We've all seen the name of AIG's CEO, Edward Liddy, far too often in the last few months. He recently attended a hearing before a congressional committee explaining why he thinks $165 million in federal bailout money from American taxpayers needs to go to AIG employees for bonuses. During Liddy's introduction, Chairman Kanjorski raised the issue about Liddy's former role as CEO of Allstate, and that company's denial of insurance contract claims. Later, one of the representatives asked why we as taxpayers are being forced to pay $165 million in bonuses on the basis that these were contracts. Liddy had no problem denying insurance contract claims which the policyholders made against his former company, Allstate. It might be surprising for the public to realize that Liddy made over $350 million in salary and stock options in his position at Allstate, in large part by implementing a plan to deny and otherwise underpay contract claims to Allstate policyholders. He did this with the assistance, of McKinsey & Co., the same consultants who created the Enron business plan. The public might also be interested to know that while running AIG, Liddy continues to be a major Allstate stockholder. Liddy was the President and CEO of Allstate Insurance Corp. from 1995 to 1999, then the Chairman of the Board until 2007. While at Allstate, he orchestrated across-the-board claim denial and underpayment systems created by McKinsey & Co., which led to David J. Berardinelli's investigative book From Good Hands to Boxing Gloves: The Dark Side of Insurance. According to this book, by the time he left, Mr. Liddy had already amassed Allstate stock worth over $250 million, with an additional payment at retirement of $50 million, and a retirement package worth over $70 million. You can also find out how, during his leadership at Allstate, Liddy oversaw that company's rejection of Hurricane Katrina home loss claims, how those costs were passed off on the American taxpayers through the National Flood Insurance Fund, and how Allstate and Liddy profited by passing off the losses to taxpayers. Find out for yourself why insurance claims are being improperly denied, delayed, and defended at trial. Read the story the insurance industry doesn't want you to know.
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Editorial Reviews
Review
Allstate Corp., fresh from fending off criticism about its response to policyholders affected by Hurricane Katrina, faces another potential storm, this one from an author [David J. Berardinelli] who claims the insurer is forcing policyholders to accept prompt but lower payouts or risk time-consuming and expensive litigation...The book [tells how and why] the nation´s second-largest home and auto insurer treats some policyholders with boxing gloves during their time of financial and personal duress, rather than the reassuringly familiar good hands highlighted in its advertising. ----Chicago Tribune, Author Throws a Punch at Allstate; May 3, 2006
It's the story Allstate doesn't want told. --BusinessWeek, In Tough Hands With Allstate, May 1, 2006
This book delves deep into the dark heart of the profit-boosting strategies that efficiency consulting firm McKinsey & Company cooked up with Allstate and the dramatic negative impact they have had on policyholders.... They created a plan for Allstate's claims operations known as the Claims Core Process Redesign or simply CCPR...To date, CCPR has generated between $15 to $25 billion in excess profits for Allstate's stockholders. It has also generated a national firestorm of bad faith litigation. This estimate is based on Allstate's annual statements showing an increase in surplus from $4.5 billion in 1992 before CCPR to a staggering $21.8 billion in 2004 with an additional $14 billion distributed in that time as shareholder dividends. Allstate has consistently refused to state how much extra profit CCPR generated. However, in 2004 Allstate claims its net income rose to a record $3.1 billion, despite 4 hurricanes in the Southeastern United States. --United Policy Holders
It's the story Allstate doesn't want told. --BusinessWeek, In Tough Hands With Allstate, May 1, 2006
This book delves deep into the dark heart of the profit-boosting strategies that efficiency consulting firm McKinsey & Company cooked up with Allstate and the dramatic negative impact they have had on policyholders.... They created a plan for Allstate's claims operations known as the Claims Core Process Redesign or simply CCPR...To date, CCPR has generated between $15 to $25 billion in excess profits for Allstate's stockholders. It has also generated a national firestorm of bad faith litigation. This estimate is based on Allstate's annual statements showing an increase in surplus from $4.5 billion in 1992 before CCPR to a staggering $21.8 billion in 2004 with an additional $14 billion distributed in that time as shareholder dividends. Allstate has consistently refused to state how much extra profit CCPR generated. However, in 2004 Allstate claims its net income rose to a record $3.1 billion, despite 4 hurricanes in the Southeastern United States. --United Policy Holders
About the Author
David Berardinelli is an attorney specializing in insurance law. He graduated from Santa Clara University Law School in 1974. After five years as a criminal prosecutor, he went into private practice. Berardinelli participates in legal organizations including the New Mexico Trial Layers Association, the American Academy of Trial Advocacy, and the American Association of Justice. And editor of the New Mexico Trial Lawyer, and a lecturer to legal audiences, he also publishes a regular column on insurance bad faith. He is the attorney who sued Allstate and uncovered the infamous McKinsey Slides. From this experience, Berardinelli authored From Good Hands to Boxing Gloves: How Allstate Changed Casualty Insurance in America.
