Louisiana’s Attorney General has filed a lawsuit against several major insurance companies and third-party groups, alleging that they worked together to “deny, delay, and defend,” while creating a monopoly and artificially fixing prices on services after Hurricane Katrina.

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

“In a scheme to thwart policyholder indemnity and in direct violation of their fiduciary duties, insurer defendants and others continuously manipulated Louisiana commerce by rigging the value of policyholder claims and raiding the premiums held in trust by their companies for the benefit of policyholders to cover their losses, as taught by McKinsey & Company.”

According to their web site, McKinsey & Company is a global management consulting firm that advises businesses, governments, and institutions on difficult issues and serious challenges. The complaint alleges that McKinsey’s philosophy of “deny, delay, and defend,” which Foti said involved underpaying claims in order to divert money to management and shareholders, was forced upon insurers’ employees through intimidation.

The complaint also alleges that insurers coerced policyholders into accepting low claim payments by editing engineering reports, delaying payments, and forcing insureds to bring forth lawsuits in order to receive full claim values. It also accuses the named parties of conspiring to fix or manipulate prices of repair services utilized in calculating the amount to be paid.

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

“This continuous arrangement gave insurers an unjust advantage over policyholders, which they took advantage of before, during, and after the greatest disaster this country has ever suffered, by reaping huge profits from the misfortunes of persons whom they pledged to protect from risk of loss,” said Foti, in the complaint. “They raised insurmountable odds against policyholders’ abilities to recover. The schemes operated under cover of secrecy and were perpetrated despite the fact of numerous past lawsuits against insurers.”