4. State Farm
In August 2005, Hurricane Katrina ripped through the north-central Gulf Coast, killing nearly 1,600 people and leaving thousands homeless. The aftermath of the catastrophic natural disaster revealed State Farm at its worst. Notorious for it's deny and delay tactics, the insurance company did almost anything to avoid paying claims, including changing engineering reports concerning Hurricane damage. The Nguyen family experienced this firsthand.
The Nguyens', of Mississippi, lost their home in Hurricane Katrina. Although State Farm's own engineers reported that the damage to their home was caused by wind – even citing eyewitnesses who saw another house lifted up by the wind and thrown into the Nguyen home – the company denied the family's claims. Instead, State Farm hired another engineering firm to draw a different conclusion, saying the damage was caused by flooding.
The unfortunate circumstances of the Nguyen family show State Farm's disregard for its customers. In April 2007, State Farm agreed to reevaluate more than 3,000 Hurricane Katrina claims, and after a few months, the company paid nearly $30 million in additional settlements.
AIG has a reputation for being one of the most ruthless claims fighters in the insurance industry. Former AIG claims supervisors have stated that the company uses countless deny and delay methods, including postponing payment of attorney fees until they were a year old, locking checks in a safe until claimants complained, and regularly challenging claimants for years in court over routine claims.
The company's claims-fighting tactics were apparent in 1988, when an AIG-insured Safeway burned down in Richmond, Virginia. Nearby residents who were affected by the fire confronted the supermarket with damage claims. But AIG refused the claims, saying the damage was not caused by the fire, but by smoke, which was not covered because it was a form of air pollution.
AIG is also infamous for its callous opportunism. After Hurricane Andrew swept through Florida in 1992, AIG Executive Vice President J.W. Greenberg sent a memo to the entire company which said, "This is an opportunity to get price increases now." AIG exhibited a similar opportunistic attitude immediately following the tragic terrorist attacks on September 11. CEO Maurice Greenberg said he believed that "opportunities for his 82-year-old company have never been better."
Unum is one of the country's largest disability insurers, but the company has not exactly lived up to its customers' expectations. Known for unjustly denying and delaying claims, Unum's actions have hurt many of its policyholders.
When Potter developed multiple sclerosis, she filed a disability claim with Unum. However, the insurance company refused the claim and told Potter that her conditions were "self-reported." In response, Potter's physician sent a series of memos to Unum testifying to her problems. For three years, the insurance company continued to deny her claim, despite appeals from Potter's employer and a confirmation by the Social Security Administration that she was totally disabled. Unum finally agreed to pay the claim when Potter hired an attorney.
Unum is infamous for its poor claims-handling policies. In fact, former employees of the company have stated on record that Unum instructed them to refuse claims in order to meet cost-savings goals. It is clear that instead of focusing on the needs of their policyholders, Unum is far more concerned with its own financial interests.