Settlement Reached in Auto Insurance Software Probe

Finger touching keyboardAn 18-month “market conduct exam” looking into Allstate auto insurance’s use of a claims-handling software program has led to an agreement in which the insurer will pay 45 states a total of $10 million.

The investigation, led by the National Association of Insurance Commissioners, found inconsistencies in the way the car insurance coverage provider managed and used the Colossus software, which assists adjusters in coordinating settlement offers for bodily injury claims.

Allstate was said to have been fully cooperative during the examination.

Although the exam revealed inconsistencies in the way that bodily injury claims were handled in different parts of the country, officials said they did not lead to systemic underpayment of claims.

The $10 million will go toward setting up what the insurer calls an “education fund” that will be used to help train regulators on how claims-handling software is used.

In addition to the payment, the agreement also established changes that need to be made in Allstate’s use of Colossus.

The agreement, according to the New York State Insurance Department, requires Allstate to notify policyholders when Colossus is being used, consolidate claims-handling practices, enhance the software’s ability to reflect recent claims and strengthen internal audits of the program.

Allstate will also be barred from requiring or incentivizing adjusters to settle claims according to the values calculated by Colossus.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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