SEATTLE - Insurance industry profits are up, but the amount of claims paid out is down.

Consumer advocates believe they can trace the trend to a secret set of business documents, started by a company Allstate Insurance hired years ago.

Those documents  turned the insurance industry upside down. They're from a business consultant hired by Allstate to boost profits. The consultant suggested a new business model that critics say is now widely used to shortchange accident victims who file a claim.

In the aftermath of her 2004 car crash, Bonney Lake resident Colleen McCallum wasn't just angry at the driver who caused the accident and sped off.

"Just out of nowhere the car next to me came into my lane and slammed into my car," she said. "It whipped my head around a lot and hurt my neck, my back. I had a lot of pain in my shoulders."

Since the "at fault" driver got away, McCallum relied on her uninsured motorist coverage from her own insurance company, Allstate Corp., to pay her mounting medical bills.

"But after several months in, I started getting more bills that hadn't been paid," she said.

McCallum says Allstate – the company with the slogan "You're in good hands" - was rejecting her claims. She hired attorney Karen Koehler, who says it's a familiar scenario.

"You're in a moderate car crash and for some reason your insurance company is making you jump through incredible hoops to collect on a modest policy," she said.

Now she's suing Allstate in a landmark court proceeding in Washington State. McCallum's legal team is trying to unearth the secret "McKinsey documents" -- the blue-print that several major insurance companies use to pay claims.

"These documents are the 'Da Vinci Code' of the insurance industry," Koehler said.

Documents obtained by the KING 5 Investigators show the strategy: New York business consultant McKinsey and Company urged Allstate to trade in its "good hands" for boxing gloves - in some cases to use more aggressive tactics when settling claims to send a message to lawyers and the public.

The consultants said that paying "promptly and fairly" does not reward Allstate shareholders with profits.

KING 5 didn't obtain actual McKinsey documents. We obtained notes from a New Mexico lawyer who was allowed under court order to view them, but could not make copies.

Allstate offered McCallum what she called a lowball $9,000 payment. After two years of delay, the insurer suddenly asked to see one of their doctors for the first time.

"He went in and dismissed everything, said it's not important - she doesn't have fibromyalgia - she doesn't have whiplash," McCallum said. "There's no way these can continue for so long - so she doesn't have a problem."

McCallum's lawyer says it's textbook McKinsey strategy, which she says violates laws that require insurance companies to settle claims in good faith -- properly and promptly.

"McKinsey set up a way for them to cut clams. Make profit - cut claims," Koehler said.

Insurance companies used to focus on making money by selling more policies. But McKinsey offered a way to boost the bottom line without selling more policies or raising premiums.

One way to measure McKinsey's effectiveness may be through "loss ratio." That's a percentage showing each dollar collected in premiums - and how much of that dollar is paid out in claims.

In the mid 1990s, when Allstate hired McKinsey, it paid out about 75 cents per dollar in claims.

But a consumer group says that percentage dropped to just 47 cents on the dollar nationally last year -- meaning Allstate is keeping more of the money.

KING 5's review of records in Washington state show two of the three insurance companies with the lowest loss ratios - Allstate and State Farm - are former McKinsey clients.

"This is about how to build a better mousetrap," said Ben Cooper, Allstate lawyer. "How to run a better insurance company."

Allstate denies it's not following the law.

In two cases -- including McCallum's -- Allstate lawyers are appealing judges' decisions to hand over more than 12,000 McKinsey documents, arguing they contain trade secrets like how to root out false claims.

"These are precisely the things an experienced insurance company spends a lot of time and money researching to figure out what is the best way to handle claims," Cooper said.

McCallum's lawyers believe many policyholders have been shortchanged by McKinsey strategy, and that the documents are powerful evidence in "bad faith" cases against insurance companies.

They're asking the courts to release the documents publicly so that other crash victims can use them without expensive legal battles.

Colleen McCallum thinks it's only fair.

"They shouldn't be able to hide things and they shouldn't be able to conceal important facts when we have to reveal all of our private information," she said. "You know, I had to have my medical records, my personal life, everything dissected."

Allstate isn't giving up the McKinsey documents without a fight - in this state and several others.

In Missouri, the company is in contempt of court and is being fined $25,000 a day for refusing to give the documents to plaintiff's counsel.

In Washington State, the appeals court says the documents can be kept secret while Allstate appeals.

Claims payments in general have been dropping industry-wide. Many insurers say they're not being dishonest, they're reducing fraud, which they say was once widespread.

But experts say many insurance companies are feeling the competitive pressure to keep premiums down, and this is one way to do that and still make money.