What’s in it for me? See how “delay, deny, defend” became a profitable strategy, all at your expense.
In May 2024, the killing of Brian Thompson, CEO of UnitedHealthcare, brought renewed national scrutiny to the American insurance industry. The case drew even more attention when it was reported that the shell casings found at the scene were inscribed with the words “deny,” “defend,” and “depose”—a pointed reference to insurance industry tactics, and a clear play on the title of this book, Delay, Deny, Defend.
Because of this, Feinman’s book was thrust back into the spotlight. The similarity between the words on the casings and the book’s title sparked public debate and media coverage, with many people turning to the book to understand the deeper issues behind the headlines.
So, how did we get here—and where do we go next? In this Blink, you’ll dive into the US insurance system to see how it was transformed from a public service into a profit machine. You’ll learn about the history of claims handling, the current crisis for consumers, and what might help fix the system in the future. Is there a way to restore trust and fairness? Let’s find out.
The great betrayal
If you look at the marketing from major American insurance companies, it would seem that you're going to be looked after. State Farm promises they’re “like a good neighbor.” Allstate, meanwhile, tells you “you’re in safe hands.” After all, isn’t the purpose of insurance to know you’re protected when things don’t go according to plan? To have that peace of mind when disaster strikes?
But for millions of Americans, the relationship between insurer and insured has completely broken down. Cindy Robinson discovered this the hard way. Her car’s back wheel randomly fell off while she was driving, leading to a serious back injury. She’d paid her premiums diligently for years—surely, her insurer would be there for her when she needed them most. Six months after the accident, she’d racked up $11,000 in medical bills. The check she received from her insurance company? Just $1,662 dollars and 18 cents.
But the story wasn’t over. The pain continued to get worse, so she decided to go in for surgery. After the operation, the hospital refused to conduct physical therapy. Why? Because her insurance hadn’t paid the outstanding bills. It’s a situation many Americans are familiar with, and it left Cindy feeling completely trapped. She was in pain, in debt, and the company that had promised to protect her had hung her out to dry. It took another three years—and hiring an attorney—for her to get the money she was owed.
Now, while this might sound like bad customer service, it turns out it’s actually a deliberate strategy with a simple name: Delay, Deny, Defend.
The math behind the strategy is deceptively simple. The purpose of insurance companies is to collect premiums from millions of customers, most of whom never file a claim. All those premiums add up to a huge amount of money, dubbed the float by the industry. But here’s the thing: every day an insurer delays paying your claim, they earn income on investments they’ve made with your money. And every claim they deny stays in the float forever. It’s really that simple—every dollar they give to you is a dollar less for their shareholders.
Now, things weren’t always like this. Traditionally, insurance claim adjusters were taught to pay what the company owed—no more, no less. It was a simple job: figure out what the policy covered, and get it paid. Just how you’d expect such a system to work.
But that all changed when insurers started seeing their claims departments less as service centers and more as profit centers. Instead of paying claims quickly, every cent became a negotiation. Lawyers were hired. Computer systems were created to automatically lowball settlement offers. We’ll get into more detail on all of these dirty tricks in the sections ahead.
All of this didn’t happen by accident, though. Let’s now take a look at where all of this began: the hallowed boardrooms of McKinsey & Company.
When McKinsey came to town
As the 1990s rolled in, the insurance industry was bleeding money. In 1992, Hurricane Andrew landed in Florida, causing $16 billion in insured losses. Allstate paid out $2.7 billion alone. After the dust settled, eleven insurance companies went bankrupt.
Then, two years later, the Northridge earthquake shattered California. Fifteen billion dollars was wiped out of insurers’ coffers—four times the amount they’d collected in earthquake premiums. This double whammy led to the industry facing its worst crisis in decades.
Adding insult to injury, insurers had spent years leading up to the disasters in what’s called a soft market—in other words, slashing prices to poach customers from competitors. GEICO promised to save customers “15 percent or more” if you made the switch. Customers weren’t asking questions about claims service, though—they simply went for the best price. It seems naive from today’s perspective, but it was a simpler time.
This soft market dragged on for twelve years, far longer than the typical four-to-six-year cycle. Underwriting losses nearly doubled from 1988 to 1990, then jumped to $36.3 billion in 1991. The industry was caught in a vise—huge losses on one side and intense price competition on the other.
Then, in 1992, McKinsey consultants arrived at Allstate’s headquarters with a radical proposition. They’d identified billions of dollars in profit hiding in plain sight. To capture it, companies would have to put a stop to one thing: leakage.
