Allstate Agrees to $10 Million Settlement
A news release has confirmed that automobile insurance giant Allstate has agreed to pay a $10 million in a regulatory settlement following an investigation by the National Association of Insurance Commissioners (NAIC) that lasted for a year and a half. The settlement involves forty-five states, but New York is one of the lead states, receiving 1.2 million.
The examination was primarily focused on Allstate’s use of the software program Colossus, a program used to guide their settlement offers on bodily injuries following an automobile accident. The examination found inconsistencies in Allstate’s handling and management of the software.
According to New York State’s Insurance Superintendent James Wrynn, “Allstate has agreed to implement procedures to ensure transparency and fairness for consumers who have bodily injury claims. The new processes ensure that claims will be handled consistently in different regions of the country, and consumers will have the right to get the information they need in order to understand how Allstate evaluates their claims and make sure they are fairly treated.”
Allstate also agreed to make some changes in their claims handling and processes in addition to the payment. These include:
- Providing notice to claimants that Colossus may be used in the adjustment of their bodily injury claims
- Enhancing its management oversight of Colossus to ensure that it adheres to established criteria and a uniform methodology in selecting claims to be used to “tune”or modify the software to reflect recently settled claims
- Strengthening its internal auditing of Colossus and bodily injury claims handling to ensure adherence to written guidelines and procedures
- Consolidating its bodily injury claims handling practices into a singleclaims handling manual
- Not establishing a policy or rule requiring claims adjusters to settle bodily injury claims solely on the value recommended by Colossus and not providing incentives for claims adjusters to settle claims at or near the value recommended by Colossus.
“It is important to note that we found no systematic underpayment of bodily injury claims”, said Wrynn. “While the issues addressed were serious, Allstate cooperated fully with our examination and is working to correct these deficiencies.”
The money from the settlement will be used to establish a regulatory fund to develop and train examiners to monitor and review the industries use of claims handling software in adjusting claims.