The Huffington Post reported, “Unlike many other businesses, the insurance industry is bound by law to act in good faith with its customers.” Insurance companies were considered “semi-public-trusts.” Yet, that changed in the 1990s when their focus shifted from service to profit making. Allstate is credited with originating this trend by adopting a plan crafted by consulting firm McKinsey & Company. The strategy was simple: “Rather than adjusting claims the traditional way, which gave claims managers wide latitude to serve customers, insurers embraced a computer-driven method that produced purposefully low offers to claimants.” Customers who accepted “low-ball offers” had their claims processed quickly, while those who refused were forced to wait. “As former Allstate agent Shannon Kmatz told the American Association for Justice, the trial lawyers’ lobby, the strategy was to make claims ‘so expensive and so time-consuming that lawyers would start refusing to help clients.’”
From the American Association for Justice press release.