Insurance Claim Denials
Allstate started a litigation revolution in the 1990s when it decided that it was going to stop treating injured people fairly and begin to “low ball” offers to settle claims. It worked. Many attorneys just gave in or gave up and accepted the ridiculously low offers. Some were afraid to actually go to a jury trial and others were probably lazy.
Allstate continues to use a proprietary computer software program called “Colossus.”
Colossus is a computer program that values traffic collision claims for at least half of the insurance claims in the United States.
Colossus was first licensed and popularized by Allstate in the 90’s. Allstate went with Colossus because it wanted to make all claims follow a standard procedure. Incidentally, it happened to save money on payouts, too. The system also identified plaintiffs’ lawyers who typically would not file a lawsuit and just settle for whatever was being offered.
There are two similar products widely used by insurance companies: “Claims Outcome Advisor” (made by Insurance Services Office) and “Claims IQ” (made by Mitchell International.) Mitchell also sells “Mitchell Decision Point,” a similar software program that helps insurance companies determine if they should pay the doctor’s entire bill in PIP/Med Pay claims.
Colossus’ system has a proprietary and secretive system to calculate a series of inputs about the nature and severity of injuries into a “numeric” score of pain and suffering. There is nothing wrong with this idea if used fairly. But it was not.
After all, a jury trial does the same thing. But this computer program was used unfairly to “lowball” all plaintiffs with real injuries.
How Colossus Works
Colossus considers some preliminary matters before looking at your individual case like whether your attorneys usually take cases to trial or file a lawsuit or just accept a lowball offer.
It considers the geographic jurisdiction in which the claim arises for typical jury verdict size. Importantly, the program contains approximately 600 injury codes representing the various types of personal injuries that can occur. These injury codes have a “severity value” and assigns money for each severity point to each specific injury. It then calculates severity points to Plaintiff’s claims. (But, compare its 600 different injuries to the over 12,000 ICD-9 codes used by healthcare providers to classify or categorize injuries.)
Now you can see where it ignores most injuries.
The original idea was to prevent a single insurance adjuster from putting her own prejudices and beliefs about the strength of a case into a standard system.
Additionally, Colossus has over 10,000 rules to determine the questions that the system will ask the adjuster to generate a payout.
However, insurance companies do not understand the 10,000 rules. Or the insurance companies don’t care. They just know that they produce outcomes evenly in a way that advances their mission of paying out as little as possible.
After consideration of the attorneys involved and the venue, the system counts up the points and computes a dollar value. There is no question that a big value driver for the formula – and for juries, incidentally – is a permanent injury. They at least get this part right.
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