Huffington Post Article Explores Insurer 'Shorting' Practice - BodyShop Business
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Huffington Post Article Explores Insurer ‘Shorting’ Practice

An article in The Huffington Post says that Allstate and other insurers have nearly doubled their profits since the 1990s by following a new model of business that produces purposefully low offers to claimants.

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An article in The Huffington Post says that Allstate and other insurers have nearly doubled their profits since the 1990s by following a new model of business that produces purposefully low offers to claimants. Those who accepted the low-ball offers received prompt service, the article states, while those who didn’t had their claims delayed and potentially had to resort to bringing pricey lawsuits to fight for adequate compensation.

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The new business model was introduced by McKinsey & Company, a consulting firm which was the focus of the book, “From Good Hands to Boxing Gloves.” It went away from the traditional way of adjusting claims to a computer-driven method that supposedly produced intentionally low offers to claimants.

The proof that Allstate achieved its objective of more profit with the new method, the article stated, is $4.6 billion in profits in 2007, double its take in the 1990s. A consultant quoted in the article said the huge increase in profits was the result of “driving down loss values to an average of 30 percent below the actual market cost.” 

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