CNN recently released the results of an 18-month investigation into minor-impact soft-tissue injury crashes around the country, reporting what every personal injury lawyer already knows. According to CNN findings, most of the major insurance companies when faced with claims from such cases, have universally adopted a scorched-earth strategy since the 1990’s. The leaders in this strategy are the two largest insurers, Allstate and State Farm.

The minor-impact accidents are accidents in which there is little damage to the vehicle and the injuries to people are considered “soft tissue” injuries, such as whiplash – the type of injury that isn’t evident on an x-ray.
After a review of more than 6,000 company documents and court records, interviews with a dozen people nationwide, including former company insiders, and conversations with accident victims, CNN concluded: “If you challenge the offer by some insurance companies you will be left with no option but to go to court, where you will be dragged through the wringer.”
The cases, CNN found, illustrate a carefully developed strategy to make the victims look like they 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 gained access to 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. 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.
Robert Hartwig, president of the Insurance Information Institute, told CNN insurers do not have a strategy of blanket denial of claims. He also said strategies to limit expenditures on minor-impact crashes are needed to fight fraud.
As is typical for large corporations seeking justification for self-serving behavior, Hartwig specifically blamed lawyers who he claims make a living on car accident victims, saying those lawyers are upset because “the gravy train is over.” Of course, that accusation ignores that the real parties bearing the burden of the bad faith behavior are the insurance companies own customers.
The full CNN article can be found at Auto Insurers Play Hardball.

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