Allstate Reaches $10 Million Accord With Regulators On Claims Software

Allstate Corp. (ALL), the largest publicly traded home and auto insurer, reached an agreement with 45 states to pay $10 million and change the way it uses a software program that calculates how much to pay on injury claims.

Allstate agreed to pay the $10 million to the states--led by Florida, Illinois, Iowa and New York--to set up a fund to help train state regulators on the use of software in adjusting insurance claims, according to a statement from the New York State Insurance Department on Monday.

The department stated that Allstate will be "enhancing its management oversight" and "strengthening its internal auditing" of the use of the software, called Colossus, and that the company agreed it wouldn't pay added incentives to claims adjusters who settle claims for amounts close to what the software said was appropriate.

The announcement concludes a so-called market conduct exam, in which state insurance regulators evaluate an insurer's practices and determine if they're in compliance with applicable regulations. New York State Insurance Superintendent James Wrynn said the exam "found no systemic underpayment of bodily injury claims" and that the Northbrook, Ill., insurer cooperated with the exam.

Allstate, in a separate statement, said the exam found that the use of the Colossus software "provides significant benefits to the public in increased objectivity and efficiency" and concluded that "insurance department personnel need to be better trained to understand claim-handling technology and its use," which it said was the impetus for the $10 million fund.

Allstate shares rose 4 cents to $32.47 in recent trading.

-By Erik Holm, Dow Jones Newswires; 212-416-2892; erik.holm@dowjones.com

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