Loading LiveCycle Banners.
  1. News Articles
  2. Related News Articles
News Article Details

Allstate Agrees to Pay $10M to States in Claims-Handling Settlement

Source: Dow Jones

Back | A- | A+
 Email This     Print     Subscribe

Posted on 19 Oct 2010

The largest publicly traded home and auto insurer, Allstate Corp., reached an agreement with 45 states to pay $10 million and change the way it uses a software program that calculates how much to pay on injury claims.

Allstate agreed to pay the $10 million to the states--led by Florida, Illinois, Iowa and New York--to set up a fund to help train state regulators on the use of software in adjusting insurance claims, according to a statement from the New York State Insurance Department on Monday.

The department stated that Allstate will be "enhancing its management oversight" and "strengthening its internal auditing" of the use of the software, called Colossus. As part of the regulatory settlement, the company agreed it wouldn't pay added incentives to claims adjusters who settle claims for amounts close to what the software said was appropriate.

The examiners found there had been "too much subjectivity" in deciding which earlier claims to include in the Colossus program to determine proper payments in the future, and that awards for injury claims from court cases weren't included in the model, said Steve Nachman, New York's deputy superintendent of frauds and consumer services.

"Conceptually, there's nothing wrong with using this type of program," which can be helpful in paying injury claims in a consistent manner, Nachman said. "But it had been a black box."

The settlement concludes a so-called market conduct exam, in which state insurance regulators evaluate an insurer's practices and determine if they're in compliance with applicable regulations. New York's insurance department said in the statement the exam "found no systemic underpayment of bodily injury claims" and that the Northbrook, Ill., insurer cooperated with the exam.

Allstate, in a separate statement, said the exam found that the use of the Colossus software "provides significant benefits to the public in increased objectivity and efficiency" and concluded that "insurance department personnel need to be better trained to understand claim-handling technology and its use," which it said was the impetus for the $10 million fund.


Post a Comment
If you are a Storefront / Tradingfloor user, click here to login.
Note: As a guest user, please fill out the form below to post a comment.
Post your comments here.
Name :
Email Address :
Captcha :
Comments :
Character left : 2000