Moody's downgrades US credit rating to double-A  May 19th 2025

Senate subcommittee grills insurance execs

A U.S. Senate subcommittee questioned executives from State Farm and Allstate on Tuesday after hearing testimony from clients and adjusters alleging fraud and abuse in the system.

The disaster management subcommittee hearing of the U.S. Senate Committee on Homeland Security and Governmental Affairs was called to look at claims practices following natural disasters. Sen. Josh Hawley, the subcommittee’s chair, said devastating catastrophes were leaving families homeless and in debt because insurance companies wouldn’t pay out their claims.

“This isn’t charity that we’re talking about,” he said in his opening remarks. “[Americans] turn to their insurance companies because they pay premiums to those insurance companies. It’s a contract. And unfortunately, time after time, they find when disaster strikes — in their moment of utmost need — the insurance companies come back to them and they delay, and they deny, and they offer excuses, and they send out two adjusters and three adjusters and 15 adjusters and 25 adjusters, and they constantly change the estimates. And at the end of the day, they just won’t pay what is due. What is required. What is just.”

The committee heard testimony from policyholders and adjusters. Georgia homeowner Natalia Migal, an Allstate policyholder, said the company gave her the run-around after a 70-foot tree fell on her home and her roof collapsed. After Allstate offered her $46,000 to repair the damage, she hired an independent inspector and engineer, who found the property had suffered closer to $400,000 in damage.

Ultimately, Migal received less than $100,000 to repair her home. Clifford Millikan, one of the adjusters assigned to the case, said he disagreed with that payout and was told by Allstate to revise his initial estimate, which was around $200,000.

Millikan, who has worked as an adjuster for Allstate through Pilot Catastrophe for several years, said adjusters are routinely asked to lower their estimates to reduce claims awards. Allstate has also started removing on-site adjusters from the process, he said, relying instead on third-party non-licensed inspectors to take pictures and then upload them to a portal for review. This increases the likelihood that damage will be missed, he said, which is to Allstate’s benefit.

“These new practices are wrong, and the people most affected by them are the ones who lack the resources to fight back, like the poor and the elderly,” he said.

Michael Keating, operations vice president for State Farm, and Mike Fiato, vice president and chief claims officer at Allstate said their companies are committed to paying out claims and helping policyholders recover.

Keating said State Farm received 129,600 claims from hurricanes Milton and Helene last year and has paid out $1.28 billion so far. Less than 1% of those claims have received one or more policyholder complaints, he said.

Fiato said he regretted that Migal was unhappy with how her claim was handled but disputed the testimony surrounding the case. He said much of the damage was cosmetic, not structural, which accounted for the discrepancy in repair estimates.

He said Allstate has robust internal oversight protocols and a separate quality department. He pointed out that insurers are also subject to state regulation.

Rate filing read-across implies 1-time, $12B-plus US private auto tariff hit | S&P Global

Most publicly traded private auto insurers took a wait-and-see approach in their comments during first-quarter earnings conference calls to the impact of tariffs on loss costs, but timelines associated with the rate filing process may increasingly compel them to make judgments about potential inflation in the costs to repair and replace damaged vehicles. Two filings newly obtained by S&P Global Market Intelligence show that at least one carrier is seeking to incorporate its internal estimates of future tariff-related hits in its selected rates.

Industry participants and observers expect that private auto will be the property and casualty business most directly impacted by the Trump administration's tariffs on a wide range of goods due to the automobile supply chain's reliance on imported finished products and raw materials. And private auto insurers have recent experience with a bout of severe loss-cost inflation stemming from pandemic-era supply chain disruptions that led to historically unfavorable underwriting results and, in response, multiple rounds of large rate increases.

Geopolitical developments, political pronouncements and fluid deadlines over the past several months have made it difficult to gauge the magnitude and timing of the impact of various new tariffs on private auto loss costs. But while internal scenario testing has been ongoing around the industry for weeks, new filings in Virginia and Oregon by regional carrier Acuity A Mutual Insurance Co. provide one of the first public attempts to quantify and address through rate increases the effects at the coverage level.

We extrapolated Acuity's projections, which specifically applied only to its books of business in those two states, to the industry level. When applied in a uniform manner against actual 2024 statutory financial results, we arrived at an estimated impact on US private auto net incurred losses of approximately $12.4 billion, representing an increase of about 5.6% over actual 2024 private auto incurred losses.