How Insurance Companies Adjust Claims

Grand Prairie lawyers and those in Fort Worth, Dallas, Arlington, Hurst, Euless, Bedford, and other places in North Texas who handle insurance claims would want to know about this article.
The Consumer Federation of America has published an article titled “Low Ball: An Insider’s Look At How Some Insurers Can Manipulate Computerized Systems To Broadly Underpay Injury Claims.”
Here is some information about the article:

Report:Insurance Claims Systems Adjusted To Lowball Payouts
A former insurance company executive has authored a report for the Consumer Federation of America detailing how easy it is for the country’s largest insurers to tweak their computerized claims system in order to issue payments to injured policyholders that are less than what they should receive.

Mark Romano, a former executive at Allstate and Encompass, and now the CFA’s Claims Project Director, is an expert on the Colossus injury claims system, one of the most widely used evaluation systems in the industry.

His report, titled “Low Ball: An Insider’s Look at How Insurers Can Manipulate Computerized Systems to Broadly Underpay Injury Claims,” provides details on how Colossus and other programs are “tuned” to reach particular claims payment monetary goals and adjusted over time.

Among the techniques intended to reach these bottom-dollar payments:
*Directly reduce payments by a predetermined amount across-the-board, without determining whether this will lead to unjustifiably low payments for individual claims.
*Selectively remove higher-cost claims from data used to determine the acceptable range of payments for particular injuries. This has the effect of lowering payments for all claims of this type.

*Require insurance adjusters without medical training or credentials to second-guess medical professionals by altering injury determinations, thus dictating lower payments for certain injuries.

*Encourage adjusters to downplay or even ignore the likelihood that injured consumers will need future medical treatment or will be permanently impaired, thus lowering payouts.

*Encourage adjusters to determine that drivers are partly at-fault for the auto accident that injured them, even when they may not be.

“This report is a wake-up call for consumers and regulators who are not aware of the many ways that computer claims’ software can be manipulated to produce unjustifiably low injury payments to consumers and tens of millions of dollars in illegitimate ‘savings’ for insurers,” says Romano.

He says that the public discussion of these systems is all about the very legitimate goal of consistency, “but these companies tell a different story behind closed doors. Software marketing representatives acknowledge that the real reason insurance companies are willing to invest millions in these systems is that they can dial down claims’ payments to thousands of consumers at a time, regardless of whether these payouts are fair.”

The contents of this report will be written about here in future posts. This is information that most experienced Insurance Law Attorneys are already aware of. For those not aware of it, it is something that you have to educate yourself on. Part of the article tells us that the methods used can be manipulated to get the results desired. Being aware of some of these methods puts the attorney dealing with the adjuster in the position of being able to ask direct questions about the methods used in the evaluation. The adjuster and company have to be aware of the possibility of future lawsuits and thus the proper questioning of the techniques used may help to resolve the case in an acceptable manner.

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