Editor’s note: The story has been updated to include comments from State Farm and Allstate.
Sen. Elizabeth Warren (D-Mass.) and Sen. Josh Hawley (R-Mo.) are reportedly seeking answers from major home and auto insurers after analysis showed consumers increasingly face claims that close without receiving any payment.
The senators requested data explaining why more claims are ending without payments. The inquiry covers both formally denied claims and other claims closed without payouts, reported the Wall Street Journal.
The letters ask State Farm, Allstate Corp. (NYSE:ALL) and other insurers to disclose closed-claim data, including denials. The companies must also explain whether employee, contractor or adjuster compensation depends on claim decisions or payouts.
State Farm told Benzinga in a statement that it is reviewing the senators’ letter and emphasized its responsibility to support customers when unexpected losses occur. "Our customers count on us to be there when the unexpected happens, and we take that responsibility seriously," the insurer said.
The company added that "each claim is evaluated based on the facts and the coverage purchased" and said that when a loss is covered, it pays the benefits available under the policy. State Farm also stated that a claim being "closed without payment" does not necessarily mean coverage was denied. According to the insurer, claims can be closed without a payment for several reasons, including when the loss falls below the customer’s deductible or when the customer withdraws the claim.
Allstate told Benzinga that it receives high customer satisfaction ratings across more than 7 million home and auto insurance claims annually. The insurer also said its claims practices have been validated through more than 150 formal regulatory reviews across all 50 states over the past five years.
The senators said the findings raise “serious questions about whether consumers can trust their insurance companies” to honor their obligations. They also criticized “increasingly aggressive” claims-handling practices, which also include tactics to delay payments, as insurers chase stronger profits.
Scrutiny Grows as Insurer Profits Surge
The inquiry expands Warren’s broader scrutiny of concentrated influence in insurance and healthcare. In August, she criticized vertical integration involving UnitedHealth Group Inc. (NYSE:UNH), arguing that control across insurance, pharmacies and providers can raise patient costs while increasing corporate profits.
The WSJ, based on its review of thousands of regulatory filings, found that homeowners may face nearly even odds of receiving no payment. Drivers have also seen worsening prospects for auto liability and medical claims.
U.S. property and casualty insurers posted $31.2 billion in underwriting profits in the first half of this year, nearly triple the $10.9 billion earned a year earlier, according to a report by AM Best. The report credited higher premiums and lower claim payouts, while insurers maintain they investigate all claims and pay what is owed promptly, fairly and fully.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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