From Good Hands to Boxing Gloves: The Dark Side of Insurance Book

Contents Introduction....................1
1 The Story Behind the Story....................5
José and Olivia Pincheira....................5
What is McKinsey?....................8
Timeline: The McKinsey Slides....................9
Allstate's Efforts to Protect the Slides....................13
2 The McKinsey Business Credo....................15
How an Insurance Company Works....................17
CCPR in Action....................19
3 Traditional Insurance Rules....................21
The Indemnity Principle....................23
The Fiduciary Principle....................23
4 Insurance and the Can of Mother's Peas....................29
The Half-empty Can....................30
Payment History at Allstate....................31
Allstate's Explanation for its Earnings....................33
An Alternate Explanation for Allstate's Earnings....................35
Allstate's Story for the Public....................37
Allstate's Story for the Financial Community....................38
5 McKinsey and the "Greed is Good" Model....................47
McKinsey and Enron....................48
McKinsey's Methods....................49
The CPR Formula....................51
The CPR Formula at Allstate....................53
6 From Sears to CCPR....................55
Allstate at the World's Fair: 1933....................55
Allstate Hires McKinsey: 1992....................56
Allstate's Split from Sears: 1994....................59
Executive Wealth and the Allstate IPO....................60
7 McKinsey's Initial Presentation....................67
No Surprises FromMcKinsey....................69
McKinsey's Solution to Allstate's Problem....................72
McKinsey's Plan for Allstate....................75
Changing Employee Behavior....................76
Changing the Claims Organization at Allstate....................78
8 The Zero-sum Game....................81
McKinsey's Game....................81
Tort Reform and the Zero-sum Game....................88
9 Good Hands or Boxing Gloves....................93
First- and Third-party Claims....................98
Litigation as a Tool....................100
10 We Get What We Measure....................105
Traditional Insurance Rules at Allstate....................105
Allstate's Employee Incentive Programs....................106
Measuring Compliance with Colossus....................107
11 Stepping Into the Ring....................111
How a Lawsuit Works....................112
Sample Cases....................115
The Results for Policyholders....................118
12 Colossus....................119
McKinsey's Approach to Evaluating Claims....................120
What is Colossus?....................121
How Colossus Works....................122
Colossus at Allstate....................126
13 Allstate on the Gulf Coast....................129
Allstate and Flood Insurance....................130
14 Redefining the Game....................135
Attorneys for Consumer Protection....................135
What Can We Do?....................140
Epilogue....................145
Glossary....................149
People....................153
Notes....................155