Australia Built the First Colossus. We’re Still Living in Its Shadow.
Nov 18
4 min read
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How a government experiment inside the GIO became the global blueprint for claims-denial algorithms — and why every Australian needs to know.
Most Australians have never heard of Colossus.
But almost every injured person has felt its fingerprints.
Colossus is the claims algorithm at the centre of one of the biggest insurance controversies of the last 30 years — a system that quietly reshaped how insurers value human injury, human pain, and human futures.
And the part almost no one talks about?
Colossus was born inside the NSW Government Insurance Office — the GIO.
A government-run insurer created the system that would change injury compensation around the world.
What began as a cost-control experiment in the late 1980s at the GIO became the software engine exported globally, and today, its logic sits beneath modern claims platforms used across Australia, including in the institutions now failing injured workers.
This post is not the full documentary. That will go much further.
But as 2025 draws to a close — with injured workers in crisis, governments scrambling to fix budget holes, small businesses and charities struggling due to cost of living crisis and, insurance systems under national pressure — there is one essential truth everyday Australians deserve to know:
We built the first black box. And we are still living inside its shadow.
The Australian Origin Story Nobody Acknowledges
In the late 1980s, the NSW Government Insurance Office (GIO) was drowning under rising claim costs, more than 14% per year.
Instead of asking why injuries were increasing or how to improve recovery, leaders chose a different path:
They went after the adjusters.
Human judgment was “too inconsistent.” Payouts varied too widely. And so the GIO attempted something radical for its time:
Encode the judgment of its most experienced adjusters directly into software.
Consistency. Predictability. Control.
The result was Colossus — one of the first large-scale attempts to turn human injury into structured data.
Colossus used up to 700 questions and around 600 injury codes to generate “standardised” payout ranges.
On paper: fairness and order. In practice: the birth of algorithmic control over human suffering.
Costs stabilised. Variation tightened. And soon, the software was commercialised and exported overseas.
Australia — through a government insurer had created one of the world’s first injury-valuation algorithms.
The Export: How Colossus Became a Global Weapon
Once Colossus reached the United States, major insurers adopted it and supercharged it.
Insiders later described how easily the system could be manipulated:
entire regions’ payouts reduced
high jury verdicts excluded from “averages”
injuries recoded to minimise severity
double-digit savings generated at the expense of the injured
One technical lead described his work as “turning the knobs.”
He explained how a claim valued at around $10,000 could be recalibrated down to $4,300 with a few software adjustments.
This took a moral toll.
Some insiders left the industry altogether after witnessing how algorithmic tuning harmed ordinary people: families, workers, parents — who trusted their insurers to do the right thing.
These stories are not outliers. They reveal a global pattern.
And as part of creating Shattered, we have already consulted experts in insurance, claims technology, and regulatory systems across Australia, the U.S. and Europe. Their accounts line up almost exactly.
The Black Box Spreads and Regulators Look Away
In 2009, U.S. regulators launched a major investigation into Colossus:
1 million pages of data reviewed
8,500 hours of analysis
40 staff interviewed
$10 million in fines
Yet the final conclusion was:
“No systemic underpayment.”
Consumer advocates called it a failure of regulatory courage.
Australians will recognise the pattern:
narrow inquiries
limited scopes
failure to speak with key insiders
“no systemic issue found”
and injured people left carrying the consequences
We see the same script in Australia today.
Why Every Australian Needs to Understand This in 2025
Here’s the truth:
The philosophy created inside the GIO in the 1980s still shapes how injury claims are managed in Australia today.
Not necessarily the same software —but the same operating logic:
standardise injury
minimise variation
compress payouts
contain costs
call it “efficiency”
hide the human consequences
Australia’s workers’ compensation systems are not “broken.”
They are functioning exactly as they were designed:to limit liability and manage cost, not restore lives.
If Colossus was Version 1.0, then icare and modern claims engines are Version 3.0 — more automated, more integrated, and far harder for the public to scrutinise.
This affects all of us:
every worker
every employer
every family
every person who relies on insurance to be a safety net
Insurance is vital to our economy. We need it. It underpins nearly everything we do.
But a system can only work if the public understands how it makes decisions and what values guide it.
There is a better way. But only if Australians know our own history.
Why We’re Publishing This Now
This piece is one fragment of the research foundation behind Shattered, the documentary series we have been filming since 2023.
The film goes far deeper:
interviews
archives
internal documents
case studies
and the historical forces and policy decisions that allowed this machinery to take hold and grow
Our purpose is simple:
To help everyday Australians understand the systems that shape their lives before those systems shape their futures without their knowledge or consent.
With NSW workers’ compensation in crisis, with suicidality in this system rising, and with governments rewriting laws outside public view, this context cannot wait.
If there is one message we hope stays with you, let it be this:
Australia, through the GIO — built one of the world’s first injury-valuation algorithms. And we never asked what happens when you turn human pain into data.
We’re asking that question now. The answers will be revealed in Shattered.
