Saturday, March 21, 2009
McKinsey Strikes Again
"As I was reporting my brother's story, I discovered something about Pat's former insurance company: last May, insurance regulators in Connecticut imposed a record $2.1 million in penalties on two Assurant subsidiaries for allegedly engaging in a practice called post-claims underwriting--combing through short-term policyholders' medical records to find pretexts to deny their claims or rescind their polcies. ... Assurant agreed to pay the fine but admitted no wrongdoing. ... It took Pat and me less than 10 minutes to fill out the complaint form over the internet. ... On Feb. 9, we had an answer: Assurant maintained that it had done nothing wrong and that Pat should never have relied on short-term coverage over a long period. ... Those extraordinary circumstances included the fact that the state insurance department was sniffing around", Karen Tumulty/San Antonio at Time, 16 March 2009.
Why do I put McKinsey, the "very prestigious" consulting firm, in this post's title? Because in about 1995 McKinsey did a study for Allstate, the "good hands" people, telling it how to avoid paying insurance claims. Supposedly, Allstate saved $700 million over a few years by following McKinsey's suggestions. What's the problem? An insurance company has a fiduciary duty to its' insureds! No one got indicted for this. Look at the possibilities: insurance fraud, a state crime, or wire and mail fraud, federal crimes. These studies will end when it does not pay to do them. Which will be? When an insurance claimant with cancer and six months to live goes to Allstate's president's office 357 magnum in hand and empties all six chambers into the guy. Or the McKinsey partner. Will McKinsey take another "Allstate" study then? Who would staff it thinking claimants with nothing to lose will come gunning for them? Literally! The Chairman, Mao Zedong, said, "Political power grows out of the barrel of a gun". Never forget it. Like Big 87654 firms, there is little if anything a large law, CPA or consulting firm won't say for a fee. Sad, but true.