The computerized claims’ systems used by most of the nation’s largest insurance companies can be easily adjusted to make broad-scale “lowball” claims’ payments to injured consumers that are less than what they should receive under their insurance policies.
Those are the findings of a report released by the Consumer Federation of America. The main author of the report was a longtime insurance executive.
The report, “Low Ball: An Insider’s Look at How Insurers Can Manipulate Computerized Systems to Broadly Underpay Injury Claims,” describes the use of Colossus and similar software products by insurance companies. It provides information on how these programs are set up, “tuned” to reach particular claims’ payment monetary goals, and adjusted over time.
“When CSC and its competitors talk publicly about computer-based claims’ systems, they stress that the programs allow insurers to more consistently evaluate bodily injury claims,” Mark Romano, the federation’s claims project director, said in a statement.
“Consistency is a legitimate goal, but these companies tell a different story behind closed doors,” Romano. “Software marketing representatives acknowledge that the real reason insurance companies are willing to invest millions in these systems is that they can dial down claims’ payments to thousands of consumers at a time, regardless of whether these payouts are fair.”
The report also identifies techniques that insurers can use to directly and indirectly produce “lowball” claims, such as:
- Requiring insurance adjusters without medical training to second-guess medical professionals by altering injury determinations.
- Encouraging adjusters to downplay or ignore the likelihood that injured consumers will need future medical treatment or will be permanently impaired.
- Encouraging adjusters to determine that drivers are partly at-fault for the auto accident that injured them.
The federation recommends state insurance regulators better protect consumers from insurers that manipulate Colossus and similar systems to reduce claims’ payouts by:
- Regulating all companies that sell claims’ adjustment software products, such as CSC.
- Examining and monitoring the use of computerized claims’ assessment systems by major insurers.
- Requiring insurers to notify consumers in writing that a computerized claims’ assessment was used to process their claim and to provide a copy of the report generated by the system.
