After conducting an 18 month investigation, CNN’s 360 with Anderson Cooper revealed how major insurance companies have conspired to make it standard procedure to rip off car accident victims.
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CNN obtained Allstate and State Farm documents which showed that they had worked with consulting company McKinsey & Co. in the mid-1990’s to develop a strategy to increase profits by methodically delaying settlement and denying small claims.
An automobile accident causing only minor visible vehicle damage can cause major physical injuries to drivers and passengers – injuries which are painful, debilitating, and very costly to treat. Soft tissue injuries are hard to prove in court because they do not show up in x-rays. Making it even more difficult for victims, juries are easily convinced that an accident with little visible vehicular damage could not have caused serious injuries.
The strategy employed by the insurance companies is often referred to as the “three D’s” – delay, deny, and defend. They delay as long as possible, while victims rack up huge medical bills and often lost wages. They deny the claims and then defend the denial in court.
The process can take several years. By the time the claims go to trial, victims have often undergone extensive medical treatment and may no longer appear to be injured. After racking up thousands in medical expenses, many accident victims accept pitifully small settlement offers out of fear that they will receive nothing at all if they try to fight.
If you’re thinking that this doesn’t make sense, that the insurance companies must spend more fighting these cases than it would have cost to honor the claims, you need to look at the big picture.
First of all, most people don’t fight. According to insurance industry insiders, about 80% to 90% of accident victims accept settlement offers, sometimes as little as $50.
Second, the long-term goal of the strategy, according to a former Allstate attorney, is to make pursuing the claims in court “so expensive and so time-consuming that lawyers would start refusing to help clients.”
Insurance companies claim that tough tactics are necessary to prevent fraud and keep premiums down. However, according to the Insurance Information Institute, in the 10 years since the strategy was implemented premiums have risen by 30%.
The few accident victims who fight the insurance companies in court face a tough battle. Insurance companies rely on photographs showing only minor damage to the vehicles involved in the accidents. They attempt to make the victims appear fraudulent, convincing juries that an accident which caused only minor visible damage to a vehicle could not have truly caused serious injuries. All too often, juries are persuaded to believe this, especially if the victim is able to walk in and out of the courtroom, no longer appearing to be injured.
Some victims, however, are successful. CNN interviewed Roxanne Martinez, who suffered neck and back injuries in an accident, when her car was sideswiped. After Allstate offered her $15,000, a little more than half of what the accident had cost her, she decided to pursue her claim in court. The jury awarded her $167,000 plus interest. In this case justice prevailed, but not until four years after the accident occurred.