Editorial

Editorial

ALLSTATE’S SCAM STOPPED IN NEW YORK

Since the spring of 1995 Allstate has engaged in a highly misleading claims settlement procedure. As soon as it learns of a motor vehicle collision involving an Allstate insured, it affirmatively contacts the third-party claimant or claimants by means of phone calls and follow-up written communications. Ostensibly the purpose of these communications is to notify and gather information from the claimants, witnesses, and potential claimants, and to provide information to claimants concerning Allstate’s claim handling process and the role of attorneys in that process.

The documents furnished to the claimant include a form letter with authorization, a one-page "Customer Service Pledge," and a one-page document captioned "Do I Need An Attorney?"

Dennis Vacco, Attorney General of New York claimed that these communications present two basic themes: (1) to express Allstate’s intent to treat individuals who have suffered injuries as a result of an automobile accident involving an Allstate insured as if they were "customers," in an attempt to provide "quality customer service;" and (2) to provide such individuals with information concerning the role of attorneys in the claim handling process, which may serve to discourage these individuals from obtaining legal representation. He alleged that these themes have the capacity to mislead claimants or potential claimants regarding their status with Allstate and the possible benefits of legal counsel. He proceeded against Allstate under New York Executive Law §63(12), and sought assurance from Allstate that it would correct the offending practice.

On February 4, 1997 Allstate, which is New York’s largest auto insurer with 20% of the passenger car market, agreed to alter its mailings to accident victims to remove what the Attorney General claimed were misleading statements. The documents furnished to potential claimants which Allstate agreed to change were the "Customer Service Pledge" promising that "we consider you our customer and will provide you with quality customer service." Allstate also agreed to alter the language in this letter that it will help "determine if you are eligible to receive compensation for any injuries you may have suffered and ... discuss fair payment for your claim when you feel you are ready." Allstate further agreed to alter the document captioned "Do I Need An Attorney?" so as not to mislead accident victims from seeking their own legal representation.

In Connecticut, CTLA has been attempting to get the State to act since May of 1995. On May 18, 1995 then President Bill Sweeney wrote to Attorney General Richard Blumenthal requesting an investigation into the conduct of Allstate. Bill Sweeney’s letter specified exactly the same complaints made by the New York State Attorney General. Bill Sweeney followed this letter with a May 22, 1995 letter to the Attorney General complaining about similar conduct by Progressive Insurance Company. The Attorney General, on May 25, 1995 suggested to Bill Sweeney that he contact the CBA Committee on Unauthorized Practice of Law. This was promptly done, and on May 31, 1995 Attorney Sid Miller, Chair of the CBA Committee on Unauthorized Practice of Law, advised the Attorney General that the Committee "no longer pursues these matters as it did in the past ...." Mr. Miller suggested that the matter be referred to the Statewide Grievance Committee. Thereafter, George Hummelman, counsel to the Connecticut Department of Insurance, on October 23, 1995, wrote to CTLA advising that he had concluded that "there has been no violation of Connecticut insurance law." This conclusion was obviously based on the belief by the Insurance Department that Allstate was engaging in a benign dissemination of information, rather than attempting to distort the balance of power in the claims process by misleading representations to potential claimants. Shortly after Stewart Casper took office as President he wrote, on July 12, 1996, to Richard Blumenthal outlining the history of the problem, and specifying the CUTPA and CUIPA violations by Allstate in the communications at issue. President Casper also requested an analysis of the Allstate campaign by Professor Jarice Hanson, Ph.D., Professor and Chair of the Department of Communication, University of Massachusetts at Amherst.

Professor Hanson summarized the Allstate campaign as follows:

The current Allstate campaign that provides a "Customer Service Pledge" and a statement titled "Do I Need An Attorney?" starts from a misleading premise that refers to the target audience as "customers," even though the recipients of these documents are not insured by Allstate. The campaign uses many traditional propaganda appeals to persuade the audience to think positively of Allstate and its services. The overwhelming tactic used is that of omission, but the campaign also substitutes generalities for facts, uses leading questions that demonstrate a marked bias for Allstate’s services, uses evidence that is ethically questionable, and overwhelmingly discourages the audience from asking relevant questions.

With respect to the specific documents at issue, the "Customer Service Pledge" and the "Do I Need An Attorney?" document, Professor Hanson states:

(1) [T]hey use advertising tactics that are usually used for the sale of goods for the sale of a service; (2) the techniques of persuasion are consistently skewed toward leading the audience toward a specific conclusion; (3) they are symptomatic of a growing area of messages for the public that blatantly deceive the audience by omitting specific information and that use traditional advertising tactics disguised as general information. (emphasis added)

Professor Hanson states that the questions posed in the "Do I Need An Attorney?" document raise questions that are representative of typical questions anyone who has been in an accident might ask. The absence of the Allstate logo on this document "presents an image of objective neutrality." Only upon closer reading does the name Allstate appear. She states that the persuasive strategy of deception is embedded in the answers to each question because no single question and answer is clear, unambiguous or thorough. She states that one of the most powerful persuasion tactics is that of restating the question in the answer. This allows the seller to shift the question to a position in which an answer can be provided and controlled. She finds that all five statements under these questions in the document use this tactic.

Connecticut has long been a leader in the insurance industry. Indeed, Hartford for years has been the Insurance Capitol of America. It is a sad day when the Attorney General of New York State has to instruct by example the Connecticut Insurance Department as to what is misleading and what isn’t.