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Most Helpful Customer Reviews
8 of 8 people found the following review helpful:
5.0 out of 5 stars
Brilliant, Important & Informative,
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This review is from: From Good Hands to Boxing Gloves: The Dark Side of Insurance (Hardcover)
I'm not aware of another book of this quality, insight or ease of reading on this subject. The author devoted years of tenacious detective work and fact-finding in order to obtain insights and previously confidential information about claims practices at Allstate Insurance. His findings are credible and fact-based. His intellectual curiosity and inferential thinking are very strong, yet his ability to piece together and tell the story in simple, easy-to-read and highly understandable language are even more impressive. This is a first rate job of analysis of an important topic. It focuses on the claims practices initially instituted by Allstate Insurance in its automobile business and subsequently spread throughout it's property and casualty business. The net effect was to greatly reduce settlements to Allstate's customers and claimants while growing the company's operating profits significantly. It both raises deep concerns about, and also helps to explain how anti-consumer practices of such great magnitude could have escaped the detection of regulatory and oversight agencies for so long.
Since the book was published, sufficient additional information has come to light through the availability of respected management consultant McKinsey & Company's work for Allstate that a follow-up version of this book would be even more valuable. Nonetheless this book is essential reading for individuals who believe that their insurance claims may not have been handled fairly by Allstate, or who may be considering the purchase of home, auto or other P&C insurance from Allstate. The practices perfected by Allstate, with McKinsey's assistance, were pioneered by McKinsey at State Farm and elsewhere prior to initiating work at Allstate. Therefore investors, regulators or consumers interested in any of these companies will find this book important reading. Additionally this is "must" reading for insurance professionals interested in keeping their industry "clean", attorneys interested in insurance law and claims practices, those interested in the preservation of corporate ethics and the rule and protection of the law in free market economics, as well as students of first class problem solving will all benefit from and appreciate this book. Overall it is an impressive, insightful, important and highly readable piece of work. I cannot vouchsafe that every single fact and interpretation is correct, but am sure that further refinement of the author's findings will occur as more data comes to the fore.
11 of 13 people found the following review helpful:
5.0 out of 5 stars
What an eye opener!,
By
Amazon Verified Purchase(What's this?)
This review is from: From Good Hands to Boxing Gloves: The Dark Side of Insurance (Hardcover)
Do yourself a favor and buy this book if you want to get very mad at the insurance industry and All State Insurance most of all. If you read this and have All State I promise you will drop them! This is a shocking book and one that I could not put down. I read it cover to cover in one sitting.
4 of 4 people found the following review helpful:
5.0 out of 5 stars
From an Insider!,
This review is from: From Good Hands to Boxing Gloves: The Dark Side of Insurance (Hardcover)
I have 20+ years coast-to-coast experience as a Property, Casualty, Catastrophe Adjuster, Expert Witness and 3rd party claim consultant. I have worked in-house (staff adjuster), independent and contract adjuster desks for so many Insurance Carriers I can't recall, as well as on the flip side representing the Policyholder (consumer). This insightful and brilliantly written book begins unveiling the protracted power of the 2nd largest lobby "on the hill". What most fail to recognize is how the insurance industry has been by design regulated at the individual 50 states' level (as opposed to the SEC, FDIC, FHA, FAA, FCC, FDA,....). Just why would this be??
Author David Berardinelli's brilliant work here will hopefully and eventually make him more heralded and well-known than the likes of Melinda Ballard, "The Queen of Mold" (landmark lawsuit against Farmers Ins) or Erin Brockovich (played in the movie by Julia Roberts). Unfortunately many of the insurer tactics detailed in this book have become more malevolent and exponentially widespread because: 1. The Allstate/McKinsey M.O. has spread to Allstate's major competitors so as to protect their market share AND 2. The financials fallout experienced by insurers across the board since 2008. Our best hope is that Mr. Berardinelli authors a sequel or this book inspires a screen play tantamount to the storyline affect in the movie "The Rainmaker". Mr. Berardinelli - you are a modern day Gerry Spence! My hat's off to you sir.
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