Large Property Insurers Respond to Climate Change by Denying Homeowner Claims

PALM BEACH GARDENS, Fla., Sept. 26, 2024 /PRNewswire/ — Weiss Ratings, the nation’s only independent insurance company rating agency, revealed today that 13 large U.S. property insurers have flatly denied 40% to 70% of the 3.9 million homeowner claims they closed in 2023.

 Weiss Ratings Founder Martin D. Weiss said this is probably an effort to offset the surging costs of climate change. “Instead of maintaining adequate reserves to cover the likely potential damage from storms, floods and forest fires, many insurers distribute the funds to shareholders or move them to other subsidiaries,” Weiss said. “Now, to make ends meet, these companies are closing about half of homeowner claims with no payment whatsoever.”

Homeowners have an urgent need to know how often their insurers deny claims, but it’s been virtually impossible for them to acquire this information from either the companies or their regulators.

Among insurers that received and closed 50,000 or more homeowners and farmowners claims in 2023, Farm Bureau Property & Casualty Insurance Company (domiciled in Iowa) denied 70.5% of claims with no payment; American Bankers Insurance Company (FL) denied 51.2%; and Allstate Indemnity Company (IL) denied 50.5%.

The nation’s largest providers — each with hundreds of thousands of homeowners claims closed in 2023 — made zero payments on nearly half of their claims:

Farmers Insurance Exchange (CA) closed 257,189 homeowners claims in 2023 and denied payment on 49.7%.

United Services Automobile Association (TX) closed 550,099 and denied 48.2%.

USAA General Indemnity Company (TX) closed 273,994 claims and denied 48%.

USAA Casualty Insurance Company (TX) closed 428,116 and also denied 48%.

Allstate Vehicle & Property Insurance Company (IL) closed 545,807, denying 47.1%.

And Allstate Insurance (IL) closed 893,407, denying 46.4%.

In total, 13 large providers closed 3.9 million homeowners claims in 2023, denying any payment on 47.5%.

Meanwhile, including all reporting companies, 8.8 million homeowner claims were closed in 2023, among which 37.4% were denied payment, up from 24.9% in 2004.

Weiss concluded: “There’s nothing normal about these high denial rates. They’ve been creeping up steadily for nearly two decades and have now reached alarming levels, especially among some of the biggest providers in disaster-prone states like Florida and California.

“The public can’t even begin to cope with the property insurance crisis until both the industry and their regulators provide full transparency, a change in standard operating procedure that may not be possible without strong ‘Truth in Insurance’ legislation.”

To check the denial rates of the nation’s homeowners insurers, consumers can go here.

About Weiss Ratings: Weiss rates 53,000 institutions and investments, including safety ratings on insurers, banks and credit unions as well as investment ratings on stocks, ETFs, mutual funds and cryptocurrencies. Since its founding in 1971, Weiss Ratings has never accepted any form of payment from rated entities for its ratings. All Weiss ratings are available at https://weissratings.com.

The U.S. Government Accountability Office (GAO) reported that the Weiss ratings of U.S. life and health insurers outperformed those of A.M. Best by 3-to-1 in warning of future financial difficulties, while also greatly outperforming those of Moody’s and Standard & Poor’s. The New York Times reported that Weiss “was the first to warn of the dangers and say so unambiguously.” Barron’s called Weiss Ratings “the leader in identifying vulnerable companies.”

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SOURCE Weiss Ratings