didn't return a call seeking comment late Wednesday.

In the early 1990s, the corporate consultant advised Allstate to get tough with policyholders. Consumers who didn't accept a settlement offer from Allstate would have to fight in court to get their claims paid.

'This is the new insurance world that was created by McKinsey for a lot of insurers,' Bernardinelli said.

Indeed, McKinsey did work for other companies, including State Farm. This insurer said it hasn't used McKinsey's services for more than a decade, according to a State Farm spokesman.

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