Report Says Insurance Software Unfair to Disabled Insureds
Many large insurance companies use claims software that enables them to “low-ball” consumers and manipulate claims payments, according to a new report from Consumer Federation of America. This software may also enable insurance companies to more easily deny disability insurance claims.
The report examines Colossus, injury evaluation software widely used in the insurance industry. According to the report, Computer Sciences Corporation (“CSC”) developed the software and originally marketed it to insurance companies as a cost-saving product. The marketing campaign changed quickly, though, as companies became concerned that the word “savings” would expose them to litigation—injured consumers could argue the so-called “savings” were actually a result of unjustifiably low claims offers. The “savings” concept was familiar to insurance companies, but according to the report, CSC never mentioned the “savings” word when it presented the software to the California Department of Insurance.
Even though CSC changed the marketing semantics, it did not modify Colossus in any important way. The report shows how insurance companies manipulate the software to achieve significant savings. These “savings” are actually the result of computer-generated “low-ball” claims offers and payments to consumers, according to the report.
To read Consumer Federation of America’s the full report click here.
