|By Becky Yerak, Chicago Tribune|
|McClatchy-Tribune Information Services|
He was in his
Having an insider's knowledge about industry practices, the former claims project manager was disappointed by what he believed was an incomplete examination and a financial slap on the wrist.
"At that moment, I knew that I could no longer remain silent and would have to find a way to warn consumers and the regulators of what had gone on," recalled Romano, who had taken an early retirement package from the nation's second-biggest auto insurer in
For its part, Allstate says its claims handling complies with state laws and helps give "customers and claimants fair payments in a timely manner." The company said that its settlement with state insurance regulators found that the industry's use of software in claims handling "can provide significant benefits to the public in increased objectivity and efficiency." The settlement also stated that examiners found no systemic underpayment of bodily injury claims through
The investigation, however, determined "the need for enhanced management oversight of
Romano insists such software programs can be manipulated, including by omitting the costliest incidents from settlement calculations, to produce low-ball offers to consumers.
Romano should know. His claims job at Allstate included working on the injury software that he is now criticizing.
"This is an admission that I did not feel that many of the things I was directed to do were proper and that I was hurting policyholders and claimants," he told the Tribune recently.
Today Romano is a whistle-blower of sorts, as the insurance claims projects director for nonprofit watchdog
In December, Romano spoke to the
The issue of claims payments takes on new resonance with superstorm Sandy, which pounded the
In June, Romano and Hunter co-wrote a report for the consumer rights group titled "
Here's how such systems work, according to the "Low Ball" report: When an insurer buys the software, it conducts a "benchmark session" in which, with help from adjusters familiar with certain areas of the country, hypothetical claims are used to set the initial "tuning." The system that Allstate uses, Colossus, has about 600 codes representing various types of injuries, each of which has a dollar value settlement range. Periodically, an insurer might modify the software, perhaps removing or excluding certain outlying claims or settlements from the database. Those might include cases in which an insured driver has a major disfigurement.