The insurance industry has been increasing profits at the expense of injured victims and its insureds in Montana. Many people try to handle a small to moderate accident injury claim, a business claim or homeowners claim with the insurance adjuster. They also believe that the adjuster is acting in good faith and will do what’s right and under Montana Law they should. The problem with this outlook is that the major insurance companies have unabashedly announced their stated intention to increases profits by increasing denials and reducing payments to rightful claims. In the 90’s most Montana Trial Layers had heard of a “secret verdict” which exceeded 6 figures against Allstate in Butte for bad faith. While this is just rumor the facts have now come out. State Farm, the largest insurer in the state has implemented a program called ACE “Achieving Claims Excellence”. According to a recent article in “Trial Trends Magazine Spring 2011 Edition” by Charles Miller an attorney experienced with insurance practices the purpose of the program is to reduce claim payments.

A State Farm document of understanding with claims employee’s stated State Farm’s Goal is ‘future proofing’ State Farm by ‘cutting $2 billion from operating costs’. Id. Trial Trends. Other insurance companies have implemented similar programs such as Farmer’s bring back a billion campaign which was designed to recover out of the claims department the payments it had to pay in the California Northridge Earthquake.

A retired Montana Claims Supervisor for Farmers Insurance, explained to me how the system worked. A certain amount is set at the first of the fiscal year based upon the profit targets for the company. In Montana for example if there was a lot of hail damage claims then other rightful claims could not be paid. If a supervisor or adjuster paid more than the amount previously set regardless of how unrealistic they would be subject to discipline.

Most of the major insurance companies have stated goals to make their claims department the profit centers of the company. Trial Trends. It has now become clear right here in Montana rightful claims are being denied or payment amounts substantially reduced to reach profit pressures on adjusters. In Montana an adjuster must act in good faith. Also, a claimant is entitled to the full amount of his or her legal damages. Unfortunately much of the profit engineering in the claims centers is coming at the expense of insureds.

People who would normally make a uninsured or underinsured motorist claim which results when the at fault driver did not have coverage or did not have enough coverage now wind up in an attorneys office. A small business owner who needs his insurance to defend him, or a homeowner who needs to make repairs are all more often winding up in legal process than in years past based upon my experience. The reasons that are conveyed to insureds to deny claims would be humorous if true. It is unfortunate that people who pay many of the highest premiums in the Country are not getting the benefit of their bargain with their insurance company. One often cited reason to deny medical payments coverage under an insurance policy it “the other guys will pay it”, but what if they don’t? It can reflect poorly on one’s credit while denying coverage that was paid for with premium dollars.

In my experience of 16 plus years representing people against insurance companies I have seen a substantial increase in cases which would normally be handled without an attorneys help in the past, now require legal assistance because the adjuster won’t, can’t or does not even really have the authority to resolve the claim fairly. While we are able to find relief in almost all the cases we handle there is still a majority of folks who take for granted a denial from an adjuster or just accept substantially less relying on the adjuster’s good faith.

In summary, due to the fact, reduction of claims payments has become the rule of practice, many insureds and innocent victim’s now end up in an attorney’s office. These cases get filed with the Court and take up the public’s limited resources so that the major insurance companies can increase profit shifting the costs onto society. Until more law firms become serious about bad faith the guilded age of company profits will continue to reign.