Consumer Beware: AAJ Names the 10 Worst Insurance Companies

The fundamental purpose of insurance is to provide a safety net to support its policyholder in dire times. Whether it is financial protection following a natural disaster, auto accident, or life-threatening illness, Americans turn to insurance companies to ease their stress and help them rebuild their lives. Unfortunately, most hard-working individuals and their families in the United States are insured by massive conglomerates that strive to undercut policyholders at every opportunity, raise premiums without warning, deny claims whenever possible, and effectively betray the trust and fiduary duties owed to their insureds.

A recent 28-page report published by the American Association for Justice (AAJ) exposes the shocking state of affairs that exists within certain prominent insurance companies that perpetrate many such abuses and generally act in bad faith toward their clients. Succinctly titled “The Ten Worst Insurance Companies in America,” the report lists, in order of wickedness, the worst insurance companies that operate today and details why they are on the list. Such reasons include: taking advantage of less sophisticated policyholders, perpetrating fraud, engaging in illegal premium hikes, providing illegitimate reasons for denying or dismissing claims, frequency of bad faith, and legal scrutiny by government regulatory branches.

The companies included in AAJ’s rogue’s gallery are:

1. Allstate
2. Unum
3. AIG
4. State Farm
5. Conseco
6. WellPoint
7. Farmers
8. UnitedHealth
9. Torchmark
10. Liberty Mutual

The AAJ paper argues that the focus of insurance companies is no longer on protecting individual consumers, but on saving and raising revenue, usually to the detriment of policyholders. When insureds are in desperate need and present a claim, most of these insurance companies jump through hoops to deny it through any means possible. The report goes on to identify as one of the main problems with the industry that these insurance companies profit by taking in more money on premiums than they pay out in claims.

Thus, if your insurance company can successfully raise premiums and deny claims when presented, it has essentially done its job. An incredibly brazen employee incentive program instituted by Farmers Insurance called “Quest for Gold” rewarded employees in the form of gifts and pizza parties for meeting low payment goals and “dissuading claimants from retaining an attorney.” This act illustrates the depths to which such companies will sink in an effort to shirk their contractual and fiduciary obligations.

Allstate’s mishandling of legitimate claims is another prime example of this violation of trust and fiduciary duty owed to the client, according to the AAJ report. In the aftermath of Hurricane Katrina, the Louisiana Department of Insurance “received 1,200 complaints against Allstate” in regards to claims and “in 2007 Allstate attempted to cancel their relationship with 5,000 policyholders only a few days after the expiration of an emergency rule stopping insurance companies from dropping customers hit by Hurricane Katrina.” Allstate’s purported reason for these policy cancellations was the residents’ failure to demonstrate an intent to repair their property.

Unum is identified as the runner up to Allstate on the “Ten Worst” list as a result of unconscionable practices such as denying the claim of a 43-year-old male who had quintuple bypass surgery based on the insured’s claim that he could no longer work. Unum decided that the man was not classified as disabled and that he was able to work, despite documented medical opinions to the contrary. The court described Unum’s denial for that reason as “defying medical science.”

In a similar case of bad faith by State Farm Insurance, a Mississippi family’s home was destroyed during Hurricane Katrina. State Farm denied their claim based on the opinion of its experts that the damage was caused by flooding, not wind. State Farm had initially hired a team of engineer experts, who surveyed the damage and concluded that the damage was caused by wind; they even cited eyewitnesses who saw another house picked up by the wind and thrown into the family’s home. Dissatisfied by this conclusion, State Farm subsequently hired another engineering company, which provided the justification they counted on to deny the claim.

Such instances of flagrant and attenuated claims denials are all too common in Florida, which is prone to natural disasters such as hurricanes and sinkholes, not to mention a high rate of auto accidents compared to the national average. Under Florida law, when an insurance company—in its legal capacity as a fiduciary to its policyholders—fails to act in the best interest of its insured, the company may be liable for bad faith. Bad faith by insurance companies is, by and large, failing to settle a claim when the insurer could and should have done so under the circumstances, if it had acted fairly and honestly. In the examples provided in the AAJ report, the courts found that the insurance companies had breached their fiduciary responsibilities and acted in bad faith toward the policyholders. These consumers dutifully paid their insurance premiums each month with the faith that, if an accident or other devastating event occurred, they could count on the coverage they purchased from their insurance company. The courts in these actions therefore held the insurer’s callous and willful denials of legitimate insurance claims to be improper.

For more information on bad faith practices by insurance companies, or about insurance claims in general following an auto accident or other loss, please contact the experienced and dedicated injury and trial attorneys at PERENICH The Law Firm.