New York State
James J. Wrynn Superintendent of Insurance 25 Beaver Street New York, N.Y. 10004
|ISSUED 10/18/2010||FOR IMMEDIATE RELEASE|
Allstate has agreed to pay New York $1.2 million as part of a $10 million regulatory settlement, New York State Insurance Superintendent James J. Wrynn announced today. The agreement follows an 18-month targeted National Association of Insurance Commissioners (NAIC) multi-state market conduct examination of Allstate’s claims handling practices.
“Allstate has agreed to implement procedures to ensure transparency and fairness for consumers who have bodily injury claims,” Wrynn said. “The new processes ensure that claims will be handled consistently in different regions of the country, and consumers will have the right to get the information they need in order to understand how Allstate evaluates their claims and make sure they are fairly treated.”
The NAIC examination, for which New York was one of the lead states, focused primarily on Allstate’s use of claims handling software, particularly the software program, Colossus.
Colossus is a software program Allstate used to guide its settlement offers for bodily injury claims after automobile accidents. The examination found inconsistencies in Allstate’s management and oversight of the Colossus software program. In particular, the examination found that Allstate had failed to modify or “tune” the software in a uniform and consistent manner across its claims handling regions.
Under the settlement agreement, Allstate agreed to make a number of changes to its claims handling process, including:
“It is important to note that we found no systemic underpayment of bodily injury claims,” Wrynn said. “While the issues addressed were serious, Allstate cooperated fully with our examination and is working to correct these deficiencies. Here in New York, we will continue to review the use of claims handling software by property/casualty companies.
“This settlement shows how state insurance regulators work together to protect consumers,” Wrynn said. “The four lead states – Florida, Illinois, Iowa and New York – worked cooperatively to conduct this examination and will keep working with the other 41 states that have signed on to this agreement to ensure it is fully implemented and consumers are properly protected.”
Allstate’s payment will be used to establish a regulatory fund. The fund will be used by the 45 signatory states, to the extent consistent with applicable state laws, to develop and train examiners to review and monitor the property/casualty industry’s use of software technology in adjusting claims.