Lawmakers questioned whether insurance companies are fulfilling their contractual obligations to consumers after disasters, as policyholders and former adjusters alleged delays, denials, and pressure to lower claim payouts during a US Senate hearing on May 13.
AM Best reported that the Senate Committee on Homeland Security and Governmental Affairs convened the hearing to examine how insurers responded to major natural disasters, including recent hurricanes and wildfires.
Testimony came from executives of State Farm and Allstate, alongside policyholders, consumer advocates, and former claims adjusters.
Committee chair Sen. Josh Hawley said many consumers feel abandoned when they need their insurers most. He cited repeated inspections, inconsistent estimates, and claim denials. “They delay, and they deny, and they offer excuses,” Hawley said, describing reports of insurers sending multiple adjusters with varying assessments.
Some adjusters testified that they were directed to revise damage reports in ways that reduced settlements.
Meanwhile, policyholders described navigating confusing processes and receiving less compensation than expected despite consistent premium payments.
Insurance executives rejected suggestions of widespread misconduct. Michael Keating, vice president of operations at State Farm, said the company received 129,600 claims from hurricanes Helene and Milton, paying out nearly $1.28 billion. He said fewer than 1% of those resulted in formal complaints.
"Our job is to honor the commitments we make to policyholders under their policies," AM Best quoted Keating. "At the same time, we also have an obligation to pay only covered claims in the proper amount; doing otherwise unnecessarily increases insurance costs for all policyholders."
Mike Fiato, Allstate’s chief claims officer, said the company paid $3.3 billion in claims in the first quarter of 2024 and over $37 billion year-to-date. Fiato noted that not all claims qualify, citing reasons such as unmet deductibles, policy exclusions, or lack of damage found during inspections.
According to National Association of Mutual Insurance Companies president and CEO, Neil Alldredge, the US insurers provide daily guidance and timely payments, referencing responses to recent hurricanes and California wildfires.
“The swift response to the recent California wildfires and hurricanes Helene and Milton shows how committed carriers are to helping people recover and rebuild as quickly as possible,” said Alldredge.
The hearing also addressed the role of the Federal Emergency Management Agency (FEMA). Sen. Andy Kim spoke against calls to eliminate the agency, noting its central role in disaster response. He acknowledged the need for reforms but urged bipartisan cooperation
"Yes, it (FEMA) needs reforms. Yes, there are changes that need to happen. That is something that we can try to work on in a bipartisan way," said New Jersey senator Kim. "Emergency managers, first responders and other people in my community are deeply concerned about some of the rhetoric coming out of this administration about abolishing or getting rid of it."
President Donald Trump has formed a FEMA review council to examine agency performance. Evan Greenberg, CEO of Chubb Ltd., was appointed to the panel in early May.
Do insurers uphold their commitments after disasters, or do reforms need to go further? Share your thoughts in the comments.
