Senators Elizabeth Warren & Josh Hawley Probing Insurer Claim Payments

Democrat Sen. Elizabeth Warren and Missouri Republican, Sen. Josh Hawley want to know how insurers pay home and auto claims. They read Wall Street Journal report in May of this year stating in 2025 the five largest home insurers closed over 40% of claims without paying them.

A decade ago that figure was 36%.

In August the publication ran a story saying auto insurers didn’t pay liability and/or medical claims for 45% of the claims filed. A decade ago that number was 35%

So the two senators penned a letter to State Farm, Allstate, USAA, Farmers, Liberty Mutual and American Family wanting to know why. They wrote the claim denials don’t look all that good when rates are quite high, and growing higher, and insurers are generating high profits.

"The growing share of both homeowners and auto insurance claims resulting in no payment raises serious questions about whether consumers can trust their insurance companies to hold up their end of the bargain when disasters or emergencies occur and affect their most basic essentials: their home and car," the letters said.

Warren and Hawley want information from the insurers by this Friday, October 16th.

Mark Friedlander is the senior media director for the Insurance Information Institute (Triple I). He addressed the profitability noting they need to be viewed through rising costs and big losses in years past.

“Property/casualty insurers must maintain sufficient capital (surplus) to pay current and future claims, including losses from catastrophes that may not occur until well after premiums are collected,” he said. “Recent insurance industry financial results also need to be viewed against the significant increases in property repair and rebuilding costs, severe weather losses, higher auto repair costs, legal system abuse and claim fraud that have negatively affected underwriting performance in recent years.”

The National Association of Mutual Insurance Companies (NAMIC) said closing claims isn’t the same thing as denying one. Some claims are closed because deductibles aren’t met. Some losses are from flooding, and flooding is not covered by property insurers.

NAMIC CEO Neil Alldredge wrote a letter to the Wall Street Journal editors saying readers weren’t shown the whole picture. The publication refused to print the letter. He said:

• In 2024 insurers paid 7.35 homeowners claims

• That’s one payment for every 14 policies

• From 1990 to 2024 homeowners insurers averaged just a 2.9% return on net worth

• That compares to 7.7% for property/casualty claims overall

“Buried well into the piece is this: no-payment figures reported to regulators include claims paid by the other driver’s insurer, claims withdrawn by customers, claims outside policy terms, and claims below the deductible,” Alldredge said. “These simple facts explain much of the gap between the data and the headline’s implication. They belong at the top of the story, not near the bottom. The analysis also excluded claims still open at year’s end, which the Journal itself acknowledged will lower recent years’ nonpayment rates as those claims resolve. That caveat also appeared far too late in the piece.”

State Farm responded saying closed claims and claims denials must be “evaluated based on the facts and the coverage purchased, and when a loss is covered, we pay the benefits available under the policy.”

The company said a claim being closed without a payment doesn’t necessarily mean a claim was denied.

“Claims can close without a State Farm payment for several reasons, including when the amount is below the customer’s deductible or the customer withdraws the claim,” State Farm said in its statement.

Source link: PropertyCasualty360.com — https://bit.ly/4yfOjsh

Source link: Insurance Journal — https://bit.ly/3UnbYZO