Only a few years ago vehicle insurance companies were setting up huge call centers to reach customers quicker. Now the trend is online operations. Nearly all of them sell policies on their official websites. Policyholders can print or download documents, as electronic proof is becoming commonplace as well. Like in majority of industries, this automation will continue to expend into most departments for the better or worse.
Allowing submitting claims online is only one part of the electronic operations these days. They now use computers to even work out the pay-outs. A widely used program called Colossus determines the personal injury settlements for a few of them.
First it gathers a large sample of previously closed cases. From there it can device a formula to pay new ones based on the previous amounts paid to certain types of injuries. Under normal circumstances this system should speed up the decision-making process and therefore should be good for both carriers and policyholders.
However the Consumer Federation of America (CFA) report suggests that the injured parties may not be getting a fair deal with computerized handling. They agree that it may be the right step forward as it makes handling cheaper and faster. Hopefully these efforts will result in lower automobile insurance rates for the future due to cost savings.
The report highlights the possibility that car insurers can fine-tune the Colossus program to increase profitability by reducing bodily injury liability settlements. The researchers are convinced that the software can be adjusted and the result manipulated.
As mentioned above Colossus is integrated into claim handling. It can come up with average payment for variety of situations based on past samples. The argument is that companies can manipulate it to deliver lower figures all the time by feeding selective samples. Taking out the most expensive settlements and leaving the cheaper ones can achieve this. The program then would automatically come up with lower averages.
Also, they are still in full control, as they sign off on the final amount. They may decide to intervene and re-assess the suggested figures if they were found too high. Essentially the argument is about either allowing the software to achieve its objectives independently or never use it if insurers will keep fiddling on it and its results. The report points out that properly fine-tuned Colossus program can produce accurate results. It can assess and determine a fair settlement if it was used as it is meant to.
The suggested solution according to CFA is the National Association of Insurance Commissioners (NAIC) closely examines its usage. Also, underwriters are urged to share the information that they are letting software to determine the outcome without interference.
Another problem can be that they can be arrogant about the correctness of the settlement since a computer does it. However that can be the exact reason for the objections. They may feel that some human side of their sufferings has not been taken into account. If it bothers you that a computer will decide on your claims you should perhaps check if this is the case with the chosen ones.