Allstate Releases Massive McKinsey Report

Allstate has released approximately 150,000 pages of documents pertaining to a review of its claim practices conducted in the 1990s — referred to as the McKinsey documents — in order to dispel what it says are inaccurate portrayals of its business practices.

The documents, which are available at Allstate's web site, have been the subject of a book written by David Berardinelli called From Good Hands to Boxing Gloves. In it, Berardinelli discusses how consulting firm McKinsey and Co. allegedly reengineered Allstate's claim-management system — referred to as Claim Core Process Redesign — in order to unfairly maximize profits. It has been speculated that these techniques involved offering low initial settlements followed by a tougher, hardball approach if the settlement was not quickly agreed to by the policyholder.

In a release made public last month, Allstate disputed these accusations, saying that “public criticisms by people with a vested interest in creating an inaccurate picture of the company's claim practices have been based unfairly on only snippets from the documents taken out of context.”

The company has justified not releasing the documents in the past by saying that they contained trade secrets and proprietary information that could be used by its competition. It said it released the documents now to “address misunderstandings resulting from the growing misplaced focus by our critics on very small pieces of the whole.”

Allstate also pointed out that, as a state-regulated company, it is subject to review by state departments of insurance. Furthermore, it referenced a recent legal case in Kentucky, Hager v. Allstate, in which a claimant unsuccessfully sued Allstate for violating the Unfair Claims Settlement Practices Act (see sidebar at end of article, A Closer Look at Hager v. Allstate).

Allstate recently began implementing a new claim-handling software system referred to as Next Generation Claim Systems. Allstate said the system will provide an integrated claim-handling platform that will reduce cycle time, improve access to claim information, and assign claims more quickly to adjusters. Time will tell if it will face the same kind of controversy that the company's past technology has endured.