The purpose of Settlement Intelligence is to allow lawyers to obtain higher offers on their cases, more quickly and more efficiently. To understand how we accomplish this, you need to understand how personal injury claims such as auto claims, premises liability claims and workers compensation claims are adjusted by insurers.
Despite books, articles and lectures on Colossus and other bodily injury claim software being available for nearly 20 years, many personal injury lawyers still know very little about these programs. If you and your firm settle most of your personal injury cases, not understanding these programs will result in lower offers than your clients would get otherwise. The offers will also be lower than what an attorney who understands this process would get for the same case. In a competitive marketplace you do not want to be taking longer on case and getting lower outcomes than your competitors.
Since the early 1990s, auto insurers in the United States have been licensing bodily injury assessment software to cut claims payments. Claim assessment software, including COLOSSUS, Liability Navigator (formerly known as Claims Outcome Advisor or “COA”), and ClaimIQ evaluate bodily injury claims -- typically the largest expenditure of an insurance company. These software programs compute the general / non-economic damages of a claim. While the insurers have claimed Colossus creates "consistency" in claim handling, non-protected depositions in a national class action case make clear that these software programs act as cost containment measures to limit settlement offers. As such, the programs’ purpose is to consistently and intentionally underpay claims, resulting in improper insurance company profits. Insurers and the software vendors simply use the word "consistency" so that it wasn't as obvious in bad faith claims that the primary purpose was to reduce claim payments to their own policyholders, as well as in third party cases.
What Is Colossus, Liability Navigator and ClaimIQ?
Colossus is the trade name for a software program owned by DXC Technologies (formerly Computer Science Corporation or "CSC"), and licensed to individual insurers for use in evaluating bodily injury claims. The software was initially created in Australia for an insurer with the express intention of saving money on claim payments. In 1992 it was adopted by the first insurer in the United States and its use was widely adopted by insurers after Allstate implemented the program in 1995 as part of CCPR, and demonstrated massive profits in the following years. In a press release dated June 27, 2001, CSC claimed that Colossus was being used by 34 insurers, representing 60% of all U.S. Direct Written Premiums for personal auto insurance. Since the early 1990s the program has been used internationally in Australia, North America, Europe and Asia.
Despite using the programs, insurers have instructed their adjustors to conceal it from the plaintiff's bar and their own policyholders. Only Allstate is required to disclose the program's use due to a settlement with several state Insurance Commissioners. But, Colossus remains in use by many large auto insurers even though adjustors may tell you it is not.
Subsequent to widespread adoption of the Colossus, the same programing team created a new program that has gone by a variety of names, and has been owned by a variety of companies. The program is now owned by Verisk and is called Liability Navigator or "L Nav", but is also widely known from its time owned by ISO when it was called Claim Outcome Advisor or "COA." Early in its development, this program was intended for use not only on auto claims but also on Premises Liability and Workers Compensation claims.
The final major bodily injury software has also changed ownership and names. It is now called ClaimIQ and is owned by insurance software vendor Mitchell International. The program was originally created by former employees of McKinsey & Co (the company that created claims programs at State Farm, Allstate, Farmers, USAA and others), as well as programmers from Oracle. This program has substantially increased its market share since Mitchell purchased the program and is now used by several very large auto insurers in the US.
Colossus, Liability Navigator and ClaimIQ, bodily injury claims assessment software is utilized by 9 out of the top 10 Property and Casualty insurers in the U.S. and nearly all of the Top 20. So, whether you know about the programs or not, they are evaluating your claims. To get the best outcome for injured clients, lawyers must understand 1) how claims assessment software evaluates cases and 2) how to format their demand letters to provide all facts valued by the software so that clients get the best settlement offer possible.
Understanding the Programs
These programs calculate general / non-economic damages based upon the client's injuries and factors, sometimes called "value drivers."
Injuries within Colossus are dealt with in a specific way, while they are dealt with differently by Liability Navigator and ClaimIQ. Injuries are tracked as to very specific facts about the injuries, all contained within the Settlement Intelligence system.
Colossus also provides value to approximately 12,500 value drivers, while Liability Navigator and ClaimIQ use approximately 20,000. In general, factors are provided value based upon the duration of symptoms, the type of treatments received, the frequency and duration of treatment, and the complications arising from the injuries. Our team of experts know nearly all of the factors used to create value in these software systems. More importantly, the benefit of the Settlement Intelligence platform is that we have created different templates based upon the insurer you designate as the company receiving the demand and optimize how we provide injury and factor data to ensure we are providing the insurer what they need to enter into the appropriate system so that your client's claim will get the maximum settlement offer based upon the specific program being used to evaluate that claim.
Colossus evaluates claims based upon a severity scale by providing “weight” to certain injuries and factors in the form of “severity points.” Without going into a lengthy discussion of severity point, benchmark tuning, and retuning (all of which we understand in detail, as well as the potential bad faith ramifications of those issues) the thing that is important to note is that the monetary value per severity point is increased with the entry of more factors of value. So, if you are using a demand letter format (or hiring a demand letter consulting company that doesn't understand these systems), factors will be missed leading to decreased settlement offers on the claim, not just for the missed factors, but also in the monetary value for every other factor that was entered.
As insurance adjustors enter information into these systems, they will open up additional screens in order to collect information on that entry. Historically, adjustors would use a 1-2 page form called a "dissection sheet" to collect claim data prior to entering it into the software. One of the inherent problems for the plaintiff is, the dissection sheet only had 60 of the 12,500+ factors on it and so often a great deal was missed in correctly entering the data on injury claims. This results in much lower settlement offers for the injuries sustained.
The Most Effective Demand Letter to Obtain High Settlement Values
There are approximately six different demand letter formats used by lawyers. They include everything from a 3/4 page letter providing the adjustor very little information, to "medical timeline" demand letters that regurgitate records that the adjustor could review themselves (which is required of the adjustor, so these demands are mostly useless.) Most of the six demand letter styles are ineffective because they do not address the issues that actually provide value in Colossus, Liability Navigator or ClaimIQ.
What Settlement Intelligence has done is use Aaron DeShaw's years of research into the injuries and factors provided value in these systems, to create an Artificial Intelligence program that creates special demand letters. These demand letters provide adjustors the information they need to evaluate the claim, in the order that they need the information. Instead of them relying upon an incomplete dissection sheet, a Settlement Intelligence Demand Letter provides the information adjustors need, in the order they need it. This gives the insurer everything they need to provide what Colossus, Liability Navigator of ClaimIQ will generate as the maximum claim value for that case. There is inherent bad faith in the use of claim software that fails to correctly provide value to certain non-economic losses, or is set to intentionally underpay claims. But, further proof of bad faith would be an insurer failing to enter an injury or factor you specifically claimed in the demand letter that could be entered into their software but was not.
What is the result of giving the adjustor exactly what they need, and covering all of the factors of value in their software? Higher offers. Faster offers. And, if the Settlement Intelligence platform guides you and your staff through the demand letter process quickly, collecting all the data necessary to maximize the settlement offer, it will be more efficient than wasting time on useless information (like typing out a full medical timeline on the client.)
So, if you want to start getting better settlement offers on your cases, more efficiently, and increasing client satisfaction, you should license Settlement Intelligence.