Allstate Agrees to $10 Million Regulatory Settlement Over Bodily Injury Claims Handling Process
Well, it's a step in the right direction.
Allstate has agreed to pay a $10 million regulatory settlement, New York State Insurance Superintendent James J. Wrynn announced yesterday. The agreement follows an 18-month targeted National Association of Insurance Commissioners (NAIC) multi-state market conduct examination of Allstate’s claims handling practices.
“Allstate has agreed to implement procedures to ensure transparency and fairness for consumers who have bodily injury claims,” Wrynn said. “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.” The examination focused primarily on Allstate’s use of claims handling software, Colossus.
For years, Colossus has been used to guide Allstate's settlement offers for bodily injury claims after automobile accidents. The examination found inconsistencies in Allstate’s management and oversight of the Colossus software program. In particular, the examination found that Allstate had failed to modify or “tune” the software in a uniform and consistent manner across its claims handling regions.
Under the settlement agreement, Allstate agreed to make a number of changes to its claims handling process, including:
- Providing notice to claimants that the Colossus software program 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 single claims handling manual; and - 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.
For now, we will have to wait and see whether Allstate will make good on its agreement.
