The advent of “intelligent” claims systems has often been hailed as a material advance in allowing more efficient adjusting of claims. But there is opposition in some quarters about just how effective and equitable such systems are when cases are being valued for settlement.
The controversy on the impact of “smart” claims systems has recently been in the news since the Consumer Federation of America has alleged that computerized claim systems used by many carriers intentionally serve to minimize settlement valuations, in this case to injured motorists.
At the heart of the issue is the impact of intelligent claims systems on the way claims adjusters investigate and judge the value of settlement. This issue is applicable in all bodily injury claims, though the CFA centered on vehicular injuries, and specifically mentioned the Colossus claims system, which is sold by Computer Sciences Corporation, and used by a significant number of large insurance companies.
The Pursuit of Consistency
A plethora of factors are involved in each bodily injury claim. These factors defy the substitution of a computer system for a claims adjuster. There is simply no way that computer programmers can produce a claims system with myriad complex algorithms needed to process the thousands of potential combinations of issues that can be encountered when dealing with a human being who has sustained a physical injury.
What smart claims systems can do is aggregate information that is input by adjusters on each case, and assist in identifying potential trends. This allows the claim to be profiled into various types that have certain similar data. This should, in turn, allow for more consistency in the evaluation of bodily injury claim settlement values.
In the Colossus example, the system contains hundreds of injury codes that are given a severity value. The higher the severity value, the more the settlement amount that is recommended. Colossus also takes into consideration the legal representatives and their predilection to either try or settle claims, as well as the court venue.
Inherent in each of these systems is the ability to identify claim “outliers,” with some type of warning generated to the adjuster and management. Of course, the data extraction is only as accurate as the original information that is entered. Corrupt computer data information seems to be the bane of the industry from time immemorial. The “garbage in, garbage out” scenario was never more accurate than when applying a smart claims system to a claims adjusting operation.
The purveyor of Colossus is the first to say that the system wasn’t designed to remove the claims adjuster from the equation. Rather, the objective is to provide normal disposition “ranges” with consistency based on like injuries and damages. The goal is consistency of case valuation within specific data parameters.
Fair or Foul?
Consumer groups often aver that the use of smart claim systems like Colossus intentionally strive to decrease the settlement value of the claims. They stress computer systems cannot take into consideration intangibles such as pain, mental stress, inability to participate in social activities, loss of consortium, etc. As a result, the system settlement recommendation is many times undervalued.
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