Consumers who pay premiums to insurance companies expect that those companies will be on their side if they are injured in an accident. However, a recent report issued by the Consumer Federation of America warns that most of the nation's largest insurance companies use computer software that can be easily manipulated to pay out less than what policy holders deserve.
The report detailed a number of ways insurance companies use a computer software program known as Colossus to produce "lowball" payouts for their policy holders' injury claims. According to the report, Colossus and similar programs give insurers the ability to input biased or incomplete information into their systems to reduce claim payouts.
The report says that these programs allow insurers to:
Recently, a class action lawsuit was filed against the manufacturer of Colossus, Computer Sciences Corporation (CSC). Court documents revealed that the company misled regulators about the purpose of Colossus, claiming that its main function was to produce more consistent payouts. However, CSC marketed the program to insurance companies as a way to achieve enormous savings through lower insurance payouts.