Wednesday, July 11, 2012

Advocacy Group Examines Insurance Claims

A consumer advocacy group, the Consumer Federation of America (CFA), recently reported findings that many major insurance companies who use computerized claims systems can be manipulated to make claim payments that are far below what consumers should receive in their insurance policies.   One computer system, called Colossus, is the most commonly used system for insurance companies, has the potential to be manipulated to provide incredibly low payments to consumers.  This results in millions of dollars of savings for the insurance companies.

CSA's report is called "Low Ball:  An Insider's Look at How Insurers Can Manipulate Computerized Systems to Broadly Underpay Injury Claims".  Within the report, the background of these software systems are given, as well as giving information on how the programs can be set up, manipulated, and adjusted over time.  According to the report, there are a few common ways that insurance companies use these systems to lowball claims.  These techniques include: encouraging adjusters to determine that their drivers are partly at-fault for accidents, ignoring or downplaying the likelihood of future medical treatment/impairment, and reducing payments at a predetermined amount for all claims (among other techniques).

In addition to providing background information on Colossus, the report also gave some legal information surrounding lawsuits involving Colosuss.  According to one lawsuit,  it was found that "Insurers could adjust Colossus to produce virtually any claims' payment reduction they wanted, whether or not it was justified.  One CSC executive told the court that Colossus could be "tuned" to potentially achieve a particular level of savings, such as 15 percent, for all claims." The computer system could also be used to save upwards of 19% for some insurer clients.

Insurance companies can often be difficult and complicated to deal with.  If you are being unfairly treated while making an insurance claim, it might be time to consult with an attorney.  Attorney Doug Stoehr is a personal injury lawyer serving western and central Pennsylvania.  For more information on his practice, please click here.

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