Allstate Agrees to $10 Million Settlement after Claims Handling Investigation - BodyShop Business

Allstate Agrees to $10 Million Settlement after Claims Handling Investigation

Allstate has agreed to pay a $10 million regulatory settlement following an 18-month targeted National Association of Insurance Commissioners (NAIC) multi-state market conduct examination of Allstate’s claims handling practices, New York State Insurance Superintendent James J. Wrynn announced.

The NAIC examination, for which New York was one of the lead states, focused primarily on Allstate’s use of claims handling software, particularly the software program Colossus.

Allstate used Colossus to guide its settlement offers for bodily injury claims after automobile accidents. The examination found inconsistencies in Allstate’s management and oversight of the Colossus software program. In particular, 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 has agreed to implement procedures to ensure transparency and fairness for consumers who have bodily injury claims,” Wrynn said. “The new processes ensure that claims will be handled consistently in different regions of the country, and consumers will have the right to get the information they need in order to understand how Allstate evaluates their claims and make sure they are fairly treated.”

Under the settlement agreement, Allstate agreed to make a number of changes to its claims handling process, including:

• Providing notice to claimants that the Colossus software program may be used in the adjustment of their bodily injury claims;

• Enhancing its management oversight of Colossus to ensure that it adheres to established criteria and a uniform methodology in selecting claims to be used to “tune” or modify the software to reflect recently settled claims;

• Strengthening its internal auditing of Colossus and bodily injury claims handling to ensure adherence to written guidelines and procedures;
 
• Consolidating its bodily injury claims handling practices into a single claims handling manual; and
 
• Not establishing a policy or rule requiring claims adjusters to settle bodily injury claims solely on the value recommended by Colossus and not providing incentives for claims adjusters to settle claims at or near the value recommended by Colossus.

“It is important to note that we found no systemic underpayment of bodily injury claims,” Wrynn said. “While the issues addressed were serious, Allstate cooperated fully with our examination and is working to correct these deficiencies."

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.

“This settlement shows how state insurance regulators work together to
protect consumers,” Wrynn said. “The four lead states – Florida,
Illinois, Iowa and New York – worked cooperatively to conduct this
examination and will keep working with the other 41 states that have
signed on to this agreement to ensure it is fully implemented and
consumers are properly protected.”

You May Also Like

Body Bangin’ Southeast Collision Conference: Create a Bulletproof Repair Plan with Danny & Kyle

Live from the Southeast Collision Conference, Micki Woods interviews Kyle Motzkus and Danny Gredinberg on building a repair plan supported by facts.

Micki Woods, master marketer for collision repair shops and owner of Micki Woods Marketing, is kicking off a series of daily podcasts from the Carolinas Collision Association's 2024 Southeast Collision Conference. This series is sponsored by Lombard Equipment, which offers a premier line of automotive collision repair equipment for all your OEM certification needs.

Body Bangin’ Southeast Collision Conference: To Calibrate or Not to Calibrate with Greg Peeters

Live from the Southeast Collision Conference, Micki Woods interviews Greg Peeters of Car ADAS on what it takes to do an accurate calibration.

Body Bangin’ Southeast Collision Conference: Building Value in Your Business with Matt DiFrancesco

Live from the Southeast Collision Conference, Micki Woods interviews Matt DiFrancesco on how to make your business as valuable as possible.

Body Bangin’ Southeast Collision Conference: Future-proof Your Shop with Mike Anderson

Live from the Southeast Collision Conference, Micki Woods interviews Mike Anderson on finding the formula for future success.

Body Bangin’: Taking the Gloves Off with Clay Hoberecht

Micki Woods interviews Best Body Shop Owner and Vehicle Care RockStar Clay Hoberecht on how he stands out in a crowded industry.

Other Posts
Body Bangin’: Are You Ready for the Southeast Collision Conference?

Micki Woods interviews Jordan Hendler and Josh Kent about the upcoming Southeast Collision Conference May 16-18, 2024 in Greensboro, N.C.

Body Bangin’: Hidden Gems to Grow Your Business with Rick Selover

Micki Woods interviews collision consultant Rick Selover on things you can do to immediately impact your person, body and business.

Body Bangin’: NORTHEAST Show Highlights with Ken Miller

Micki Woods interviews AASP/NJ President Ken Miller on highlights from the NORTHEAST Show.

Body Bangin’: Overcoming Common Shop Challenges with Kyle Motzkus

Micki Woods interviews Kyle Motzkus of Hunter Auto Body on common challenges collision shops face.