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 youngsters 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 would possibly 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 corporations’ claims dealing with following Hurricanes Helene and Milton. In his letter, he described reviews 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 common 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 offered 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 provides you pocket change for claims fee. Miguel’s Georgia dwelling was crushed by a 70-foot tree after Hurricane Helene. Allstate’s preliminary provide? $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 provide to below $100,000. In the meantime, the roof nonetheless leaks, the wires nonetheless spark, and Allstate nonetheless insists the whole lot’s working as supposed. 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 baby. State Farm instructed 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 unbiased adjusters, Nick Schroeder and Cliff Milliken, testified below oath that Allstate reviewers often 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 completely. Milliken even acknowledged that after agreeing to testify earlier than the Senate, he bought the dreaded name that he was being “minimize 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 guess 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 Quinn, director of the American Policyholder Affiliation, added 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 think about what many people within the trenches have lengthy been saying: State regulators are asleep on the wheel, and state regulation shouldn’t be sufficient. His view is that we’d like federal enforcement, not simply to punish fraud, however to stop it. He made the purpose that the {dollars} insurers withhold unfairly from a disaster-struck home-owner typically trigger the American taxpayer to cough up federal assist by means of FEMA. 5
Now, right here’s the place issues actually bought fascinating. Throughout a podcast dialog I had with insurance coverage protection legal professional Steve Badger simply final evening, he made an offhand statement that deserves extra airtime. He acknowledged that other than the Huge 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 line with Steve, the unhealthy habits appears concentrated in a selected herd.
Shouldn’t the following Senate listening to function 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 perhaps even somewhat gratitude. Congress ought to think about an Insurance coverage Whistleblower Safety Act that not solely shields truth-tellers from retaliation however requires corporations 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 find out about altered engineering or outcome-based reviews.
Shouldn’t there be a federal unfair claims follow regulation that offers catastrophe survivors the correct to sue when insurance coverage corporations stall, lowball, and outright sabotage legitimate claims? The present patchwork of state-level cures leaves too many with out recourse. If a tree falls on your home and your insurer sends you a verify for lunch cash, there must be a transparent, federal treatment. If Congress is severe about defending Individuals from catastrophe, it’s time to start out holding insurers accountable below federal regulation. And perhaps, simply perhaps, we are able to get again to the concept insurance coverage is a security web, not a entice door.
The picture above exhibits Merlin Regulation Group legal professional Steven Bush within the background on the Senate listening to. When you have any inside details about insurance coverage firm fraud, please contact Steven Bush. We’re preventing for these whistleblower safety legal guidelines, that are desperately wanted to assist maintain the insurance coverage claims business in verify 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.
