Insurance Bad Faith

A CNN investigation into minor-impact soft-tissue injury crashes around the country revealed that insurers will most likely not be willing to pay all the medical costs incurred, even if the injured person was not at fault. Soft-tissue injuries are not easy to see by the naked eye or conventional medical tools, for example, X-rays.

According to the CNN story, “insurance companies are paying out less and less for minor crashes even while their profits soar and premiums continue to rise”:

Since the mid-1990s, most of the major insurance companies -- led by the two largest, Allstate and State Farm -- have adopted a tough take-it-or-leave-it strategy when dealing with such cases. The result has been billions in profits for insurance companies and little, if anything, for the public, according to University of Nevada insurance law professor Jeff Stempel. . . . "So I think now we can say to continue this kind of program is in my view institutionalized bad faith."

If you have never heard of the strategy, it's because insurance companies don't want you to know that they are paying out less and less for minor crashes even while their profits soar and your premiums continue to rise. (CNN)

Part of the strategy is to aggressively defend claims in court by arguing the car accident victim are trying to defraud the insurers:

But documents CNN obtained indicate profit, not fraud, is the reason companies decided to play hardball in small accidents. For Allstate and State Farm, according to documents obtained by CNN, the strategy was developed in the mid-1990s with the assistance of consulting giant McKinsey & Co. Looking for a way to boost profits, McKinsey focused on soft-tissue injuries incurred in minor crashes.

While the McKinsey documents -- numbered in the thousands -- are under seal in courts around the country, CNN saw several of them during a court hearing in Lexington, Kentucky. Playing off Allstate's signature slogan, one document recommends the insurer put boxing gloves on its "good hands" for those who insist on going to court.

The strategy, according to former Allstate and State Farm employee Jim Mathis, relies on the three D's -- denying a claim, delaying settlement of the claim and defending against the claim in court. "The profits are good, and as long as the community, the public allows this to occur, the insurance companies will get richer and people ... will not get a fair and reasonable settlement," Mathis said. (CNN)

Attorneys at Pritzker | Ruohonen fight back to obtain fair compensation for their clients. The firm has extensive experience with car accident cases and insurance bad faith cases, and it has the resources to take on the insurance companies and win. To contact a lawyer at Pritzker | Ruohonen for a free consultation, please call toll-free at 1-888-377-8900 or submit the firm’s online consultation form.

Attorney Rich Ruohonen accepted a pro bono (without pay) case involving an insurance company's denial of a claim and also fought for passage of a law that would prevent further injustice by insurance companies.

Source: Griffin, D., and Johnston, K., ContentAreaAuto insurers play hardball in minor-crash claims, CNN, February 12, 2007.

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