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Allstate to pay $10 million for improper use of claims software

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October 19, 2010—Allstate Corp., the parent company of Allstate Insurance Co., agreed on Tuesday to pay $10 million to 45 states for improper use of claims software.

The settlement ends the 18-month National Association of Insurance Commissioners (NAIC) examination of Allstate’s handling of bodily injuries after auto accidents, according to Buffalo News. The investigation looked into how Allstate used Colossus software. The NAIC found inconsistencies in payment and use of software for handling claims.

“It is important to note that we found no systemic underpayment of bodily injury claims,” said James Wrynn, New York insurance superintendent.

Allstate will increase internal auditing of the software and its claims handling, and it will use a single manual for claims handling, according to Buffalo News.

The states will use the money to set up a fund that will develop and train examiners to monitor how the industry uses software in handling claims.

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