Allstate Worst Insurance Company For Consumers
Ryan Bradley | January 24, 2022 | Personal Injury
By nearly every measure, Allstate can be one of the worst insurance companies for consumers. Allstate plays hardball with third-party claimants and customers. In recent years, Allstate even cut the percentage of premiums it paid as claims and doubled its profits.
This makes Allstate a darling with investors. But Allstate’s practices can create a hostile environment for car accident victims.
Here are some of the ways that Allstate is the worst insurance company for consumers and claimants.
How the Insurance Industry Works
Insurance companies are private businesses with a fiduciary duty to maximize their shareholders’ profits. At the same time, they enter into binding contracts with their customers to pay their liabilities.
These duties are at odds. If the insurer pays claims, it loses opportunities to make a profit.
Insurance companies need your premium dollars – not to pay claims, but to invest. In 2020, only 77% of Allstate’s revenue came from collecting insurance premiums. The rest of its revenues, nearly $429 million, came from investing your premiums.
When they pay claims, they lose their investment money. This creates a financial incentive for insurers to deny and reduce claims.
All states know this. Every state, including Missouri, has passed a version of the Unfair Claims Settlement Practices Act. These laws regulate how insurance companies investigate and pay claims.
Measuring Allstate’s Performance for Claimants and Consumers
You have a few ways to measure how Allstate compares to other insurers, including:
The American Association for Justice (AAJ) studied the insurance industry and listed the ten worst insurers. According to its analysis, Allstate is the worst insurance company in America.
It gave several reasons for the low rating, including:
Former Allstate employees have said that the company uses a “three Ds” approach to adjusting claims — deny, delay, and defend. Allstate tries to frustrate claimants into giving up.
The approach is also intended to run up the legal expenses. The company hopes that lawyers will refuse to help clients against Allstate because it will take too much time and money.
Even when Allstate pays out a claim, it pays less than other companies. In 2020, Allstate collected nearly $1.5 billion in premiums and paid $386 million in claims. Thus, Allstate only paid out 25.9% of its premiums in claims.
Allstate does this by giving incentives to claim adjusters to reduce and deny claims. According to the AAJ report, supervisors told adjusters to lie to claimants and rewarded them when they did.
Allstate has a record of running afoul of state insurance regulators. Maryland, Texas, California, and Louisiana have all fined Allstate for its bad faith practices.
Another measure of Allstate’s poor record comes from consumer complaints. The National Association of Insurance Commissioners (NAIC) creates an index based on consumer complaints across all 50 states.
According to the NAIC, Allstate’s consumer complaint index is 2.71. This means that Allstate gets nearly three times as many complaints as the average insurer.
Allstate does not fare much better in Missouri. Missouri’s insurance regulators calculate an index based on complaints received. Allstate’s complaint index in Missouri is 138, meaning Allstate gets 38% more complaints in Missouri than the industry average.
You have probably heard companies on TV brag about their score on a J.D. Power & Associates consumer survey. You will probably not hear this in an Allstate commercial. According to J.D. Power & Associates, Allstate places 10th out of 13 companies for customer satisfaction.
Pursuing a Claim with Allstate
If you have a claim with Allstate, you could have a rough time ahead. Some ways you can combat Allstate’s practices include hiring a lawyer, remaining patient, and being willing to file a lawsuit.
A lawyer can try to keep Allstate’s adjusters on task by reminding them of their obligations under Missouri law. A lawyer can file a lawsuit to keep the pressure on Allstate and can fight for a fair settlement from tight-fisted insurance personnel.
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