Consumer group warns that insurers may be manipulating claims payouts

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Organization warns that software is allowing insurers to make reduced payments on injury claims

The Consumer Federation of America has issued warnings this week concerning software that is often used by many of the largest insurance companies in the U.S. The organization, which works to establish a more consumer-friendly atmosphere in a number of different industries, claims that this insurance system is susceptible to manipulation, allowing insurance companies reduce their payouts concerning home injury claims. The organization has released a report detailing the shortfalls of the system and calling for consumers to take action by petitioning state insurance regulators to investigate the matter.

Report suggests that many state regulators are overlooking problematic issues

According to the report, state insurance regulators that conduct so called “superficial” reviews of companies are not aware of the problems with the evaluation software. The report suggests that the claims software being used by many insurance companies allows them to make unjustifiable low injury payments to policyholders. If the issue is not addressed by new regulation, the Consumer Federation of America believes that consumers may be exposed to further financial duress.

Organization details methods used by insurers to manipulate payments

The report details several ways that insurers can use the evaluation software to produce lower payouts. One of these methods requires insurance adjusters to second-guess doctors who have treated victims of injuries. Many of these adjusters do not have medical training, making them unqualified to conduct a medical investigation. The report suggests that these untrained adjusters provide insurance companies with incomplete information, allowing them to manipulate claims more easily.

Many large insurers accused of dubious practices

The Consumer Federation of America notes that State Farm is among the few big-name insurers that does not make use of this particular software. Nonetheless, the organization is petitioning consumers and state insurance regulators to look more closely at the issue in order to avoid further problems. The organization claims that the problem is particularly pronounced in Pennsylvania, where auto insurance companies are using the software to manipulate claims payments.

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