One of the favorite tools of automobile insurance companies in handling personal injury claims is software applications designed to evaluate claims according to the insurance companies’ formulas. The best-known example of this is a computer program called, somewhat ominously, “Colossus.” Insurance is all about math and data.

Insurance companies use this data and math to predict how many claims are likely to occur in a given amount of time and what the payout value is likely to be for those claims. Comparing this information with data about the people and natural events that cause these losses, they “run the numbers” and determine what they need to charge in insurance premiums to cover the claims payments and make a tidy profit.

Having collected its own big pile of claims data over decades of claims adjusting experience, Allstate Insurance in the 1990s decided to develop its own program for evaluating claims – this became known as Colossus.

Over the years, other claims-adjusting programs have also been developed. Some were developed independently of Colossus, while others are offshoots or revisions of the original Colossus program. But they all follow a similar pattern in how they work. They tend to focus first on the specific injuries diagnosed by a personal injury victim’s doctors. Most of the programs (Colossus included) have their own injury lists.

In contrast, some programs use the “ICD” diagnosis codes commonly used in the medical record and billing. The insurance companies believe their data can accurately predict the “value” in dollar terms of each injury on their lists. The claims programs then factor in additional data on the victim’s injuries, such as medical billings and lost wages.

Colossus and similar programs consider other factors unrelated to the personal injury claimants, such as the court “jurisdiction” where the injury occurred. Are the local courts generous or stingy to personal injury plaintiffs, should this claim ever come to trial – and what are the claims and trial record of the attorney representing the claimant? (This is one situation where having an experienced personal injury attorney can pay off entirely.)

Insurance companies believe that reducing everything to a formula and a computer-generated value can make insurance adjusting “objective” and reduce the process to an automated valuation. Of course, beyond the effort to generate an “objectively” valued claim, insurance companies also like to tweak their computerized programs to dial down the valuations of claims in general. For example, if a company study of the data shows that a particular broken bone has a typical value of $20,000, a company that wants to save a little money on claims for this injury can simply change the value to $19,000 in their claims program, and $18,000 the following year, and so forth.

Insurance companies also believe they can “standardize” the adjusting process by compelling their adjusters to follow the “guidelines” of their Colossus-type software. Many insurance claims adjusters have privately said that they do not like this type of software when, instead of providing informational data on the claim’s value, they give them only an instruction that they must settle within a specific dollar figure.

Many adjusters get graded on how well they can keep their settlements within the Colossus numbers, making adjusters feel like “cogs in the wheel” and removing much of their individual judgment from the claims process. A good, experienced adjuster can recognize when a particular claim may have substantially greater value than Colossus estimates when there are essential factors for the claim that Colossus has not considered.

Another place where Colossus and similar adjusting software commonly fails is valuing the “human element” of injury claims. Some people experience a broken bone, get patched up, and make a rapid and complete recovery with a minimum of fuss and pain. For someone in a different situation, however, the same broken bone may be a devastating event, producing pain like they’ve never experienced before, generating economic stress, family stress, and so forth. But for both these people – with the same broken bone diagnosis – Colossus assigns the same value.

In these situations, an experienced personal injury attorney who can articulate the pain and suffering that their client is undergoing and provide the proper evidence of this human element is absolutely essential. Hopefully, the attorney can get the attention of the human adjuster operating behind the Colossus curtain, persuade them that the particular claim has essential factors that Colossus cannot take into account, and get the attention of human claims supervisors who can approve appropriate settlement figures outside the Colossus guidelines. And if that fails, the exact attorney can present this information to a jury.

^{Editor’s Note: updated 11.29.23 Photo by Adeolu Eletu on Unsplash GM cha [cs 893]}

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