Louisiana's Attorney General has filed a lawsuit against severalmajor insurance companies and third-party groups, alleging thatthey worked together to "deny, delay, and defend," while creating amonopoly and artificially fixing prices on services after HurricaneKatrina.

In the complaint, which was filed in early November, LouisianaAttorney General Charles C. Foti, Jr., accused Allstate, LafayetteInsurance, Xactware, MS/B, Insurance Services Office (ISO), StateFarm Fire and Casualty, USAA Casualty, Farmers Insurance Exchange,Standard Fire, and McKinsey and Company of suppressing competitionin the state's insurance industry to obtain profits illegally.Specifically, the complaint states:

"In a scheme to thwart policyholder indemnity and in directviolation of their fiduciary duties, insurer defendants and otherscontinuously manipulated Louisiana commerce by rigging the value ofpolicyholder claims and raiding the premiums held in trust by theircompanies for the benefit of policyholders to cover their losses,as taught by McKinsey & Company."

According to their web site, McKinsey & Company is a globalmanagement consulting firm that advises businesses, governments,and institutions on difficult issues and serious challenges. Thecomplaint alleges that McKinsey's philosophy of "deny, delay, anddefend," which Foti said involved underpaying claims in order todivert money to management and shareholders, was forced uponinsurers' employees through intimidation.

The complaint also alleges that insurers coerced policyholdersinto accepting low claim payments by editing engineering reports,delaying payments, and forcing insureds to bring forth lawsuits inorder to receive full claim values. It also accuses the namedparties of conspiring to fix or manipulate prices of repairservices utilized in calculating the amount to be paid.

Lastly, the complaint states that since the insurance companiesand third parties were using the same damage estimating systems --Xactimate and IntegriClaim -- they were acting together in aneffort to low ball claim payments.

"This continuous arrangement gave insurers an unjust advantageover policyholders, which they took advantage of before, during,and after the greatest disaster this country has ever suffered, byreaping huge profits from the misfortunes of persons whom theypledged to protect from risk of loss," said Foti, in the complaint."They raised insurmountable odds against policyholders' abilitiesto recover. The schemes operated under cover of secrecy and wereperpetrated despite the fact of numerous past lawsuits againstinsurers."

The entire complaint may be found by clicking here.

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