Insurance companies use a variety of formulas in arriving at settlement figures for Massachusetts personal injury claims. All insurance companies are different. Some may multiply the amount of special damages (medical bills and lost wages) to arrive at a figure. Some, however, use very expensive computer programs which crunch numbers and variables to arrive at settlement value. One popular computer program for doing this is called Colossus.
I found the following post over at the New Hampshire Law Blog which talks about Colossus:
Many insurance companies use certain computer software to evaluate the value of automobile bodily claims (Colossus seems to be the most common software). This process drives down the amount of money paid out in claims made by injured people, regardless of how badly injured they may be, or how much their lives have been affected as a result of their injuries.
Feeding information into a machine to have it calculate a number for settlement of a bodily injury claim takes the human claims adjuster factor out of the picture. (Machines cannot be persuaded by injured victims, their families or their lawyers.) The software recognizes only a narrow set of data to which it assigns monetary value. All other data is ignored. In many cases, the insurance companies refuse to even negotiate the amount produced by the machine, and force injured victims to file a law suit.
Insurance adjusters do not tell injured victims or their attorneys that this machine is being used. They merely make the offer the computer tells them to make, and leave it to the victim or attorney to decide whether to file suit. Because negotiation is no longer an option, attorneys are forced to file law suits, increasing the victim’s costs to seek compensation, and further crowding already busy court dockets.