This was McKinsey’s gift to the insurance industry. Before the consultants arrived, claims departments paid what policies required, as you’d expect. After McKinsey, they had a new vocabulary. Leakage meant money the company was “losing” by paying full claim values. To demonstrate this, McKinsey’s consultants examined thousands of settled claims. For example, they’d look at a whiplash case where the adjuster had paid $5,000—and declare it should have been worth only $2,000. That $3,000 difference became leakage, or in other words, profit lost through supposed “overpayment.” Put together, this amounted to billions of dollars that could be recaptured by paying out less on claims.
The math turned out to be seductive. State Farm, for example, “discovered” a 12 percent “shortfall” in claims payments based on the new logic of leakage. But if they could reduce this to 10 percent, they’d save $2 billion—not by cutting fraud or improving efficiency, but simply by paying less out on claims to their paying customers.
Allstate Chairman Jerry Choate made the stakes clear to employees in 1997. During an internal meeting, he explained that winning on the claim side meant everything, as it was precisely where every dollar saved on payouts went straight to profit.
The consultants had shown insurers where the money was. Now, they needed to identify which claims offered the easiest returns. The answer, it turned out, was to be found in the millions of Americans with sore necks and aching backs.
The MIST playbook
So, it was to be soft tissue injuries that would pad the coffers of America’s insurance companies. In many ways, you have to give them credit – it’s a genius idea. Injuries resulting from rear-end collisions? Whiplash, muscle strain – pain that disrupts your life but doesn’t photograph well. No broken bones, no x-rays, no dramatic wounds that can be easily documented. Just physical therapy and mountains of bills.
McKinsey labelled them MIST claims, or Minor Impact, Soft Tissue. It was a profit goldmine. Sure, the individuals claims were small, but millions of Americans suffered through such injuries every year. And it was in its total volume where the money was to be made.
So, to convert that potential into profit, a strategy was put into place to deal with claimants in this category. The goal was explicit: compromise settlements weren’t desired. They wanted to pay nothing or, if they had to, next to nothing.
In practice, it worked like this. Meet Tammi Drannan. She was six months pregnant when her car was rear-ended. Her medical bills? $890. The other driver? Admitted the fault was entirely his. Oh, and his insurer? Allstate, who offered Tammi a measly $51 in compensation.
As you’d expect, Tammi refused the insulting amount and took them to arbitration. Allstate fought tooth and nail, spending $4500 to defend their decision. They forced Tammi to submit to an independent medical examination, and even hired a biomechanical expert. The whole thing dragged on for over two years.
Luckily for Tammi, the arbitration judge saw through Allstate’s tactics, and awarded her $3400. They even condemned Allstate’s strategy of using expensive litigation as a way to force claimants to simply give up and go home.
The crazy thing is that all of this is out in the open, laid out in Allstate’s training manual. It’s a five-step process. First, they look for fraud. Second, they make a lowball offer – or no offer at all. Then, if claimants still haven’t given up, they send a message to the claimant’s attorneys detailed how they’ll defend their decision all the way to the end.
If claimants still decide to fight, that’s where things get ugly – we’re talking surveillance, employment records, or, as we saw, even biomechanical experts. If that fails, they try to scare the claimant’s attorney with the huge costs of pursuing the case, making it clear that losing means financial ruin.
The crazy thing is that it worked. In the years following McKinsey’s fateful intervention, Allstate’s average MIST payout dropped by 38 percent. And the profit this drop generated was around $150 million, all taken out of the pockets of people like Tammi Drannan – pregnant women, elderly drivers, workers injured during their commute. In other words, normal Americans living normal lives, not fraudsters trying to take advantage of insurance behemoths.
But this was just the beginning. When disaster struck down entire cities, the $150 million made from MIST would seem like peanuts. The insurance industry was about to deploy their strategies on a massive scale.
Broken promises on a mass scale
In August 2005, Hurricane Katrina made landfall. When all was said and done, 80 percent of New Orleans was flooded, 300,000 homes were destroyed, and over 1,800 people were dead. Insurance companies faced 1.75 million claims. It was a chance for them to fulfill what they’d promised: to protect American families from financial ruin. Spoiler alert: they failed spectacularly.
In this case, the weapon of choice was the so-called flood exclusion buried in the fine print of every homeowner’s policy. This meant that while wind damage was covered, water damage wasn’t. That distinction ended up being worth a whopping $41 billion.
Enter the wind-water protocol. Drafted by State Farm executive Stephan Hinkle, it stipulated that if your house was completely destroyed—say, reduced to a concrete slab—State Farm wouldn’t give you a dime. Their argument was that without a standing structure, they couldn’t determine whether the damage was from wind or water. Never mind that Katrina’s winds arrived hours before the flooding.
