I was browsing the internet recently for information on auto insurance company settlement ratios. The first information that I found involved the country of India. That post stated that insurance company settlement ratios ranged from 97.03 per cent to 53.85 percent. Most settlement ratios went down slightly from 2011 to 2012. This may be due to the current worldwide economic conditions.
I then found the website for Ohio Department of Insurance which indicated that in 2011, Ohio residents paid $5,056,298,077.00 in auto insurance premiums. Of that, State Farm companies collected about $959,000,000.00 and Allstate companies collected $429,000,000.00. The complaint ratio for Ohio is one complaint for each million dollars of auto premiums paid. Insurers on the Ohio list include Allstate companies, American Family, Farmers, Geico, Liberty Mutual Noationwide, Progressive, Safeco, State Farm and USAA, which also are carriers that write auto insurance in Nevada.
I then came across a post entitled Top 6 Worst Auto Insurance Companies – 2011 on the Michigan Auto Law Blog. This article listed Dairyland Insurance Company as receiving the Worst Insurance Company in Michigan Award.
Allstate and State Farm were rated 3d and 4th worst. Allstate was criticized for cutting payments to its own customer as a way to boost its profits. Further criticisms were for the use of a computer program designed to reduce claims payments, and for pushing injury victims to accept quick, but very low, settlements.
State Farm is the number one provider of auto insurance in the county. In 2009 it had a $777,000,000.00 profit nationally. Michigan is a no-fault state. State Farm is the most aggressive insurance company in Michigan accusing its own customers of fraud and putting them under investigation and fighting payment of their no-fault insurance benefits.
Progressive was the winner of the Michigan Auto Law’s Worthless Coverage Award, indicating that Progressive’s uninsured motorists coverage was worthless.
There are many internet postings indicating that Farmers is rated the worst insurance company overall. They had the most complaints in California, Washington, Texas, Oregon, Arkansas, Arizona and Colorado. They were criticized for worst ratings for collision repair, overall claim experience, worst claim settlement representative, worst claim process and settlement procedures and consumer reports ratings. Their employee salaries and bonus encouraged and condoned delay, denial and underpayment of claims and forced litigation of claims.
Affiliated, subsidiary, sister and related companies of Farmers include domestics state companies with the Farmers in their name,(Example: Farmers Insurance Company of Arizona), Truck Insurance Exchange, FFS, FIG, Fire Underwriters Association, Foremost Insurance Company, Mid Century Insurance Company, Prematic Service Corporation, Truck Underwriters Association, Civic Property and Casualty, Exact Property and Casualty, Bristol West Insurance, Neighborhood Spirit, Zurich North American, Zurich Financial Services Group and 21st Century Insurance.
Based upon my observations in handling personal injury claims against insurance companies for the past 30 years, I have come up with the following chart which rates the settlement potential of the major auto insurance carriers doing business in Nevada. If you are a claimant you may want to refer to this chart to before you criticize your attorney for not promptly settling your auto insurance claim.
BEST SETTLEMENT POTENTIAL
State Farm is by far the most solvent insurance company in the world. The chance of his insurance company becoming insolvent, I am told, is very low. They are the number one auto insurance carrier in the nation. Therefore, they can afford to pay more to settle an auto claim than any other insurance carrier in Nevada. I do find that State Farm is quick to assign special investigators to first party claims where any fraud is alleged. They will hire an attorney who will subject the insured to EUO (examination under oath). In the EUO the first thing that the attorney doses is to read insurance fraud statutes into the record and they have told my clients that they are sending a copy of the EUO transcript the Attorney General.
WORST SETTLEMENT POTENTIAL
It is very difficult to settle car accident claim against Farmers Insurance in Nevada. I am told, and experience bears this out, that Farmers doesn’t offer more than 1.3 times the claimant’s medical bills to settle a pre-litigation personal injury car accident claim. Farmers will also try to devalue the injured victim’s medical bills. This makes it almost impossible to settle a Farmers claim, unless the claimant has Medical Payments Coverage that pays for all he claimant’s medical bills. Therefore, the chances of settlement of a Farmers claim are dismal and litigation is almost necessary.
Farmers will pay car accident claims that have a value well in excess of their insured’s liability policy limits.
In litigation Farmers mostly uses in house counsel. Their in house counsel are very busy. Each attorney has handles a lot of cases. The attorneys are generally likeable individuals. They sometimes, on egregious liability claims (i.e. drunk driving) or very high property damage car accident claims, will settle prior to an arbitration hearing or trial. In most cases, if the claimant gets a good arbitration award they will be willing to offer a more reasonable settlement offer, generally less than the arbitration award, to get the claim settled. In some cases they will agree to pay the arbitration award plus any costs and prejudgment interest that may be awarded by the arbitrator. Farmers, I believe tries to weed out those cases where the claimant’s attorney does not strongly believe in his client’s case to the extent that he is willing to go thorough litigation to get a higher settlement for his client. I believe that this strategy works with some attorneys.
Mercury, Dairyland, American Access, Prudential and Progressive Insurance are companies that write a lot of minimum liability policies $15,000.00/$30,000.00) for their insureds. They employ a strategy to low ball cases. They do not want to pay out their minimum limits. They hire aggressive attorneys to handle cases and they often make you go through the time consuming arbitration program. And, when you win the arbitration, then they will exempt the small case out of the short trial program and now the attorney is in normal litigation. In normal litigation the cost of trying the case, including the cost of paying doctor to come to trial to testify, is in many cases higher than the amount in controversy. Of course, the down side exposure to the client associated with not prevailing in excess of a low offer of judgment is very high. This potential downside exposure could be tens of thousands of dollars to the claimant. This puts pressure on the attorney and the claimant to accept a lowball offer of judgment served by the defense.
Progressive writes a lot of a minimum policies because of their television commercials and low premium advertisements. Often they get large claims against minimum policies and there is no underinsurance available. In these cases you try to get their insured to personally contribute to the settlement. However, with or current economy (most people don’t have any saving) this strategy doesn’t often work.
MEDIUM POTENTIAL FOR SETTLEMENT
Companies that fall into this category are Geico, Allstate, USAA, American National, American Family, Met Life and Nationwide. However, these companies do not like low property damage cases. They do not like case that involve any questionable liability or comparative fault. If there is comparative negligence element involved with a claim, they offer only a minimal settlement, and force the claimants attorney in litigation. On low impact cases they will hire biomechanical expert to inspect the vehicles, and he always renders an opinion that nobody could have been hurt in the accident.
The purpose of his article is to give you some indication of how various insurance companies in Nevada will react to your claim. You need to know what you are up against on an auto insurance claim. This is the only way that you can make an intelligent decision to either settle or not settle your claim. I think that it is good policy to explain to each client the adverse insurance company’s idiosyncracies on settlement , so that the client can be prepared for what is likely to transpire on his claim.