A claims adjuster with no feelings
If you’ve been banged up in an auto accident, at least you’ll be dealing with someone in the insurance business capable of feeling your pain. Or will you?
Most consumers probably don’t know this, but the dollar value of insurance payouts frequently is determined not by a human being but by a highly sophisticated computer program bearing a name straight out of a sci-fi movie: Colossus.
Little is known about how Colossus works.
But some medical practitioners, attorneys and former insurance industry insiders say the system is designed to allow insurers to lowball claims and limit the amount of money policyholders receive in the event of an accident.
“Colossus is a completely unscientific device that’s geared toward devaluating claims,” said Arthur Croft, director of the Spine Research Institute of San Diego and co-author of a textbook on whiplash injuries.
Sci-fi fans likely will recall a 1970 movie called “Colossus: The Forbin Project,” in which an advanced government computer takes over the world. A remake reportedly is in the works.
The actual Colossus is licensed to insurers by Computer Sciences Corp., an El Segundo-based company that also does extensive work for the federal government, including the super-secret National Security Agency.
CSC says its clients include at least 12 of the top 20 U.S. property and casualty insurers, although it won’t say which ones without their consent. It calls Colossus the general insurance industry’s most widely used claims-evaluation system.
Claims adjusters input data by answering an extensive series of questions posed by Colossus. The system “uses the information supplied by the claims professional to assess the relative severity of the claimant’s injuries,” CSC says.
Jackie VanErp, a CSC spokeswoman, acknowledged that the company has no control over how insurers use Colossus.
“The actual use of it is determined by the clients, the insurers,” she said. “We don’t believe that insurers are using it to lowball consumers. But we don’t know.”
Attorneys and former insurance industry workers say Colossus is often modified by individual companies to produce results more to their liking. They also say that insurers routinely use the lower end of the system’s recommended settlement range as the final figure.
“Colossus exists for one purpose and one purpose only -- to minimize the amount of money you get,” said R. Rex Parris, a personal-injury lawyer in Lancaster.
Dani Bednar worked as a claims adjuster at Allstate Insurance’s Palmdale office from 1990 to 1998. She said Colossus was introduced to her office in the mid-1990s and that Allstate “fine tuned” the program after it was installed by CSC.
“Colossus streamlines the process,” Bednar said. “But it doesn’t take into account the human factors. A lot of the time, the settlements it gave people were lower than what I would have given.”
She said she and other claims adjusters in her office were specifically instructed by Allstate not to inform customers that settlement decisions were being made by a machine.
Bednar also said that her performance evaluations by managers were based in part on how closely payouts she handled matched Colossus’ recommendations.
“My job was making Allstate’s bottom line better, not putting money in people’s pockets,” she said. “So that’s what I did.”
Bednar now works for a wind-power energy company in Mojave.
Rich Halberg, director of corporate relations for Allstate, denied that Colossus was used to reduce the amount of money paid to accident victims. He called the system “one tool of many in a comprehensive evaluation process.”
“Our goal is to handle each and every claim in a fair and timely manner, and to pay the appropriate amount,” Halberg said.
A confidential manual Colossus prepared for Allstate claims adjusters in 1995 -- a copy of which has made its way into my hands -- specifies that “there are many factors that Colossus cannot consider” and that “the Colossus results are to be considered a recommendation only and not an absolute.”
But the manual also indicates that the adjuster is following Colossus’ lead in handling a claim, not the other way around.
“Colossus has a very sophisticated knowledge base and could, in the most extreme hypothetical case, ask you over 700 questions before coming to a conclusion about an appropriate sum for general damages,” it says.
“Colossus has been programmed to simulate the thought processes involved in assessing general damages for accident victims,” the manual says, adding that even if an adjuster can’t answer a particular question, “the system is capable of arriving at a conclusion for you.”
It says Colossus measures all injuries relative to what it considers to be the most catastrophic thing that could happen to anyone -- ending up as a quadriplegic on life support.
“In Colossus’ view, this is the worst injury that can be suffered,” the manual says, adding that this is also “the injury that has historically attracted the highest awards for general damages.”
Gail Hillebrand, a staff attorney at Consumers Union, said there may be nothing inherently unethical about Colossus -- it all depends on how the system is used by insurers.
But she said consumers have a right to know that a machine, which has no concept of human pain and suffering, is making decisions that place a value on people’s lives.
“It should not only be disclosed to consumers but at the very least there should be regulatory oversight,” Hillebrand said.
Jennifer Kerns, a spokeswoman for state Insurance Commissioner Steve Poizner, said current regulations “provide extensive rules governing how an insurer determines the appropriate value” of accident-related claims.
“If an insurer uses a computer program which doesn’t satisfy our regulations, whether it’s Colossus or any other program, they are already in violation of the law, and if we become aware of it we will take action against the insurer that is in violation,” Kerns said.
CSC’s VanErp said much of the criticism of Colossus comes from personal-injury lawyers and their paid experts.
“Plaintiffs attorneys are personally incented to seek excessive, inequitable claim awards for their particular clients, and thus do not share the public’s interest in obtaining consistent settlements for all claimants,” she said.
The Colossus user manual from Allstate acknowledges that man and machine may face challenges in learning to coexist.
“Initially, you will experience some difficulties consulting Colossus, mainly in capturing and entering the data it requires,” it says. “But with usage you will come to respect and have confidence in the integrity and complexity of Colossus.”
In the movie version, Colossus puts it like this: “In time, you will come to regard me not only with respect and awe, but with love.”
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