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.
- Repeatedly denied a disabled woman with multiple sclerosis for three years, despite physician’s testimonies, and only agreed to pay the claim when she hired an attorney.
- Company has a history of denying claims and a CEO was forced out because of the repeated controversy surrounding claims-handling policies. (But he still left with $17 million in severance and pension benefits)
- In 2005 Unum settled with insurance commissioners from 48 states over their claims-handling practices and agreed to reopen more than 200,000 cases and pay $15 million.
- While being investigated in California, the investigation found that Unum systematically violated state insurance regulations and fraudulently denied claims using phony medical reports, policy misrepresentations, and biased investigations.
- Admitted to only reviewing 10 percent of the eligible cases for reopening under the terms of their legal settlement reached three years earlier.
- Denied the claim of a 43-year-old man who had a quintuple bypass and despite the doctor’s orders to stop working, Unum told him he was not disabled and could still work. The US 9th Circuit Court of Appeals later described it as defying medical science.
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.
- After Hurricane Katrina, State Farm claimed that it settled 99 percent of its cases but regulators criticized them for using misleading statistics.
- State Farm wrongfully denied claims after Hurricane Katrina because didn’t consider water damage to constitute a claim, and blamed other factors for causing damage so that they could deny claims.
- Threatened to fire the engineering firm they hired to inspect Hurricane Katrina victims’ houses if they didn’t alter reports to stating that the damage was caused by something else, that they could use as reason to deny claims.
- State Farm doesn’t want policyholders to know exactly what their policies do and do not cover.
- When they finally agreed to re-evaluate their Hurricane Katrina claims they paid nearly $30 million in additional settlements.
- Like Allstate, State Farm hired McKinsey & Co. and adopted the “three D’s” – deny the claim, delay the payment, and defend against a lawsuit.
- Never paid the $3 billion dollar fines that they had against them for mishandling claims after the Northridge earthquake in 1994.
- Bribed former insurance commissioner Chuck Quackenbush by donating $12 million to his non-profit foundations.
- After tornadoes ravaged Oklahoma in 1999, homeowners filed a lawsuit against State Farm for allegedly trying to undervalue the damage to their homes or claim that the damage was caused by other factors like faulty construction.
- Stopped writing new homeowner policies and embarked on a campaign of market withdrawals and non-renewals after Hurricane Katrina.
- Funded a justice so that after he won the election he cast a crucial vote reversing a $9 billion dollar judgment against State Farm.
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.
- Always focused on taking more money in premiums than it pays out in claims, AIG turns a profit through underwriting.
- Has used all kinds of tricks to delay claims, including locking checks in a safe until claimants complained, disposing of important correspondence and routinely fighting claimants for years in court over commonplace claims.
- After discovering that they were losing money on auto-warranty claims, AIG began systematically rejecting thousands of claims using any excuse to deny them, even against the recommendation of their own claims-handling contractor.
- AIG and its subsidiaries built their reputation as one of the most aggressive claims fighters in the industry through their constant denial of high-profile cases.
- State insurance commissioners found out that AIG conspired with other brokers to submit fake bids to create an illusion of competitive bidding process in commercial insurance markets and forced them to pay $12.5 million to several states.
- An AIG reinsurance unit was forced by an arbitrator to pay more than $440 million to five insurance companies who alleged the AIG unit tried to rescind their contract when it was time to pay, and then continued to refuse payment even after several courts had ruled against rescission.
- AIG uses the “three D’s” strategy but what has set them apart from other companies is their desire to take advantage of its policyholders’ misfortunes.
- Unashamed of their opportunistic reputation, they have committed enough fraudulent acts to involve the FBI, and paid $1.6 billion to settle charges for financial scandals that earned them the nickname “the new Enron”.
- Fined millions of dollars for bilking pension funds out of billions of dollars.
- Implicated in the manipulation of $7 billion dollars worth of bonds that were intended to aid the poor and supply computers to inner city schools but instead benefited companies like AIG.
- AIG has violated U.S. tax laws in Florida, Georgia, Oklahoma, and Tennessee by taking $220 million in bonds issued to promote affordable housing and eventually had to settle with the IRS.
WellPoint - Abandoning Policyholders
Investigations have proven that WellPoint consistently cancels policies of pregnant women and chronically ill patients, confirming their cut throat strategy of putting the welfare of the company over that of their policyholders, earning it the number six spot in the Top 10 Worst Insurance Companies in America (according to the American Association for Justice).
- Indianapolis-based Anthem and Thousand Oaks, and California-based WellPoint completed a $20.8 billion dollar merger in 2004 that was widely criticized by consumers, doctors, pension managers, and state regulators who feared that the merger would create a monopoly that would both raise premiums and reduce claim payments to cover the cost of the massive severance packages for the executives who initiated the merger.
- The terms of the merger included a payout of $250 million to a dozen executives, giving the former WellPoint CEO almost $82 million with additional pension and stock options.
- Sued for illegal rescission, or routinely canceling individual health policies of pregnant women and chronically ill patients.
- Sued by Insurance Commissioner for improper rescissions, failure to pay claims on a timely basis, failure to provide required information when denying a claim, failure to pay interest on claims where required, and mishandling of member appeals.
- Los Angeles City Attorney sued Anthem Blue Cross for fraud, violation of state and federal insurance regulations, and violation of truth-in-advertising laws. He stated that they also jeopardized the health of more than 6,000 customers by retroactively canceling their health insurance and tricked more than 500,000 consumers into purchasing healthcare coverage based on false promises.
- WellPoint has had to pay over $30 million to settle lawsuits in Colorado, Kentucky, and Nevada for overcharging policyholders.
- Was one of the insurance companies sued by over 800,000 doctors who claimed that they were not paid the full amount for their care and services.
- Wanted California doctors to violate doctor-patient confidentiality by reporting pre-existing conditions that patients might have so that they will be able to use that against policyholders when refusing claims.
Conseco - Targeting the Elderly
By selling long-term care policies to the elderly that can no longer advocate for themselves, Conseco exploits its clients’ vulnerability by delaying claims until their policyholder passes away. This abusive tactic has earned Conseco the number 5 spot on the Top 10 Worst Insurance Companies in America.
- By targeting the elderly, Conseco uses their vulnerability as an advantage by delaying and denying valid claims until the policyholder gives up or dies.
- Conseco, Bankers, and Penn Life have had numerous complaints filed with state regulators over long-term care insurance, particularly in regard to claims handling, price increases, and advertising methods.
- In 2002, the company was $6.5 billion in debt and was forced into bankruptcy.
- Former CEO was sued for more than $250 million over company-backed loans and debt, and two other Conseco executives were also sued for fraud.
- In 2006 an adjustor admitted that company policy forbade her from calling physicians or nursing homes to request paperwork before denying claims.
- Another Conseco employee was told to withhold payment on claims until the policyholder submitted documents that weren’t required under the terms of the policy.
- The National Association of Insurance had to broker a settlement between Conseco and 39 states including the District of Columbia because of abuse claims in its long-term care business.
