Worst Insurance Companies: The Top Ten Worst Insurance Companies in America

In 2008, the American Association for Justice released a 29-page report entitled “The Ten Worst Insurance Companies In America.” The report was the result of a comprehensive investigation of a blizzard of court documents, FBI records, state insurance department complaints and investigations, news stories from around the nation, and testimony and depositions from former insurance agents and adjusters. The final list includes companies that insure cars, homes, disability, health and life.

One thing that the report shows is that Allstate, State Farm and Liberty Mutual all hired famous management consultant McKinsey and Company to study how they could be more profitable. McKinsey came back with a strategy known as “The Three Ds…Deny, Delay and Defend.” All three companies have used this strategy aggressively to boost profits for their shareholders.

To read the report, go to: http://www.justice.org/docs/tenworstinsurancecompanies.pdf

The list is as follows:

10. Liberty Mutual

Not only has Liberty Mutual pulled out of Coastal states like Florida and Louisiana, but also Massachusetts, Rhode Island, Connecticut, Maryland and big parts of New York.

9. Torchmark

A variety of company subsidiaries sell burial insurance, cancer insurance, and life insurance. The company has been accused of selling minority customers higher priced products than white customers. Its sales tactics have attracted frequent lawsuits from regulators and policyholders.

8. United Health

This health insurer has a reputation for health care reimbursement rates that are so low and so delayed that doctors report patient health is at risk.

7. Farmers

Owned by Swiss insurance giant Zurich Insurance, Farmers is consistently near the bottom of homeowners and auto satisfaction surveys conducted by JD Power and Consumer Reports. As an example of their “profits over people” attitude, note that after the 1994 Northridge CA earthquake, Farmers instituted an employee program called “Bring Back a Billion.” This was an effort to save the company a billion dollars in claims settlements.

6. Wellpoint

Wellpoint is the nation’s largest health insurer, covering over 28 million people. They have been found to routinely cancel policies on pregnant women and chronically ill patients. In 2007, the California Department of Insurance assessed a $12.6 million fine against Wellpoint for “serious violations” in their claims procedures. Wellpoint was also sued by 800,000 doctors for underpaying claims.

5. Conseco

Long-term care insurance is Conseco’s forte. And that usually affects the elderly most. Conseco takes advantage of the calendar, knowing that if it waits long enough, many policyholders submitting claims will die before their claim is paid.

4. State Farm

The largest property casualty insurer in America, who has a long reputation for delaying and denying claims. State Farm has recently announced that it has pulled out of the Mississippi and Florida markets entirely. In 1999, after a giant Oklahoma tornado event, homeowners file a class action lawsuit against State Farm, alleging that the insurer widely undervalued homes. The jury ruled that State Farm had acted “recklessly” and “with malice” toward its own policyholders. And don’t get me started on how State Farm acted after Katrina.

3. AIG

The world’s largest insurer has had massive financial problems of late, with the Congress negotiating a Federal bailout of the insurer in Fall 2008. But besides that, AIG has developed a reputation over the years as a company that fights claims aggressively.

2. UNUM

This Chattanooga, TN based company is one of the nation’s leaders in disability insurance. UNUM has a long reputation for delaying and denying claims. If you want to read an infuriating book about this subject, read “Insult to Injury,” by Ray Bourhis. The author is an attorney that took on UNUM in court. UNUM is regularly the target of insurance department and media investigations for their claims handling tactics.

And…drumroll please…the AAJ choice for number one worst insurance company in America is….

1. ALLSTATE

The AAJ stated that the “good hands” of Allstate should be shown inside boxing gloves. According to the National Association of Insurance Commissioners (NAIC), complaints filed against Allstate were greater in number than most all of its major competitors. After Hurricane Katrina, the Louisiana Department of Insurance received over 1,200 complaints against Allstate, which is more than any other company. State Farm had over 700 complaints, and State Farm has the biggest share of the homeowners insurance market in Louisiana. Allstate embraces the McKinsey philosophy, “Delay, Deny and Defend.”

Allstate’s CEO Thomas Wilson summed up the strategies of all the companies when he said, “Our obligation is to earn a return for our shareholders.”

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9 Responses to Worst Insurance Companies: The Top Ten Worst Insurance Companies in America

  1. What credibility does the American Association for Justice bring? How do we know this isn’t some sort of hatchet group bent on slamming, if not slandering, insurance carriers (whether they deserve it or not)?

    • russlongcore says:

      The AAJ is the former Association of Trial Lawyers of America. As the world’s largest trial bar, AAJ promotes justice and fairness for injured persons, safeguards victims’ rights—particularly the right to trial by jury—and strengthens the civil justice system through education and disclosure of information critical to public health and safety.

      Who would know the insurance companies better than the trial lawyers who meet them in American courts? By the way, some of the insurance companies certainly deserve slamming. The AAJ identified ten of them.

      As an advocate of long term care insurance, you should have the welfare of your clients at the top of your list. But, I do understand that if you are selling LTC insurance policies, you might be more loyal to those who are paying your commissions.

  2. Tom says:

    Hi thanks for a great post. I’ll be back 🙂

  3. watcat says:

    Hi this blog is great I will be recommending it to friends.

  4. wonker says:

    Interesting blog, I’ll try and spread the word.

  5. Matt says:

    Interesting piece. Do you have a “Top Ten Best Insurance Comapnies in America”? If these guys are the worst, who’s the best?

  6. Trinidad says:

    Hiya!. Thanks for the info. I’ve been digging around for info, but i think i’m getting lost!. Yahoo lead me here – good for you i suppose! Keep up the good work. I will be coming back in a few days to see if there is updated posts.

  7. Jon says:

    Nice site – Like what you did. Wishing you a very happy and prosperous new year !

  8. Tom Barker says:

    I just don’t understand how CONSECO INS. ony ranks #5. I have had a heart policy and a cancer policy since 1985. It was orginaly with Transport Life(which was great)but CONSECO bought them out. This company has got to be the sorriest company in the country.

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