Writing an Allstate Demand Letter
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How do you write a demand letter for Allstate personal injury claims?
Each major auto insurance company uses a combination of insurance claim software programs to evaluate the economic and noneconomic damages in an auto accident case to arrive at the settlement offer. This article summarizes a few insights on writing demand letters for Allstate insurance personal injury claims.
Allstate claim handling methods
Allstate's claim handling methods are very important as they have been highly influential on the rest of the insurance industry. The methods used by Allstate and copied by many other insurers, is discussed at length in the book From Good Hands to Boxing Gloves by Berardinelli, Freeman and DeShaw.
In the mid-1990s, Allstate hired the world's leading consulting company, McKinsey & Co., to overhaul its claim handling methods. McKinsey suggested dividing claims into five types of claims:
- First call settlements (for small amounts of money within the first 72 hours of a claim);
- Minor Impact Soft Tissue (or "MIST") claims;
- Special Investigation Unit (or SIU") - the fraud unit of the company;
- Clear Policy Limits cases; and
- General Claim Handling
The first four categories comprised 20% of all claims and the remaining 80% of all claims fell into general claim handling. Certain goals were implemented for fraud designation based upon the geographical location.
Maximum payments of $2,500 for bodily injury settlement offers were implemented for minor impact claims regardless of injury severity. (For ways to get claims out of the MIST unit see our "minor impact claim handling" letters to increase settlement offers in MIST cases, which is part of the Settlement Intelligence platform license.)
Allstate and Colossus
During their consultation with McKinsey, Allstate separately licensed the Colossus program, which had already demonstrated significant cost savings for smaller insurers since USF&G initially implemented it in the United States in 1992. Allstate implemented Colossus in 1996 and have used it to evaluate noneconomic damages since then in both first party and third party claims.
Colossus was the first "artificial intelligence" bodily injury program and at one time was used by over 60% of auto insurers in the United States. Colossus was designed to cut payments on claims and that was Allstate's intention in implementing the program as demonstrated in several insurance class action and bad faith claims after its implementation.
Colossus broke down all personal injury claims into a small number of injury types and 10,000 factors or "value drivers." The software prompted insurance adjusters to enter data and in response sought additional claim data.
In 2001-2004 our co-founder, Aaron DeShaw, obtained tens of thousands of original programming documents, unprotected claims manuals and adjuster claim manuals, piecing together every aspect of how Colossus works. From that information he created a demand letter format for triggering the claim system. In addition, he created Duties Under Duress and Loss of Enjoyment of Life forms for gathering data on two key areas of value in creating a person's settlement offer.
In the past 20 years, DeShaw and Settlement Intelligence co-founder, Charlette Sinclair, have continued to research insurance claim software and worked on thousands of claims while consulting law firms on how to maximize claim value with demand letters. In 2020, the two founded Settlement Intelligence. The Settlement Intelligence platform allows lawyers to optimize their demand letters based upon our founders deep knowledge of Allstate's claim system.
Allstate's Evaluation of Economic Damages
Despite Colossus being used by insurers very few lawyers know much about it. Even fewer know about Allstate's system for evaluating economic damages. But, our co-founder, Aaron DeShaw, also wrote a book about this system and his knowledge is incorporated in our claim platform.
Reasonable and Necessary Medical Bills
The phrase "reasonable and necessary" is common in considering whether the client's past medical bills are necessary for the injuries caused by the car crash, and reasonable in the amount of the charge given the customary charges in that geographical region.
Allstate uses economic damage claim software to evaluate economic damage claims. A primary function of that software correlates ICD codes (injury diagnosis codes) and CPT treatment codes. A primary problem in personal injury claims is the failure of hospitals, clinics and doctors of fully diagnosing a patient. If an ICD diagnostic code doesn't exist in the record for an injury, all treatment on that area or injury may be provided zero value in the economic damages. (In our prior role as legal consultants, we've seen many cases of very low settlement offers because a client wasn't fully diagnosed. Settlement Intelligence's upcoming full AI products will demonstrate where this is an issue.)
A failure to have ICD codes for all of the CPT treatment codes, is how some client's cases result in settlement offers that are lower than the client's medical bills. Just as detailed medical records are critical to achieving the best evaluation of noneconomic damages, a complete diagnosis of the client by their providers is critical to obtaining a full economic damage evaluation. We discuss this in more detail in this blog post on increasing settlement offers by finding all of the diagnoses for the demand letter.
Some services on the same date will not be provided value. At Settlement Intelligence, we know which ones those are and our AI Medical Timelines can alert you to this problem.
Economic Damage assessment software also considers the amount of reasonable charges for medical services within a geographical area. The system provides caps on certain types of treatment.
Demand Letters Optimized for Allstate and Colossus
Settlement Intelligence was built around the method used by the founders for the past 17 years. Unlike other companies claiming AI demand letters, our founders are not new to personal injury law. We are the leaders in optimizing demand letters for insurance company claims software systems.
Use Settlement Intelligence to maximize your Allstate settlement offers.