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Allstate’s agreement to change its use of Colossus: A start to slowing auto insurance company abuse?

April 6, 2011 by Steven M. Gursten

Michigan injury attorney says agreement limits some abuse against auto accident victims and accident lawyers, but the insurance company still has more to do

I previously wrote about how Allstate has promised Michigan Insurance Commissioner Ken Ross that it will change how it uses Colossus claims software to handle auto accident injury claims.

Colossus is designed to low-ball and aggressively defend car accident lawsuits. The software is used by many large auto insurance companies to “calculate” the settlement value of car accident injury claims. The goal behind the claims software is to drive down auto accident settlements, saving insurance companies more and more money over time, regardless of whether they’re settling legitimate accident claims.

Instead of changing how it uses Colossus, it would have been wonderful if Allstate had promised to quit using the software entirely, and agreed to evaluate and settle auto accident claims fairly and in good faith.

The whole point of Colossus, after all, was to distort the true value of auto accident claims by frustrating accident victims with Allstate’s unethical 3Ds strategy – Delay, Deny, Defend. First through endless delay, followed by no or low value offers of settlement (deny), and finally, by fighting the auto lawsuit aggressively to conclusion — until the injury attorney and victim would surrender (defend).

But the Allstate agreement is, at least, a start in reigning in the abuse of Colossus in the auto accident settlement process. Moreover, this will certainly give auto accident victims in Michigan added leverage when dealing with the other auto insurance companies that incorporate Colossus into pushing “low- ball” settlements for serious bodily injury claims.

The important parts of Allstate’s agreement for Michigan auto accident victims

For Michigan auto accident victims and injury lawyers, one important feature of the agreement is Allstate’s promise to not require adjusters “to settle claims based solely on the value recommended by the Colossus software program. … [and] not provide incentives to adjusters … for settling claims above or below the value recommended by the Colossus software program.”

Another important feature is Allstate’s promise to “provide notice to claimants” — and their attorneys — “that the Colossus software program may be used in the adjustment of their bodily injury claims …”

Michigan accident victims and their auto lawyers can expect to receive letters from Allstate with the following disclosures:

“One of the tools that our claim personnel may use in evaluating your claim is a computer program known as Colossus, licensed by Computer Sciences Corporation. Colossus uses a broad range of information about your injury, treatment, and prognosis to determine the severity of your injury. Based on this information, Colossus makes a recommendation as to the value of your injury. The Colossus recommendation is only one factor among many that our adjusters consider in reaching a decision as to the overall evaluation of the claim.”

Finally, under the agreement, Allstate agreed to pay $10 million into a regulatory fund to train state insurance officials “in processes designed to review and monitor the insurance industry’s use of software technology tools in the claims handling process.”

Allstate’s obligations under the agreement will likely take effect in 2011.

Meanwhile, I’ve written and spoken at several seminars on how injury attorneys can use Colossus to substantially increase the value of their car accident cases. Here’s a link to recovering better auto accident settlements for your clients.

Tomorrow, I’ll write about how Allstate was caught trying to deliberately pervert the auto accident claims handling process. This led to Allstate’s promise to Michigan Insurance Commissioner Ken Ross to change how it handles such claims. I’ll also discuss how auto accident victims can protect themselves from such abuse.

Steve Gursten is recognized as one of the nation’s top injury attorneys handling serious car accident and truck accident lawsuits. He routinely writes about insurance company abuse and the No-Fault laws in Michigan, and is available for comment.

Related information:

Michigan No-Fault insurance law

Dealing with auto insurance companies in Michigan

Allstate won’t be targeting Michigan doctors who help auto accident victims

Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights to better serve you. Call (248) 353-7575 for a free consultation with one of our injury attorneys.

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