Insurance Companies Crackdown on Paying a Fair Settlement; 80-90% of Victims Let it Happen

November 2, 2016 | Attorney, Matthew Dolman
Insurance Companies Crackdown on Paying a Fair Settlement; 80-90% of Victims Let it Happen

In 2007, CNN investigative reporters did an expose on how insurance companies handle “minor” accident claims, revealing exactly how it affects consumers. In this article, we are revisiting that report to reveal how it affects our clients.

The CNN report, investigated by Drew Griffin and producer Kathleen Johnston, originally aired on Anderson Cooper 360. The report was the result of an 18-month study.

In the report, Griffin uncovered condemning evidence against the two biggest insurance carriers in the US, State Farm, and Allstate. The report states that these companies, and other giants like them, are saving billions of dollars by underpaying the victims of so-called minor car accidents.

The essence of the entire report is that insurance companies scrutinize every claim as if they were fraudulent, and then profit the money that they should be paying towards the injured person's medical bills and lost wages.

Although these strategies aren't exactly new, they do show a shift from the way insurance companies used to handle these claims. They used to pay what they owed and in return had trusting customers.

Today, the story is a bit different. Instead, insurance companies adopt a strategy of “take it or leave it” for the payouts they offer. In many of these cases, the offered amount doesn't even cover a fraction of the victims' expenses.

The insurance company knows that customers are so relieved to get at least something, that they'll take the offer. This is not how this process should work. After all, most of us have insurance so that in the event of an accident, we don't have to worry about going bankrupt over the medical bills and lost wages.

The Three D's

In the expose, Griffin and Johnson focus on a woman named Roxanne Martinez and her so-called minor car accident.

Martinez was t-boned by an SUV on the passenger side of her car. As a result, she was severely injured. Her medical bills and lost wages quickly added up. Just like anyone else, she assumed that because the driver was insured with a reputable company like Allstate, her bills would be covered. Martinez thought she could rest easy knowing that everything was covered and just focus on her recovery.

Instead, three years later, she was still fighting with Allstate. Her doctors' bills and a list of medical problems kept increasing. On top of that, she was losing income from taking time off to work to recover, attend doctors' appointments, and to have surgeries.

After years of fighting, Allstate finally offered her a settlement. The amount was $15,000.

The only problem was, this amount didn't even cover her medical bills. It also didn't cover her pain, lost wages, or the emotional distress of forever being in debt because Allstate didn't do their job.

This offer is a good example of how insurance companies now handle claims in order to increase their profit. (Although they will say that it's to protect consumers from fraud, but more on that later). This system is known as The Three D's: Deny, Delay, Defend.

The insurance companies deny the claim in an effort to not pay at all.  Or to begin instilling the fear in the customer that they may not get paid at all. Then, they delay the claim. Again, this is in order to bolster the fear that they may never have any of their bills covered. Finally, they defend their denial of the claim in court. They do this for a few reasons. First, through misleading the jury and special laws that protect them, they hope for a lower settlement. Second, they hope to make the cost of fighting a claim so high that personal injury attorneys won't take these types of cases.

This method is part of a strategy insurance companies are using to save themselves from paying billions of dollars in honest claims. The math is really quite simple: if the insurance companies reduce every claim they settle by $1,000, and they do this on 1 million claims, then they have increased their profits by $1 billion.

$1,000 x 1,000,000 = $1,000,000,000

This is a lot of extra earnings for the stockholders and executives of the insurance company.

The CNN investigation found that if you are injured in a so-called minor accident, the insurance companies begin to initiate this process; first, by challenging your claim. Then, they drag you through the court system for as long as possible. Finally, after years of this, they make you an offer that is significantly less than your claim is worth.

The report interviewed insurance company insider, Jim Mathis, who said:

“The profits are huge. The profit is good. And as long as the public allows this to occur, the insurance companies will get richer and people will not get a fair, reasonable settlement. Period.”

