Drum roll please…. The number 1 worst insurance company, according to a 2008 study published by the American Association for Justice, is:
Known for its insensitive attitude of putting profits before its policyholders, Allstate is the epitome of insurance industry greed. Despite its highly publicized "good hands" approach, Allstate frequently employs an aggressive "boxing gloves" policy against its customers, aiming to delay and deny claims as often as possible.
This policy was initiated by the infamous consulting giant McKinsey & Co. in the mid-1990s. The firm suggested that Allstate focus on decreasing the amount of money it paid in claims, whether or not the claims were legitimate. After adopting this suggestion, Allstate decided that making a profit would be its number one priority. It's no wonder that complaints filed against Allstate are much higher than most other insurance companies, according to the National Association of Insurance Commissioners.
Allstate's "boxing gloves" strategy places its customers at next to no importance. Over the last ten years, the amount Allstate paid out in claims has considerably decreased, from 79 percent in 1996 to 58 percent in 2006. As the company paid less in claims, its profits grew to $4.6 billion in 2007, more than double what it earned in the 1990s.
Even though the company is inundated with cash, it consistently neglects its customers. After Hurricane Katrina, for example, Allstate tried repeatedly to drop 5,000 policyholders for supposedly not showing intent to fix their properties. In Florida, Allstate has dropped over 400,000 customers since 2004, and the company got in trouble because it appeared to be only renewing the customers who had multiple lines of Allstate coverage. The provider was investigated in New York for the same reason and was forced to discontinue the practice.
All of the companies in this list from the association's study are examples of why the insurance industry is in dire need of reform. Allstate's CEO summed it up perfectly when he expressed the company's mission: "our obligation is to earn a return for our shareholders." Indeed, too many times we find insurance providers looking out for their own self-interests, doing all they can to increase profits and forgetting their ethical and legal responsibilities to customers.