Home and auto insurer Allstate Corp said on Monday it will pay 45 states a $10 million settlement after a review found it was inconsistent in the way it managed and used software to review bodily injury claims.
But the 18-month probe under the auspices of the National Association of Insurance Commissioners also found Allstate had not systemically underpaid claims, a finding that could have had much more serious implications.
Allstate uses an in-house program called “Colossus” to review and manage claims for bodily injury following automobile accidents. The New York State Insurance Department, one of the lead examiners, said there was a lack of transparency in the way the program was used.
“The examination found that Allstate had failed to modify or ‘tune’ the software in a uniform and consistent manner across its claims handling regions,” New York officials said in a statement.
Allstate agreed to strengthen its internal auditing of how Colossus is used, to develop a single claims-handling manual and to refrain from establishing policies or rules that would force adjusters to settle claims based solely on Colossus’s recommendations.
The company, in a statement, said it cooperated fully with the review and was “pleased” there was no evidence of systemic underpayment.
An Allstate spokeswoman told Reuters the settlement fund would primarily be used to fund training on claims technology for the staffs at state insurance departments.
Allstate shares were up 7 cents to $32.50 in afternoon New York Stock Exchange trading.
