Ask most people how an insurance company decides what to offer for an injury claim. They’ll picture an adjuster reading medical records and making a judgment call. That’s not always how it works anymore. About half of all U.S. auto insurance claims go through special software before a person ever sees them. The most well-known program is called Colossus. Big insurance companies have used it since the 1990s. It’s worth understanding how it works before you accept what looks like a final offer.
How the Math Works
Colossus and similar programs, like Claims Outcome Advisor and Claims IQ, use a list of about 600 injury codes. Some injuries are “demonstrable.” That means they show up on an X-ray or a test. Others are “nondemonstrable,” meaning they’re based on what you report, like pain. Each code gets a point value. The software runs these values through thousands of rules. It looks at where you live. It looks at how long you were treated. It even looks at your lawyer’s history of settling cases versus going to trial. Then it produces a settlement range.
The problem is what this process leaves out. A formula built from injury codes can’t capture what an injury really costs someone. It can’t measure missing your child’s first steps because your back hurts too much. It can’t measure not being able to pick up your grandchild. It can’t measure how chronic pain wears down your sleep, your work and your relationships. Insurance companies can also shape the results before you ever see a number. They might change which past settlements the software compares your case to. Or they might pick an injury code that quietly lowers your value. The result is a system that can treat very different injuries and very different lives, as if they were the same, just because they got the same code.
This Already Happened And It Went to Court
This isn’t just a worry about where things might be headed. It already happened. In 2005, a huge lawsuit accused hundreds of car insurance companies of using Colossus to underpay uninsured and underinsured motorist claims. The case led to 27 separate settlements. It forced changes in how insurers use the software. And it paid out more than one billion dollars combined to the people affected. The software is still used today. It’s now often paired with newer AI tools. But the same problem is still there. A formula quietly shapes your payout and you rarely get a real explanation why.
Why the First Offer Rarely Tells the Full Story
This matters most for people who don’t have a lawyer. If you handle a claim on your own, you usually only see the final number. You don’t see the injury codes behind it. You don’t know what got left out of the comparison. You don’t know if the offer matches what similar cases have actually settled for, or what a jury has awarded in court. A number from software can look official and final. But it’s often just a starting point, made to be accepted by someone who doesn’t know they can negotiate.
How to Push Back Against a Formula
The best way to fight a formula isn’t to argue with the software directly. It’s to give the adjuster, or later a jury, something the software can’t measure. That means keeping records that go beyond diagnosis codes. Write down what a normal week looked like before your injury and what it looks like now. Get statements from family or coworkers about specific things you can no longer do. Keep steady treatment records that show your real recovery, not gaps that make an insurer question your claim. It also means knowing when to push back on a number instead of accepting it. And it means being ready to file a lawsuit if the offer doesn’t match your case.
Signs Your Offer Came From a Formula
A few signs can tell you if a number came from software instead of a real review. The offer comes back very fast, even though you sent a lot of documents. The number is oddly round and doesn’t clearly connect to your medical bills or lost pay. When you ask how they got that number, you get a vague or scripted answer instead of a real explanation tied to your records. None of this means the offer is automatically wrong. But it’s a sign to look closer before you accept it. Push back with details specific to your case, not just a request for more money.
Knowing when a number came from a formula, instead of a real look at your case. It’s the same skill a phoenix personal injury lawyer brings to a claim, especially when the gap between the algorithm’s number and your real injury is the biggest.
About the Author
Jason A. Harris is the founder of Harris Injury Law, PLLC, a personal injury and workers’ compensation firm based in Phoenix, Arizona, practicing since 2006. He is licensed by the State Bar of Arizona and is a member of the Arizona Association for Justice. He regularly negotiates against algorithm-driven settlement
