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Fighting the Machine: Insurance Company Software’s Artificial Intelligence 

Posted on: November 29, 2022

LEGALLY REVIEWED BY:
Chi Hung Nguyen
November 29, 2022

insurance company can use software and computer programs with artificial intelligence

For decades, any given insurance company has used software and technology to decide how much your claim is worth. The goal of artificial Intelligence (AI) technology is to limit human interaction and decision-making from the insurance claims process. But by trying to save time and money, several lawsuits have exposed flaws in insurance companies’ reliance on artificial intelligence software to evaluate claims. 

Software and technology have become an attractive choice for insurance companies that want to replace human claims adjusters. It is not a surprise, since insurance company turnover rates have increased in recent years. Insurance companies are struggling to retain experienced insurance claims adjusters who know what they are doing and who can handle many cases at once. This makes software and technology an easy and simple choice for their business’ bottom line. Technology allows insurance claims adjusters to increase the number of cases they can handle. But in some cases, this means the software can overlook important aspects of your case, and treat your claim like it is another part of a mechanical and uniform process – another cog in the machine.

As everyone knows, software and technology are not perfect. Like with any technology that relies on data, some assumptions can be made. There are still questions such as whether the data is accurate, if the programmers’ own presumptions affect the program, or the data is current. These questions are left unanswered. For the average person, this might mean that AI programs impact the final decision an insurance company makes about your claim.

Insurance companies claim this is a good thing because it takes personal judgment out of the equation. Several lawsuits have shown otherwise. 

Artificial Intelligence Technology Lawsuit Examples

In October 2010, Allstate Insurance Company paid $10 million dollars in a settlement because of its personal injury software Colossus. The AI program serves over 40 insurance companies like Allstate. Despite its wide use, the Colossus program overlooks many factors. For example, Colossus ignores the fact that cases that go to trial often result in greater award amounts, and that the amount of attorney’s fees are completely excluded from the software’s calculations. 

In another case involving Allstate’s use of Colossus, the court said that the right way to use the AI program is not to let the AI program make decisions for the insurance adjuster, but to let it only be one of many considerations in deciding whether or not to settle a claim.

To use the program, insurance claims adjusters input information such as the specific kinds of injuries a claimant suffered, the amount of money it cost to get treatment for the injuries, how likely it will be that the claimant will need more medical treatment in the future – and more. 

It is hard enough to put a number value to each unique person’s pain and suffering. Loss and injury can impact each person differently. But with Colossus, if a doctor fails to record your injury in his or her medical records, and the error is not fixed, that injury will be excluded when the software calculates the value of your claim. 

Internally, the program is used to evaluate job performance which forces insurance company employees to use it or risk their own job security. Externally, it means this program undervalues claims. Insurance companies want people to believe that using this software removes the adjusters personal views, biases and subjectivity. But injured claimants end up paying the price. 

Not all insurance companies use AI software the same way. Some insurance companies only use Colossus as a baseline, or small part of their overall consideration of your claim. Other companies strongly rely on it to determine your claim’s entire value. 

To fight big insurance companies that rely on AI programs instead of the opinions of people or experts to decide your claim’s value, attorneys can look at the level of liability the program gave your claim — was liability in your case clear or weak? Experienced attorneys can also ask: Did the insurance adjuster include all the facts like the wages you lost from missing work because of your accident? What about out-of-pocket expenses? Did the insurance adjuster include the full extent of medical treatment and expenses? Can the insurance company provide a list breaking down all the damages (and your potential monetary award) that was put into the software’s calculation?

AI programs reach more than personal injury cases. Xactimate claims to be “the industry’s most powerful and comprehensive solution for property claims estimation.” In the United States, 22 of the top 25 property insurers use Xactimate. This program generates an estimate of property loss, the cost of repairs, and more for properties ranging from commercial and residential buildings to a farm’s barn. 

Since 1996, Xactimate is referred to in over 200 lawsuits across the nation, including class action lawsuits. In one case, Sands v. State Farm Fire & Casualty Co., the injured plaintiffs argued the insurance company acted in bad faith by failing to double check the program. The court said the plaintiffs need to show more to prove the insurance company acted in bad faith because it was reasonable enough that the insurance company relied on the program’s calculations. 

While most personal injury attorneys focus on the bodily injury aspects of an accident, many body shops will take a lien on your case. Seek experienced attorney advice to design the best plan forward for your unique case’s needs and circumstances.  

Contact an experienced personal injury lawyer

Navigating complex personal injury cases and handling insurance companies can make the recovery process even more difficult. Experienced attorneys strategically weigh the cost and benefits of each case to minimize the time and expense involved while maximizing their clients’ compensation.

Are you trying to secure your financial recovery with the help of experienced attorneys? If so, we can help.

The Pusch & Nguyen Law Firm has helped countless Texans handle their insurance disputes. Our experienced trial lawyers have gone up against some of the biggest names in the insurance industry while successfully bringing home payouts for clients. Our successful reputation speaks for itself, and with offices in both Houston and San Antonio, we are well equipped to assist Texans who are in dire need of our services. Register online for a free case evaluation or call us today at 713-366-4624 (Houston) or 210-702-3000 to schedule an appointment with a member of our team.

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