Allstate Good Hands Repair Network Direct Repair Program
By Sheila Loftus December 2006 Everything we’ve suspected and feared about Allstate is true. The insurance giant—the so-called “good hands people”—wants only to make money at other people’s expense. What other people?
Quality repair for your ride. If your car is damaged in an accident, you'll need to get a repair estimate before you can get it fixed. With Allstate, you have many options to help you get back behind the wheel as soon as possible. Good Hands® Repair Network Choose from over 3,500 trusted repair shops to get the job done. You may use this tool even if you do not have a claim with us. If you decide to select a repair shop within the Good Hands® Repair Network (GHRN) for a covered claim, please note that the workmanship for covered repairs are guaranteed for as long as you own the vehicle.
Look in the mirror. Whether you are a mom-and-pop shop surviving month to month or a big-time PRO facility (whose bottom line never seems as robust as it should given the amount of work Allstate throws your way), the insurer wants to squeeze so much money out of you, you will squeak like two pennies rubbed together.
And two pennies is about all the profit you have after an Allstate job. Now, as never before, it’s clear what Allstate cares about in its heart of hearts: Money. Like most companies, it lives for enriching its stockholders. A new and damning book about Allstate, From “Good Hands” to Boxing Gloves, written by David Berardinelli, shows in its information-packed 175 pages (plus an appendix that’s 466 pages long) when and why Allstate decided to pursue the almighty dollar at the expense of policyholders and collision repair professionals, as well as just about anyone who had any dealings with the insurer. To read Berardinelli’s book is to witness, up close and in person, how greed became the foundation of Allstate’s business strategy. While stories of greed rarely reflect favorably on the greedy, Allstate’s descent into avarice is particularly horrifying because it was selling a product people were, by law, required to buy.
Owning car insurance is mandatory in the vast majority, if not all, of the 50 states. Who wouldn’t want to sell something everyone needed? Historically, the selling of insurance has been a near-sacred charge. 3com Network Jack Configuration Software.
Insurers gather money from a community in order to spread risk and ensure the survival of unlucky members of that community who have seen their valuables, and even the lives of loved ones, lost. As Eugene Anderson’s introduction to Berardinelli’s book states, “The oath of chartered property and casualty underwriters was (and strangely still is) ‘I shall strive to ascertain and understand the needs of others and place their interests above my own.’” Try reciting that to the next insurance adjuster who steps through your door. Because of their unique position in the world of commerce, insurers were granted an antitrust exemption under the McCarran-Ferguson Act in 1945. Insurers needed the exemption because they had to be able to share information on risk management. Implicit in this exemption was the understanding that their function was to serve a public good. In theory, insurers really were supposed to be the selfless “good hands people” and the altruistic “good neighbor.” But theory is one thing, practice is another.
In 1992, Allstate hired McKinsey & Company, one of the world’s most prominent management consulting firms, to redesign Allstate’s business approach. As Berardinelli, a lawyer by trade, details in his book, McKinsey’s suggestion was, in essence, to have the insurer become a slot machine—a very stingy slot machine. In other words, Allstate—entrusted with the historical responsibility of spreading risk and making whole people who had suffered losses—would do its best to hold on to as much of its policyholders’ money as possible—and then give it to its shareholders (Allstate went public in 1993) and executives. McKinsey called this plan Claims Core Process Redesign (CCPR). Here’s a better acronym: RYB (Rob You Blind).
How did Allstate keep an iron grip on its policyholders’ money? Well, I probably don’t have to tell you, but here goes: Allstate began to underpay claims at every turn. It nickel-and-dimed body shops, hoping body shops would be so desperate to keep Allstate’s business that they wouldn’t demand to be paid for every procedure. It nickel-and-dimed claimants, hoping the claimants would get frustrated and pay whatever difference existed in the repair bill out of their pockets. (At the same time, it tried to dissuade claimants from hiring lawyers, claiming that it would take care of them better than any lawyer would.) Allstate used—or, put more accurately, abused—the United States legal system, relying on the taxpayer-funded courts to handle any disputes that arose when it failed to make customers whole (and when customers bothered to challenge Allstate in court).
As Anderson says in the book’s introduction, “A fundamental principle of insurance economics and of contracts in general is that breach of contract is profitable. Break your word and you win!” In the world according to Allstate, it isn’t the customer who’s always right—it’s Allstate that’s always right. Berardinelli, whose book is informed by the slides McKinsey used in its presentations to Allstate, says Allstate’s new approach to the insurance business had led to excess profits of $6 billion to $15 billion. And Allstate bigwigs have benefited—hugely. By the end of 1997, Allstate CEO Jerry Choate’s company stock was worth $63 million.