He continued:

“[The low offers are] not based on what should be a settlement value or offer to the claim. It's not based on ethics. [And] it's not based on profits. It's based on how much profit.”

So why do insurance companies not pay their clients what they should? Because insurance companies answer to stockholders. By denying claims and offering ridiculously low settlements, they are making them a lot of money.

80% of auto insurance companies use low offers to save money: delay handling your claim, deny you were hurt, and defend their case in long, expensive court battles. The Three D's are effective.

Changing Tactics

These companies changed to this tactic in the 90's, and it's not just an assumption or reasonable conclusion. This strategy is in Allstate's training manual: "[force] smaller walk-away settlements."

They assume that you'll be concerned about getting nothing, so you'll take the low offer. By that time, they will have worn you thin, stressed you out, and made you fear for the financial security of your family. It's an effective strategy.

The insurance companies say this strategy is part of the fight to restrict fraudulent claims. They say it hurts others by raising their premiums. So, you would think that with all the profit increases and “saving” “honest” clients' money, that profits have gone down; but, policyholders haven't seen any reduction in premiums. Premiums have increased by at least 30 percent since this policy was enacted.

A law professor in the CNN interview stated, “To continue this kind of program is, in my view, institutionalized bad faith.” The insurance companies are basically taking a position of ‘every case is a fraud' so they treat them that way. In the process, real, honest victims end up getting the short end of the stick; stuck with bills they can't pay, losing their income, and the building emotional and physical trauma of the injury and subsequent battle for coverage.

A trial court judge told CNN that many insurance company lawyers have confided in him that they, in fact, do want to settle many of the minor impact cases for a fair amount, but the insurance companies they work for won't allow them to. Instead, the insurance companies would rather fight every claim for the reasons discussed above.

And it's obviously working. 80% to 90% of injured victims surrender to the insurance companies' bullying and take the low offer.

Allstate and State Farm did not discuss the results of the investigative report with CNN.

So, what's the good news?

We are not afraid of the tactics that the insurance carriers are using. At Dolman Law Group Accident Injury Lawyers, PA, we are extremely familiar with the low-ball strategies they use, and we know how to combat them.

You are more likely to get a larger settlement with an attorney; an estimated two to three times more.

Although the insurance companies want lawyers to stop litigating cases for their customers, we still fight on. We do not back down and we do not take a purely defensive strategy. Instead, we go head on with the insurance companies and demand a fair offer.

Insurance companies know which lawyers will go to court and which will back out and take a low offer. Our reputation is of the former. They know that we will do whatever it takes to get our clients a fair deal. As a result, they are more likely to give our clients what they deserve.

Don't go at the insurance company alone. They have spent billions of dollars figuring out how to use injured victims to increase their profits. Instead, hire an experienced personal injury attorney who specifically fights insurance companies on the basis of a simple principle: protect the citizens of our community against the greed of mega corporations.

Give us a call today. Experience what we call “The Dolman Law Difference,” big firm results with a small firm personal touch.

Dolman Law Group Accident Injury Lawyers, PA


Matthew Dolman

Personal Injury Lawyer

This article was written and reviewed by Matthew Dolman. Matt has been a practicing civil trial, personal injury, products liability, and mass tort lawyer since 2004. He has successfully fought for more than 11,000 injured clients and acted as lead counsel in more than 1,000 lawsuits. Always on the cutting edge of personal injury law, Matt is actively engaged in complex legal matters, including Suboxone, AFFF, and Ozempic lawsuits.  Matt is a lifetime member of the Million Dollar Advocates Forum and Multi-Million Dollar Advocates Forum for resolving individual cases in excess of $1 million and $2 million, respectively. He has also been selected by his colleagues as a Florida Superlawyer and as a member of Florida’s Legal Elite on multiple occasions. Further, Matt has been quoted in the media numerous times and is a sought-after speaker on a variety of legal issues and topics.

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