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Is your car insurance company low-balling your injury claim?
When you’re hurt in a car accident, it can be an ordeal. It’s even more distressing if you weren’t at fault. Adding insult to injury is the reality that your pain, suffering and injuries are often merely a statistical on a computer screen to insurance companies – fed into a computer program that spits out settlement offers.
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Insurance industry folks say such software is necessary. They say there has to be a yardstick to measure bodily injury claims. For most insurers, that yardstick is a software program based on previous settlements made for similar injuries in your part of the country. Using as many as 600 factors that have been fed into a computer by your insurance adjustor, the software provides a "range" of figures that car insurance companies will pay. The largest product for this is called Colossus, and it's become the target of both consumer advocates and insurance regulators. Colossus is offered by CSC (formerly Computer Sciences Corp.), which says Colossus is used by nearly 25 percent of the top U.S. insurers.
Auto insurance settlement deficiencies
Steve Nachman, deputy superintendent for fraud and consumer services at the New York State Insurance Department, says that he's examining Colossus and other bodily injury software programs to see how insurers are using them. This comes on the heels of an October 2010 regulatory settlement that cost Allstate, the nation's second largest property insurer, $10 million for "deficiencies" in managing and using Colossus.
Last month the Consumer Federation of America (CFA) issued a warning to consumers that some auto insurance companies may be underpaying bodily claims by using these computer software programs, specifically citing Colossus.
Colossus representatives dismiss these "deficiencies." "Colossus helps adjusters to bring fairness and consistency to the process and we do not believe that consumers should be concerned about the potential for 'low-ball' claims," says Ed Charlton, a vice president in the property and casualty insurance division of CSC.
Charlton says that CSC's software reflects a "knowledge base" of medical and insurance-adjusting information to assess the severity of injuries that are input by the adjustor.
Car insurance companies can "tune" their results
But car insurance companies can "tune" the results they receive from Colossus's software, claims the CFA. "Someone in the home office dials it back so that the best offer is really 20 percent below what it should be," contends J. Robert Hunter, CFA’s director of insurance. "Consequently, insurers are making low offers."
Nachman, of the New York State Insurance Department, adds that “there was undue discretion in how 'tuning' was implemented across Allstate's claims handling regions. For example, recent jury verdicts were not included."
Colossus has come under fire from trial lawyers as well. They often challenge its findings when an injured client takes his or her case to court. The law firm of Miller & Zois says Colossus is clearly on the insurers' side. According to its website, "it was billed as a means to save money on payouts.” And the Colossus system even checks to see if lawyers hired by those injured in accidents have a record of taking cases to court -- or settling for lower figures.
This is the future of insurance claims
Insurance Information Institute President Robert Hartwig defends injury-claims computer software including Colossus and its competitors, such as Claims Outcome Advisor, Injury IQ, Injury Claims Evaluations and eXposure Manager.
"At every point in the process there's an opportunity for human adjustors to be involved," says Hartwig. "The point of this software is to help arrive at consistent decisions and help train younger adjustors." Hartwig says that there is no point in fighting the future. "Software is the way the world is going," he warns. "An individual with an abacus is just not going to cut it."
Allstate's $10 million regulatory settlement with New York's insurance department and 44 other states doesn't mean that it's abandoning Colossus – it just has to abide by new rules when using it. Allstate maintains that Colossus "provides significant benefits to the public in increased objectivity and efficiency," according to its statement regarding the settlement. It also agreed to improve the training of its personnel on how to use the claims-handling technology.
A car insurance settlement offer you can refuse
Expect injury-claims software to become more sophisticated. That means consumers will have to become savvier in order to get the insurance settlements they deserve.
"Our goal is transparency," says Nachman. "Consumers should be aware that these programs are being utilized and how they are used."
CFA's Hunter recommends the following steps:
1. Find out if your auto insurance company used a computer program to evaluate your claim. Allstate's settlement requires the insurer to tell you, but others may not. The companies using this kind of software are listed on the CFA's website. They include GEICO, The Hartford, Liberty Mutual, Nationwide and Progressive.
2. Demand to see the computer-generated results, which usually come with a dollar-figure range.
3. Don't accept a bodily injury settlement offer that is less than the high end of the range -- and consider making a higher counter offer instead.
4. If the insurer won't settle at a price you believe to be fair, you have the right to file a complaint with your state’s department of insurance and retain a lawyer.
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