Crushed by Colossus: Part I – Horrendous Insurance Industry Tactics Cost Claimants Millions: What North Carolina Auto Accident Victims Need to Know.
If you’re a recent North Carolina auto accident victim – or a friend or family member of someone who has been hurt – immediately stop what you’ve been doing. Take 15 minutes to read this blockbuster article about the insurance industry. It may be the most important 15 minutes of your life.
To call this expose “eye-opening” would be a gross understatement. It showcases the inner workings of Allstate’s Colossus project, a giant computer algorithm that’s helped insurance companies shave costs from claims, ruthlessly. Currently, over 20% of the 30 most powerful insurance companies in United States operate Colossus.
Many people are likely willing to entertain the notion that insurance companies can be somewhat two-faced. They publicly tell us one thing but do another. The expose offers powerful concrete evidence to that point. Allstate advertised to clients that they’d be “in Good Hands.” Meanwhile, behind the scenes, the company methodically, deliberately and vigorously plotted ways to confuse customers and reduce claims payouts.
In four posts on the DeMayo Law car accident and mass tort blogs this week, we will be discussing the diverse and urgent ramifications of this expose. Our goal is to protect you from falling prey to the insurance industry’s unethical and insidious tactics.
A Shift in Mindset: How and Why the Insurance Industry Lost Its Way
One of the architects of Allstate’s Colossus Program, Mark Romano, reveals why he entered the insurance business. Romano’s parents had been passionate consumer advocates. He grew up with a strong moral compass and felt a desire to help other people. By redistributing risk as an insurance agent, Romano believed he could make a positive difference in people’s lives.
In his initial years in the industry, he felt satisfied. He recalled with pride how he helped a family who lost a child in an auto accident set up a scholarship fund in that child’s name.
However, the industry underwent a cascade of changes that depersonalized Romano’s work and transformed his job from that of a compassionate helper to that of a faceless bureaucrat whose purpose seemed to be to execute the will of a machine dedicated to undercutting claim payouts.
A transformation like that doesn’t happen overnight.
One of the key turning points came during the late 80’s/early 90’s, when Hurricane Hugo and Hurricane Andrew ravaged the Eastern Seaboard. These storms caused damage that far exceeded the estimates of actuaries. The number crunchers underestimated the damage by around $10 billion! This miscalculation devastated the industry — bankrupted 11 big companies and pushed many others out of markets in Florida and elsewhere.
This metaphorical “punch in the eye” hardened the industry as a whole. To ward off a repeat disaster, companies began developing techniques to guard against the mistakes of the all-too-human actuaries. Allstate turned to Colossus, a computer project built in Australia, to play the Power Saw to the actuaries’ Paul Bunyan.
For more on what happened next, please check out Part II of our series on our mass tort blog.
If you or someone you love wants a compassionate, insightful, thorough assistance with a Charlotte auto accident claim, get in touch with the DeMayo Law team immediately for a free case evaluation.
