Insurance Companies Underpay Injury Claims. Here’s How They Do It.

//Insurance Companies Underpay Injury Claims. Here’s How They Do It.

Insurance companies often use slogans like “Your in Good Hands” and “Like a Good Neighbor…”, but you would need to be an insurance insider to have heard the slogan “Good Hands or Boxing Gloves Treatment”. A fantastic article, Storm of Money, profiles Mark Romano, a former Allstate Insurance executive, who has had a change of heart – he is responsible for shinning a bright light on how insurance companies underpay injury claims, through rigging the system that evaluates them.

How Do Insurance Companies Rig the System?

Insurance companies have spent millions of dollars to come up with a computer program called Colossus, whose main focus is to find ways to reduce payments for injury claims. How can Colossus do this? Originally, the programmers studied how insurance adjusters made decisions on injury claims, and created the program to aggregate the data through questions and spit out a value range. The program looks at a multitude of factors, some of which are  severity of the injury, settlements for the same type of injuries, and verdicts to name a few.

This all seems fair and logical on its face – but here is the catch, there are insurance company executives who are inputting the data. Those executives have a mandate to increase the bottom line, and this is done by paying less for injury claims. They are at the controls of Colossus, which means that they can and will skew the data to spit out lower valuations for claims – thus increasing profitability. Another resource for understanding how insurance companies underpay injury claims is a consumer study by, Mr. Romano and J. Robert Hunter, entitled Low Ball: An Insider’s Look at How Some Insurers Can Manipulate Computerized Systems to Broadly Underpay Injury Claims – which gets into great detail about the mechanics of how this works.

Good Hands vs. Boxing Gloves

This is another prong of the insurance companies approach to underpaying injury claims – adjusters are taught to buddy up with the insured to sway them into taking a lesser amount for their injury claim.

Over time, Allstate employees testified that they were trained to build rapport with customers and discourage them from hiring lawyers. Berardinelli and a growing cadre of lawyers alleged that the “good hands” strategy actually involved delaying and denying claims for several months and then making lowball offers as people felt more financial pressure.

After disclosure of Allstate internal claim evaluation documents it was revealed that a strategy that employees used was:

In its “Good Hands” approach, Allstate would pay those unrepresented people within 180 days, which McKinsey {consultants hired by insurance companies} said would take care of 90 percent of the claims. The 10 percent who hired lawyers or didn’t accept claim offers would get the “Boxing Gloves” treatment. In these cases, Allstate would expect to tie up payments for three to five years.

Put simply, either you take less than fair value for your injury claim or the big insurance company will try to beat you down into the poor house.

How You Should Protect Yourself If You Are Injured

The best way to protect your rights if you are injured is to hire a personal injury lawyer to represent you. Trying to deal with a giant insurance company on your own is literally like going up against Colossus.

The bottom line is the overarching goal of insurance companies is to pay the lease amount of money they can for your injury claim. Hiring a top personal injury law firm to get you full value for your injury claim is like buying insurance against the insurance company – we are the only ones who have the same interest as our injured clients, getting them the most money for their claim.

 

 

 

2017-11-15T09:58:49+00:00

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