Insurance Commissioner Says Allstate Willfully Violated Insurance Code

Will Allstate finally have to make public its own internal documents about claim handling practices and procedures that many insureds allege are bad faith programs that cheat them of the insurance coverage they paid for? Attorneys of the Alaska Personal Injury Law Group are watching closely as insurance regulators try to obtain these documents. Many of these documents are the very same ones our lawyers have been trying to get from Allstate in Alaska cases alleging bad faith and fraud by Allstate against its own Alaska insureds when they made a claim for the coverage benefits they paid for.

As I reported in an earlier article, the Florida Office of Insurance Regulation (FLOIR) subpoenaed from Allstate documents about its bad faith program for systematically low-balling and underpaying claims. This program, instituted in Alaska and the rest of the country in 1995, was created with the help of the McKinsey Company. The Office of Insurance Regulation states in a brief to the court that the insurance statutes required Allstate to provide these documents in response to its subpoena. More importantly, the regulators state that Allstate purposefully failed to provide the documents and willfully violated the insurance code by withholding them.

FLOIR also states that Allstate made misrepresentations to the court about documents it did produce. As Allstate typically does in bad faith insurance claims against it in Alaska and elsewhere, Allstate pointed to the thousands of documents it had produced. Allstate’s trick, of course, is to produce documents the opponent already has or that are meaningless, while sparing no effort to hide the important documents. FLOIR also stated to the court that many of the documents Allstate did produce were public documents it already had.

FLOIR also told the court that Allstate “falsely marked” as “Trade Secret” many documents that were publicly available, many even available on the internet. This “trade secret” ploy is a favorite of Allstate and other insurers in bad faith cases. Evidence harmful to the insurer is a “trade secret,” even if it is on the internet or otherwise publicly available. In our Alaska bad faith cases, Allstate has repeatedly claimed “trade secret” protection for documents we were able to find by investigating public sources.

Other insurance companies follow the same game plan. In one of our cases against Geico Insurance Company for claim handling fraud and bad faith, Geico refused to provide names of any other insureds likely subject to the same wrongdoing, asserting the names were a “trade secret.” To the contrary, when those insureds first made their claims, Geico had provided the names and other personal information about those insureds to the Injury Index Bureau. That information is available to other subscribing insurance companies. Yet when sued for insurance bad faith, Geico withheld the names on the basis other insurers might learn the names. Typical of the games insurance companies play when sued for bad faith.

We applaud the efforts by FLOIR to bring Allstate’s improper, bad faith claim handling procedures into public light. When they pay their premium dollars, insureds in Alaska and elsewhere are entitled to know whether the insurance company intends to keep its promises and deal with them in good faith.