Allstate and State Farm Hard Ball Strategy: Take It Or Leave It

David Lowe

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A report published by CNN after an 18 month investigation about minor impact soft tissue injury cases reveals that victims in these auto accident cases are likely to be shortchanged when it comes to compensation. These accident victims, though they are not at fault, have little leverage when dealing with insurance adjusters because accident attorneys are often reluctant to accept cases involving small claims. The threat to take an insurer to court is the only leverage of the accident victim, but without an attorney the threat is hollow. And if you take the case to court, even with an attorney, the case will likely be fought.

The CNN story quotes a former Allstate and State Farm employee, Jim Mathis, who describes the insurers' strategy this way:

The three D's -- denying a claim, delaying settlement of the claim and defending against the claim in court. "The profits are good, and as long as the community, the public allows this to occur, the insurance companies will get richer and people ... will not get a fair and reasonable settlement," Mathis said.

University of Nevada Law Professor Jeff Stempel calls the strategy "institutionalized bad faith"

By shedding light on a strategy that we trial lawyers are well aware of, CNN has independently demonstrated the importance of trial by jury. Unless insurance companies face a credible threat of being held accountable in court, they will not treat accident victims with fairness.