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Skilling infused Enron with ideas he had learned at McKinsey, including the importance of periodically culling the herd. Either advance in the firm or leave. McKinsey called it “up or out.” At Enron it was “rank and yank.” McKinsey validated Enron’s strategy, including risk taking, securitizing loa…

The insurance adjuster’s role had been greatly diminished. During her father’s time, setting a value for a claim had been a skill. Under Allstate’s new system, the computer would spit out an estimate. This was Colossus, a program that analyzed hundreds of different injuries entered by adjusters lik…

The surge in Allstate’s share price was accompanied by a dramatic fall in the “pure loss ratio,” the measure of claims payouts divided by premium income, before factoring in operating costs. In 1987, Allstate paid out 70.9 cents in claims for every dollar it took in. By 1997, two full years into th…

By the 1990s, with McKinsey-led financialization sweeping the economy and ever-increasing pressure from activist shareholders for companies to boost profits, the firm pushed a big new idea to its clients: reducing the amount paid out in claims. In McKinsey-speak: “After years of squeezing the cost …

In one slide, McKinsey told Allstate to try to settle 90 percent of its claims as quickly and as cheaply as possible. For the other 10 percent, policyholders or third-party claimants who didn’t take the Allstate offer or, even worse, hired a lawyer, the “boxing gloves” treatment was in order. They …