Blog

In 2008, Attorney David J. Berardinelli (may he rest in peace) published “From Good Hands to Boxing Gloves.” This book was earth-shattering as it explored Allstate’s transformation after it hired the consulting firm McKinsey and Company (of Enron fame) in the early 1990s. Bernardinelli had exclusive access to “The McKinsey Documents” – consulting presentations upon which Allstate based its highly lucrative and unethical practices. McKinsey penned his book’s title using, “boxing gloves,” when advising Allstate on how to treat its customers.

I was shocked when I read this book. On page 34, he discussed how Allstate could increase its average net operating profits by 3,335 percent! (That is not a typo – three thousand three hundred thirty-five percent).

Using the principles McKinsey developed and called “Claims Core Process Redesign: (CCPD) Allstate decreased claim valuations, delayed payments, and doggedly litigated against anyone who did not accept the company’s lowball offers of settlement.

Allstate was a subsidiary of Sears. The CEO of Sears who instituted the program was Edward Liddy, an allegedly unadulterated thief, who, after making millions at Sears with McKinsey recommendations, went on to become Allstate’s chairman. He milked over 350 million dollars from Allstate due to a payment plan set up by McKinsey that awarded him bonuses for the profit increases Allstate experienced. During Liddy’s leadership at Allstate, he oversaw that company’s rejection of Hurricane Katrina home loss claims, how those costs were passed off on the American taxpayers through the National Flood Insurance Fund, and how Allstate and Liddy profited by passing off the losses to taxpayers.

Where did Liddy end up? The last I heard of him occurred when he attended a congressional committee to explain why he thought it adequate to pay $165 million in Obama’s federal bailout money from American taxpayers to his employees in the form of bonuses.

I loved the book and bought several cases to distribute to clients as Christmas presented in 2009. They also loved it, and I saved just one copy for myself. Quite recently, I discussed with a client about Allstate and told her about the book. I located my copy and read some notes I had penned in the book. She asked for a copy, and I went looking for one, but I could not find it, so I went to Amazon. Could you guess how much a copy of “From Good Hands to Boxing Gloves” costs now? You won’t believe it: $ 270.24 for a new and $143.22 for a used copy. Someone has been buying up copies of that book.

In the meantime, McKinsey and the company advised OTHER insurers on how to increase their profits; that is where we are now.

Still, if you get a copy, you will see the importance of having an advocate on your side when you have an insurance claim, and that is what we do. We have to follow the “fine print of the policy.” Still, an article in The Dallas Morning News discussed how, with an attorney or public adjuster on your side, state-compiled stats show a consumer could receive between three and four times more in insurance payments.