Allstate is facing criticism following a scathing report that, among other things, accuses the company of being a leader in developing anti-consumer claim practices.
The allegations are part of a 35-page report issued by J. Robert Hunter on behalf of the Consumer Federation of America (CFA), a non-profit association of 300 organizations that seeks to advance the consumer interest through research, advocacy, and education. In it, Allstate is criticized for using a software program that allows insurers to determine the percentage amount of “savings” it wants as a benchmark, which in turn causes the software to adjust costs like claim payouts (many but not all insurers use similar software, the report carefully notes).
Allstate also is portrayed as a trailblazer in adopting claim practices that limit the amounts it pays out in claims, leading other insurance companies to follow suit. Among the techniques mentioned is the inclusion of anti-concurrent causation language in homeowners' policies, which essentially allows an insurer to deny a claim if two events contribute to a loss, but only one is covered. This type of language became well documented in New Orleans after Hurricane Katrina made landfall, causing extensive wind damage (a covered loss) followed by severe flooding (an excluded loss) after the levee system breach.
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