Adding insult to injury was the so-called anti-concurrent causation clause. Like the water damage exclusion, this had been buried in the fine print of most policies since the 1980s. It stated that if water damage contributed to your loss “in any sequence” with wind damage, the entire claim could be denied. So, your roof could be ripped off by wind, but if flooding followed, you got nothing.
To apply these devastating policy interpretations across so many claims required a lot of people on the ground. State Farm, for example, deployed 5,600 adjusters in the aftermath of Katrina. Many received only a week of training, with one session reportedly held inside a Burger King. They became known as the ladder and laptop adjusters—people who had little idea what they were doing, and whose decisions often ruined entire communities.
The result probably won’t surprise you. When the Mississippi Department of Insurance examined 101 State Farm claims, they found that 64 were denied despite evidence of wind damage. The scale of systemic failure was clear in the number of complaints—20,000 per month for six months after the hurricane.
One such dissatisfied customer was Senator Trent Lott, who hired celebrity lawyer Dickie Scruggs to fight his insurer. Yes, even a US Senator needed a big-name attorney to get what he deserved. Of course, most Katrina victims had neither the political connections nor the financial resources to launch similar fights.
In the end, the legal system ruled in favor of the insurance companies. For hundreds of thousands of policyholders, their coverage amounted to nothing. By the end of the year, insurance companies reported record profits of $48.8 billion. The system worked as designed—the industry reaped huge profits, while individuals and taxpayers picked up the tab.
The path to fair insurance
The aftermath of Katrina launched a national conversation about the predatory nature of American insurance companies. In the years that followed, not much changed. But that shouldn’t stop Americans from demanding a better system. In fact, there are a number of things worth campaigning for that can help spark real change. This involves a combination of collective and individual action. These are the recommendations the author made back in 2010, most of which are still relevant today.
Let’s start with collective action—specifically, the problem of transparency. It’s remarkable that you can find detailed reliability ratings for a television, but not for your insurance company’s claims payment record. States should require insurers to publish their data. How quickly do they pay? How often do they deny? How many customers sue? These are all questions that potential customers deserve answers to.
After all, the National Association of Insurance Commissioners already collects this information. But they keep it secret, only sending private “report card letters” to companies while leaving consumers in the dark. This is data that should belong to consumers, and it’s an issue worth campaigning for.
On the individual level, knowledge is survival. When it comes to anything related to your insurance, document everything—every conversation, every email. If it’s not in writing, it didn’t happen. Try to get your own repair estimates. And if you can afford it, challenge their experts with your own.
When the adjuster arrives with an insulting lowball offer, remember: they’re part of a profit system. Be polite but persistent. Escalate up the chain of command at every opportunity. For major losses, hire a lawyer immediately. And for property damage, consider a public adjuster. Sure, they take a percentage, but 70 percent of fair compensation beats 100 percent of nothing.
All the while, it’s important to face the music—reform faces massive resistance. Insurance ranks among the top political donors. Former regulators routinely join the companies they once supervised. Eleven of the last 15 presidents of the National Association of Insurance Commissioners went to work for the industry. This means that trade organizations draft the very laws meant to regulate them. All in all, it’s a sorry state of affairs.
But change is slowly happening, and people are fighting back. Some judges are recognizing “abuse of process” claims against insurers who use litigation as a weapon. And states are experimenting with stronger penalties and transparency requirements.
Before we wrap up, take a moment to imagine an America where insurance once again fulfills its purpose: providing security when people need it most. Sounds nice, right? Well, to get there, we need all the help we can get. Every policyholder who fights back, every regulator who enforces the rules, every legislator who strengthens consumer protections—all of these groups help us move toward that brighter future. After all, the delay, deny, defend strategy represents a choice. And we can make better choices.
Final summary
In this Blink to Delay, Deny, Defend by Jay M. Feinman, you’ve seen how the relationship between insurer and insured has broken down for millions, as companies deploy the “delay, deny, defend” strategy—transforming claims departments from service centers into profit centers.
The math is simple: every dollar not paid to policyholders becomes shareholder profit, a shift engineered by consultants like McKinsey, who redefined full claim payments as “leakage.” Insurers now systematically lowball or deny legitimate claims, from so-called MIST injuries to the 300,000 homes destroyed by Hurricane Katrina. All in all, the industry has failed spectacularly to fulfill its most basic function: protecting the lives of Americans.
While the industry reports record profits, leaving individuals and taxpayers to pick up the tab, change is possible. People are fighting back to make insurance fulfill its original promise of security. Only by coming together can we create a better system.
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