Allstate
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Allstate, founded in 1931, is an American insurance provider that also operates in Canada. The company owns several subsidiaries, many of which carry the Allstate name, as well as Esurance. It is one of the largest insurers in the United States.
| Basic information | |
|---|---|
| Founded | 1931 |
| Legal structure | Public |
| Industry | Insurance |
| Official website | https://allstate.com/ |
Consumer impact summary
Allstate, Arity, and their subsidiaries are currently involved as defendants in a lawsuit by the state of Texas , that alleges multiple violations of data privacy regulations.
Consumer impact
Alleged unauthorized data collection
Arity, an Allstate subsidiary, has been sued for allegedly collecting drivers' data without consent. Drivers have also faced systematic barriers opting out of said collection that can potentially affect insurance rates.
Unfair claims handling practices
- Lowball offers and delays
- Accused of systematically offering settlements below market value and intentionally delaying claims to pressure claimants into accepting lower payouts. This strategy was allegedly developed with McKinsey & Company in the 1990s to maximize profits by reducing payouts.[1][2][3]
- Alligator approach
- Internal documents revealed a tactic of "sitting and waiting" to frustrate claimants into settling for inadequate amounts, particularly in personal injury cases.[1]
- High denial rates
- Florida subsidiaries Castle Key Indemnity and Castle Key Insurance denied 47.1% and 46% of claims, respectively, in 2023, some of the highest rates in the state.[2]
Use of anti-consumer policy language
- Anti-concurrent causation clauses
- Pioneered policy language allowing claim denials if a loss involved both covered and excluded events. This was widely criticized after Hurricane Katrina, where homeowners were denied claims for storm damage if flooding also contributed.[2][4]
Legal and regulatory violations
- Bad-faith lawsuits
- Faced multiple lawsuits for denying valid claims, including a $2.8 million bad-faith ruling in Weiss v. Allstate and a $25 million class-action settlement for inflating premiums and unfairly denying claims.[3][4][5]
- TCPA violations
- A 2024 court ruling found Allstate vicariously liable for illegal robocalls made by subcontractors, violating the Telephone Consumer Protection Act.[6]
- State fines
- Paid a $70 million fine in Texas for overcharging homeowners and received the largest fine in Maryland history for premium hikes without customer notification.[3]
Manipulative adjuster training
- Adjusters were allegedly trained to minimize payouts and received bonuses for reducing claim values. Former employees described a culture of "lying to customers" to meet profit targets.[1][3]
Controversial profit-driven strategies
- McKinsey Documents
- Internal reports revealed Allstate prioritized profit over policyholders, aiming to pay 30% below market value on claims. Profits doubled to $4.6 billion by 2007 using these tactics.[1][2]
- Stock Buybacks & Executive Sales
- CEO Tom Wilson sold $32 million in stock amid scrutiny, while the company engaged in stock repurchases criticized as price manipulation.[5]
Discrimination allegations
- Racial Bias
- Roberto Clemente Jr. sued Allstate in 2022, alleging racial discrimination in franchise agency operations. The case settled in 2023.[5]
Public backlash and reputation
- Consumer group, American Association for Justice, ranks Allstate as the worst insurer for consumers due to its claims practices.[3]
- Negative reviews cite poor customer service, claim delays, and premium hikes without improved coverage.[2][7]
Allstate has disputed some claims, citing third-party reports supporting its practices.[4]