Intellectual Property Law

The Miami Herald is reporting that Allstate is facing contempt charges in Missouri regarding its refusal to turn over certain documents prepared by an outside consultant from McKinsey. Allstate has already had its license suspended in Florida for its failure to turn over the same documents. Allstate claims that the documents are trade secrets.

The Miami Herald reports: “According to an attorney who has seen the report from consultant McKinsey & Co., it advises Allstate on how to improve the company’s profitability: pay less on claims and take a longer time to pay those claims.”

‘The documents describe, in graphic terms, a scheme devised by Allstate and McKinsey & Co. to essentially turn the business of insurance into a zero-sum game,” said David Bernardinelli, a Santa Fe, N.M., plaintiff attorney involved in a case against Allstate.

Not exactly the kind of stuff that is good for business and it’s obvious why Allstate would rather pay $25,000 per day in contempt charges than turn them over so that the public could get a look at them.

While I understand why Allstate would not want the documents to be produced, calling a scheme to essentially stick it to the consumer a trade secret is quite a stretch. After all, doesn’t the public generally know that insurance companies operate this way? In other words, what’s the secret?

UPDATE: Here’s an additional article on the Allstate case and the so-called McKinsey documents. The author speculates that this case could cause major changes in the insurance industry, that it could result in a class-action lawsuit, and that all major insurers are nervously watching the outcome. I’ll bet they are.