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Meet The Computer System That Decides Your Insurance Settlement

Republished with permission from Legal Funding Central

At Legal Funding Central, we deal with many different shades of litigation—commercial, employment, discrimination, and everything in between. But among the most common lawsuits we encounter are personal injury cases; more often than not, the plaintiffs are victims of motor vehicle accidents. This should come as no surprise, given the alarming frequency of traffic accidents in the United States. According to the National Highway Traffic Safety Administration, car crashes in 2013 caused over 3.8 million injuries. If you’ve ever been in an accident, you’re probably already imagining the booming business this means for the insurance industry. What you might overlook is the booming business it also means for tech.

In our research into the world of personal injury litigation, we were intrigued to learn how insurance adjusters evaluate claims such as car accidents. Before the Information Age, settlements were determined by a process called “round-tabling,” in which experienced insurers gathered to evaluate hypothetical claims based on past settlements, jury verdicts, and other factors. Those days are over.

For more than two dozen companies, including the nation’s largest, the monetary value of your fractured hip—your concussion, your broken leg, your medical bills, your lost income, your emotional suffering—is calculated by software: a proprietary system called Colossus.

Developed by an Australian company in the late 1980s, Colossus was acquired by the Virginia-based Computer Sciences Corporation in 1996. Today CSC is the epitome of Big Data—a multinational tech giant providing IT support and consulting to entities ranging from Coca-Cola to the U.S. Government. It has also reduced personal injury adjustment to a cold mathematical science.

How Colossus works, according to the Chicago Tribune, is like this:

When an insurer buys the software, it conducts a “benchmark session” in which, with help from adjusters familiar with certain areas of the country, hypothetical claims are used to set the initial “tuning.” The system that Allstate uses, Colossus, has about 600 codes representing various types of injuries, each of which has a dollar value settlement range.

In other words: your pinched nerve might be worth $5,000-$10,000; your bruised ribs, torn muscles, and broken legs, $20,000-$30,000. Colossus is not designed to account for less-quantifiable injuries, like quadriplegia or psychological distress.

The program made headlines a few years ago when an eighteen-month investigation found that Allstate Insurance had mishandled personal injury claims using Colossus. The 2010 decision determined that Allstate “had failed to modify or ‘tune’ the software in a uniform and consistent manner across its claims handling regions.” Though the investigation found no evidence of systemic underpayment, a 2012 report by the Consumer Federation of Americawarned consumers that computerized programs like Colossus are easily manipulated to lowball claimants. The CFA’s claims project director, Mark Romano, was formerly Allstate’s “subject matter expert” on Colossus.

We agree with the CFA that every consumer has the right to be informed. If you’ve been in an accident, you have the right to know if a computer has assessed your claim. More importantly, you have the right to the fairest settlement possible. If your insurance company isn’t giving you what you deserve, we’re here to help you get it.