What are the top ten worst insurance companies?

To identify the worst insurance companies for consumers, researchers at the American Association for Justice (AAJ) undertook a comprehensive investigation. The final list includes companies across a range of different insurance fields, including homeowners and auto insurers, health insurers, life insurers, and disability insurers.

1. Allstate
2. Unum
3. AIG
4. State Farm
5. Conseco
6. WellPoint
7. Farmers
8. UnitedHealth
9. Torchmark
10. Liberty Mutual

Allstate Insurance - Good Hands or Boxing Gloves?

Allstate’s confrontational attitude towards its own policyholders is legendary. Allstate focuses on reducing the amount of money it pays in claims, whether or not they were valid. When it adopted these recommendations, Allstate made a deliberate decision to start putting profits over policyholders.

The company essentially uses a combination of lowball offers and hardball litigation. It routinely offers claimants less than their case is worth. Those that accept the low-balled settlements are treated with “good hands” but may be left with less money than they need to cover medical bills and lost wages. If the claimant rejects the lowball offer and files a lawsuit Allstate will spend more than the claim is worth to fight it it court...to discourage others from filing suit.

Former Allstate adjusters say they were rewarded for keeping claims payments low, even if they had to deceive their customers.

Unum - Low-ball Claims

Unum has a history of denying and delaying claims. Former employees have gone on record saying Unum ordered them to deny claims in order to meet cost-savings goals. In 2005, Unum agreed to a settlement with insurance commissioners from 48 states over their claims-handling practices. Under the agreement, the company agreed to reopen more than 200,000 cases and pay $15 million.

According to a report by the California Department of Insurance, Unum systematically violated state insurance regulations and fraudulently denied or low-balled claims using phony medical reports, policy misrepresentations, and biased investigations.

State Farm - Deny, Delay, Defend

Like Allstate, State Farm used consulting giant McKinsey & Co. The McKinsey concept involves cutting spending on claims payments to boost profits. Agents steeped in the McKinsey way speak of the “three D’s”— Deny the claim, Delay the payment, and then do anything they can to Defend against a lawsuit.

While State Farm will do anything to fight a claim once it has been taken to court, the company has never been shy about using the courts to its own advantage, even when it has to first stack the deck.

AIG Insurance - Claims Handling Abuse

The world’s biggest insurer, AIG has a long history of claims-handling abuses for both individuals and business clients. AIG has long had a reputation for claims-handling abuses. Former AIG claims supervisors have alleged in litigation that the company used all manner of tricks to deny or delay claims, including locking checks in a safe until claimants complained, delaying payment of attorney fees until they were a year old, disposing of important correspondence, and routinely fighting claimants for years in court over small mundane claims.

AIG is not alone in using strategies such as deny-delay-defend to enhance its bottom line at their customers’ expense. What sets AIG apart, however, is the way it has so callously sought to take advantage of its policyholders’ misfortunes.