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Michael Phelan
Michael Phelan
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Worst Insurance Companies for Consumers Revealed

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According to a report compiled after six months of researching court documents, SEC and FBI records, state insurance department investigations and complaints, nationwide news accounts, and testimony of former insurance agents and adjusters, Allstate is the nation’s worst insurance company for consumers.

“The rankings show a distinct pattern of insurance industry greed amongst 10 companies that refuse to pay just claims, employ hardball tactics against policyholders, reward executives with extravagant salaries, and raise premiums while hoarding excessive profits,” the American Association for Justice (AAJ) concludes.

The AAJ says the U.S. insurance industry collects more than $1 trillion in premiums annually, and has $3.8 trillion in assets, surpassing the Gross Domestic Products of all countries but the United States and Japan.

The top 5 offenders on the list:

1. ALLSTATE – CEO, Thomas Wilson; 2007 compensation, $10.7 million; 2007 profits, $4.6 billion; assets: $156.4 billion. “According to investigations and documents Allstate was forced to make public, the company systematically placed profits over its own policyholders… The amount Allstate paid in claims dropped from 79 percent of its premium income in 1996 to just 58 percent 10 years later. In auto claims, payouts dropped from 63 percent to just 47 percent.

2. UNUM – CEO, Thomas Watjen; 2007 compensation, $7.3 million; 2007 profits, $679 million; assets, $52.4 billion. “Unum, one of the nation’s leading disability insurers, has long had a reputation for unfairly denying and delaying claims..”

3. AIG – CEO, Robert Willumstad; 2007 compensation for former CEO, 14.3 million; 2007 profits: $6.2 billion; assets, $1.06 trillion; “AIG executives have also come under fire for opportunistically seeking price increases during catastrophes. Now the company has been labeled ‘the new Enron’ because of charges of multibillion-dollar corporate fraud.”

4. STATE FARM - CEO: Edward B. Rust Jr.; 2007 compensation, $11.7 million; 2007 profits: $5.5 billion; assets, $181.4 billion. “In many cases, the company has gone to extreme lengths to avoid paying claims, including forging signatures on earthquake waivers after the deadly Northridge earthquake, and altering engineering reports regarding damage after Hurricane Katrina.”

5. CONSECO - CEO, C. James Prieur; 2007 compensation: $2.6 million; 2007 profits: $179.9 million; assets: $33.5 billion. “Conseco sells long-term-care policies, typically to the elderly. Unfortunately, Conseco uses the deteriorating health of its policyholders to its advantage because the company knows if it waits long enough to pay out claims, its customers will die.”

Why is this information important to consumers? In the case of automobile insurance, a consumer involved in an auto accident may have the misfortune of being struck by a negligent driver who is either uninsured (UM) or underinsured (UIM). In either case, the consumer would have to look to his or her own auto insurer for full and fair compensation. So, you’ve purchased auto insurance with UM and UIM coverage (for which you are paying premiums), you’ve made timely premium payments for decades, and you’ve never caused an accident. You might think that when you’ve been injured by another driver and need to rely on your UM or UIM coverage your insurance company would be on your side. Think again. In such cases, your own insurance company often fights you like you’re the enemy. In my experience, there are some companies who treat their insureds better than others. USAA comes to mind as being among the best. GEICO likewise is quicker than others to offer its UM or UIM coverage limits to its insureds. Not so with Allstate and others. In my opinion, you are not in good hands with Allstate.