The New York State Insurance Department announced that Allstate has agreed to pay New York $1.2 million as part of a $10 million regulatory settlement. In all, 45 states will share the settlement dollars. The agreement follows an 18-month targeted, multi-state examination of Allstate’s claims handling practices. What turned up wasn’t pretty.
I seems that Allstate used a giant analyzing software called Colossus to figure out how much to offer for bodily injury claims after a car wreck. However, Colossus is fallible and inconsistent, and many claimants were paid less than they should have been. Because Colossus is an in-house program, it is the intellectual equivalent of a big black box—you can’t see inside to see how it’s working. And that lack of transparency is what got Allstate in trouble.
According to the press release:
The examination found that Allstate had failed to modify or ‘tune’ the software in a uniform and consistent manner across its claims handling regions.
Allstate’s payment will be used to establish a regulatory fund. The fund will be used by the 45 signatory states, to the extent consistent with applicable state laws, to develop and train examiners to review and monitor the property/casualty industry’s use of software technology in adjusting claims.
That’s a fancy way of saying that we can’t always trust computers to do the humane thing—or even the statistically correct and proper thing. While this should help improve fairness for consumers, we’re not sure how it helps those who might have been short-changed on proper payments. And it really begs the question: Are you really in “good hands” with Allstate?
If you have been in a motor vehicle wreck and have questions about bodily injury claims, feel free to call our dedicated attorneys at 1-800-4LAW-MED. Someone is there to answer your call 24 hours a day. Or, explore our website at https://www.lawmed.com. If you have questions, HensonFuerst has answers.