There are many documented instances of insurance bad faith practices—so many that it can be rather discouraging. Fortunately, the documenting and researching of insurance bad faith has been done by knowledgeable parties who seek to protect consumers from “the worst of the worst.” A great example is a recent report by the American Association for Justice (AAJ), based on thousands of:
- state insurance department complaints and investigations
- testimony/depositions of former insurance agents and adjusters
- other court documents
- SEC and FBI records
- news accounts
The AAJ report summarizes “The Ten Worst Insurance Companies in America.” At the very top of the list — the worst of the worst — is “the good hands people,” Allstate.
Assets: $156.4 billion
There’s too much to say about Allstate’s bad faith insurance practices; reams of paper have been used to describe it. Suffice to say that Allstate has been documented as using essentially every bad faith practice known to the insurance industry, including denying valid claims, delaying payment, shortchanging policyholders, etc.
As Allstate’s CEO Thomas Wilson noted, “[Allstate’s] obligation is to earn a return for our shareholders.” The company has repeatedly been forced to make public its wrongdoing, but their marketing and reputation apparently foreshadow the bad news about the company, because millions of Americans keep on signing up with Allstate.
Assets: $52.4 billion
This insurer agreed to pay fines to the insurance commissions of 48 states in 2005. For example, Unum denied one out of every four long-term care insurance claims in California, a ridiculously high rate of claim denial. Unum had to re-open over 200,000 of these cases. The California Department of Insurance found widespread fraud at Unum, systematic violations of state insurance regulations, and
- low-balled claims using phony medical reports
- policy misrepresentations
- biased investigations
California’s insurance commissioner described Unum as an “outlaw company.”
Assets: $1.06 trillion
We’ve all heard about AIG. The world’s biggest insurance company, AIG has been found guilty of ripping off individual policyholders, businesses, other insurers, and local governments who signed up with AIG for insurance. For example, in 2008 AIG agreed to pay more than $12 million to several states after it was discovered that AIG had conspired with other insurance brokers to submit fake bids — to create an illusion of a “competitive” bidding process in commercial insurance markets.
In 2007, a reinsurance unit of AIG was forced to pay over $440 million to five insurance companies who alleged that when the time to pay out arrived in accord with their contracts, the AIG unit refused to pay and attempted to rescind the contracts.
The increase in corporate fraud by insurance companies is now one of the top investigative priorities of the FBI.
4. State Farm
State Farm, the largest property casualty insurance company in the U.S., is famous for its “deny and delay” tactics. After disasters such as the Northridge, California earthquake in 1994 and Hurricane Katrina, State Farm engaged in practices such as forging signatures on earthquake waivers and altering engineering reports.
Long-term care policies are the main business at Conseco, a company that apparently uses the guideline of stalling on claims so long that its policyholders die before being awarded their benefits.
Wellpoint has been shown to routinely cancel the policies of chronically ill patient and pregnant women.
Former Farmers claims adjusters have testified that they were told to settle property insurance claims for a targeted amount, without even seeing the property. Thousands of policyholders have complained about a great variety of Farmers’ bad faith tactics.
8. United Health
Healthcare providers have repeatedly reported that United Health’s reimbursement rates are so low and so long-delayed by that patient health is compromised. United Health’s former CEO faced criminal and civil charges for backdating stock options.
Torchmark is known for preying on low-income and minority policyholders in the southern U.S., with low-cost burial insurance, cancer insurance, life insurance, etc.
10. Liberty Mutual
Liberty Mutual uses its share of deny, delay, and defend tactics, and has been found to engage in systematic bid-rigging.
For more information about the “Ten Worst” or for help with your own insurance bad-faith experience, contact Louisville insurance benefits attorney Michael Grabhorn at Grabhorn Law Office, PLLC today.