This week’s Senate listening to on the insurance coverage business’s claims practices following pure disasters wasn’t only a made-for-TV second. It was a five-alarm warning siren for policyholders and insurers throughout the nation. With photographs of collapsed breezeways, tales of kids sleeping on flooring after insurers not paying, and property insurance coverage adjusters basically confessing to being neutered into glorified picture-takers whose estimates are going to be modified by others not onsite, one may ask whether or not it’s time to begin treating insurance coverage declare abuse because the nationwide downside it’s.
Senator Josh Hawley despatched a letter on January 24, 2025, calling for a Senate listening to to analyze insurance coverage firms’ claims dealing with following Hurricanes Helene and Milton. In his letter, he described studies of widespread declare denials as “morally obscene.” He invited insurance coverage executives to testify earlier than the Senate Homeland Safety and Governmental Affairs Subcommittee on Catastrophe Administration, which he chairs. He additionally requested detailed data on the variety of denied claims, the explanations for these denials, and the typical response instances for disaster-related claims. This letter set the stage for the Could 13, 2025, listening to, the place policyholders, adjusters, and insurance coverage executives supplied testimony on the business’s response to pure disasters.
The listening to was a no-holds-barred spectacle. 1 Policyholders like Natalia Miguel and Jacob Vertel laid naked what it’s like when your home is diminished to splinters, however your insurance coverage firm presents you pocket change for claims fee. Miguel’s Georgia dwelling was crushed by a 70-foot tree after Hurricane Helene. Allstate’s preliminary supply? $46,000. Her contractor’s estimate? North of $497,000. It took months, a number of adjusters, and the intervention of a public adjuster and an engineer simply to get Allstate to grudgingly up their supply to beneath $100,000. In the meantime, the roof nonetheless leaks, the wires nonetheless spark, and Allstate nonetheless insists every thing’s working as meant. 2
Vertel’s story was simply as stomach-churning. 3 His North Carolina dwelling was rendered uninhabitable by a twister whereas his spouse was pregnant with their second little one. State Farm informed them the home was livable, even after the county slapped a “don’t enter” discover on the entrance door. After 228 days, they nonetheless haven’t made repairs. At this level, the one factor much less responsive than the State Farm claims division is a taxidermied cat. At the least the State Farm claims govt apologized for the claims dealing with.
However probably the most explosive testimony didn’t come from policyholders. That testimony got here from the individuals who had been despatched to assist them. Two impartial adjusters, Nick Schroeder and Cliff Milliken, testified beneath oath that Allstate reviewers frequently instructed them to change or delete estimates to reduce payouts. 4 They described a system the place estimates had been scrubbed of inconvenient details by reviewers who had by no means set foot on the property, and if an adjuster pushed again? They had been yanked off the file or blacklisted solely. Milliken even acknowledged that after agreeing to testify earlier than the Senate, he received the dreaded name that he was being “reduce off.” A lot for the business’s countless blather about integrity.
Senator Hawley laid into the Allstate govt whom I wrote about in Understanding Management from Contained in the Insurance coverage Claims Machine: Reflections on Mike Fiato’s Imaginative and prescient. My wager is he loved studying about his management in my weblog greater than his day within the chair responding to Allstate’s dealing with of claims.
Doug Quinndirector of the American Policyholder Affiliationadded a pointed reminder that this isn’t new. He cited systemic fraud going again to Superstorm Sandy, Katrina, and past. He urged the committee to contemplate what many people within the trenches have lengthy been saying: State regulators are asleep on the wheel, and state regulation will not be sufficient. His view is that we want federal enforcement, not simply to punish fraud, however to forestall it. He made the purpose that the {dollars} insurers withhold unfairly from a disaster-struck house owner typically trigger the American taxpayer to cough up federal support by FEMA. 5
Now, right here’s the place issues actually received attention-grabbing. Throughout a podcast dialog I had with insurance coverage protection lawyer Steve Badger simply final night time, he made an offhand remark that deserves extra airtime. He acknowledged that other than the Massive 4—State Farm, Allstate, Progressive, and Farmers—and the distinctive breed of Florida insurers, he not often hears of systemic insurance coverage claims abuse. That’s proper. In keeping with Steve, the dangerous habits appears concentrated in a particular herd.
Shouldn’t the following Senate listening to characteristic the opposite two claims executives from the Fab 4? How in regards to the Florida-based carriers and their govt management? What in regards to the Florida Insurance coverage Commissioner? It’s no secret that Florida is a petri dish of high-risk property insurance coverage and political theater. It’s time to place the highlight the place the policyholder ache is most acute.
There’s one other piece lacking from this dialog. The courageous souls who testify in opposition to their employers are often the sphere adjusters despatched to assist the policyholders. They deserve greater than applause. They deserve safety and possibly even just a little gratitude. Congress ought to think about an Insurance coverage Whistleblower Safety Act that not solely shields truth-tellers from retaliation however requires firms to self-report violations and show that inside whistleblowers are promoted, not punished. The adjusters on the listening to shouldn’t have to decide on between their careers and their conscience. It must be prolonged to engineers and workers who learn about altered engineering or outcome-based studies.
Shouldn’t there be a federal unfair claims apply legislation that provides catastrophe survivors the precise to sue when insurance coverage firms stall, lowball, and outright sabotage legitimate claims? The present patchwork of state-level treatments leaves too many with out recourse. If a tree falls on your home and your insurer sends you a examine for lunch cash, there must be a transparent, federal treatment. If Congress is severe about defending Individuals from catastrophe, it’s time to begin holding insurers accountable beneath federal legislation. And possibly, simply possibly, we will get again to the concept that insurance coverage is a security internet, not a lure door.
The picture above exhibits Merlin Legislation Group lawyer Steven Bush within the background on the Senate listening to. You probably have any inside details about insurance coverage firm fraud, please contact Steven Bush. We’re combating for these whistleblower safety legal guidelines, that are desperately wanted to assist maintain the insurance coverage claims business in examine and sincere.
Thought For The Day
“It’s by doubting that we come to analyze, and by investigating that we acknowledge the reality.”
—Peter Abelard
1 Transcript of listening to earlier than the Senate Homeland Safety and Governmental Affairs Subcommittee on Catastrophe Administration, Could 13, 2025.
2 Written testimony of Natalia Miguel submitted to the Senate Homeland Safety and Governmental Affairs Subcommittee on Catastrophe Administration, Could 13, 2025.
3 Written testimony of Jacob Vertel submitted to the Senate Homeland Safety and Governmental Affairs Subcommittee on Catastrophe Administration, Could 13, 2025.
4 Written testimony of Nick Schroeder and Cliff Millikan submitted to the Senate Homeland Safety and Governmental Affairs Subcommittee on Catastrophe Administration, Could 13, 2025.
5 Written testimony of Doug Quinn submitted to the Senate Homeland Safety and Governmental Affairs Subcommittee on Catastrophe Administration, Could 13, 2025.
