Industry Reacts to Senators’ Letter for Claims Data and Recent Reports

Senators Elizabeth Warren and Josh Hawley are on the wrong track and misunderstand the influences that can affect claims, the industry said.

The senators have sent letters to some of the largest personal lines insurers in the U.S., asking for claims data on homeowners and auto claims, particularly those closed without payment. Warren and Hawley said they have “serious concerns,” and wondered whether consumers can trust insurance companies to “hold up their end of the bargain when disasters or emergencies occur.”

Related: Warren, Hawley Press Insurers Over Closed, Unpaid Claims

Warren and Hawley insinuated that recent reports on claims denials do not look good against recent increases in premiums and hefty profits announced by insurance companies.

The letters follow an August report from the Wall Street Journal (cited by the senators) focusing on auto claims. WSJ said its analysis of insurers’ regulatory filings found auto insurance companies did not pay out on 45% of closed auto liability and medical claims last year. A prior WSJ report on homeowners insurance said the five largest homeowners insurers didn’t pay on 44% of resolved claims.

The National Association of Mutual Insurance Companies (NAMIC) and others said WSJ got it wrong, and now Warren and Hawley are misconstruing the issue.

Mark Friedlander, senior director of media relations for the Insurance Information Institute (Triple-I), said it is important to look at insurer profitability through the lens of several years of elevated losses and rising costs.

“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 in an email. “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.”

Claims is not exactly a black and white matter, NAMIC said. A closed claim is not the same as a denied claim. Many claims fall below the deductible, and others included losses from flood, which the policy likely does not cover. Some claims are withdrawn, filed twice, or missing key documents.

The analysis from WSJ counted all of these claim conclusions, NAMIC said.

Friedlander said the resolution of claims can be affected by shortages of contractors, building materials and the availability of vehicle parts can delay repairs – especially after a major disaster. Other factors such as state regulatory requirements, inspections, documentation, coordination with third parties and litigation also influence claims.

In 2024, insurers closed 7.35 million homeowners claims with payment. That’s about one payment for every 14 policies in force, NAMIC added. Furthermore, from 1990 through 2024, homeowners insurance averaged just a 2.9% return on net worth, compared with 7.7% for property/casualty insurance overall, which “undercuts the claim that insurers profit by denying claims,” NAMIC said.

Following WSJ’s Aug. 9 story, Neil Alldredge, CEO of NAMIC wrote a letter to the editor but WSJ declined to publish it. In it, Alldredge said readers did not get the full picture on auto claims from the publication’s analysis.

“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.”

NAMIC’s Alldredge was also critical of WSJ’s use of John Morgan, founder of law firm Morgan & Morgan, as a source. The story “failed to note that the nation’s largest billboard lawyer might have a vested interest in mischaracterizing claims management,” he said.

State Farm said it is reviewing the senators’ letter. The home and auto insurer said its claims are “evaluated based on the facts and the coverage purchased, and when a loss is covered, we pay the benefits available under the policy.”

“A claim being ‘closed without payment’ does not necessarily mean coverage 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 added in an emailed statement.

Other insurers Insurance Journal attempted to reach were not immediately available for comment.

Topics Claims