State Farm is the largest automobile insurer in the United States. Last year alone, its automobile insurance business collected over $30 billion in premiums! The combined net worth of the State Farm group of companies increased $5.6 billion in 2007, resulting in an overall net worth of $63.7 billion. State Farm is the largest auto insurer in Colorado.
Because of its size, State Farm’s policies and procedures affect millions of its customers. In 2007 CNN’s Anderson Cooper exposed State Farm’s business model for small impact auto accidents as “Deny/Delay/Defend”. This means that State Farm will deny that any medical claim is related to the collision, will delay the final hearing on the claim to force the victim to incur substantial expenses and wait years for trial, and defend the claim by convincing the public (on the jury) that its conduct was solely designed to fight “insurance fraud.
“State Farm’s business model is not to pay a reasonable settlement value on a claim, but to maximize its profits through its Deny/Delay/Defend business model. The State Farm model is similar to the business plan developed by Allstate in conjunction with consultant McKinsey & Company. It is not surprising that State Farm also hired McKinsey as a consultant to help it refine its business practices and increase its profits. Allstate has been severely criticized (and occasionally penalized) by several courts for its claims conduct prompted by the McKinsey consultant’s plan.
