Federal Unfair Claims Practice Law

This week’s Senate hearing on the insurance industry’s claims practices following natural disasters wasn’t just a made-for-TV moment. It was a five-alarm warning siren for policyholders and insurers across the country. With photos of collapsed breezeways, stories of children sleeping on floors after insurers not paying, and property insurance adjusters essentially confessing to being neutered into glorified picture-takers whose estimates are going to be changed by others not onsite, one might ask whether it is time to start treating insurance claim abuse as the national problem it is.

Senator Josh Hawley sent a letter on January 24, 2025, calling for a Senate hearing to investigate insurance companies’ claims handling following Hurricanes Helene and Milton. In his letter, he described reports of widespread claim denials as “morally obscene.” He invited insurance executives to testify before the Senate Homeland Security and Governmental Affairs Subcommittee on Disaster Management, which he chairs. He also requested detailed information on the number of denied claims, the reasons for those denials, and the average response times for disaster-related claims. This letter set the stage for the May 13, 2025, hearing, where policyholders, adjusters, and insurance executives provided testimony on the industry’s response to natural disasters.

The hearing was a no-holds-barred spectacle. ¹ Policyholders like Natalia Miguel and Jacob Vertel laid bare what it’s like when your house is reduced to splinters, but your insurance company offers you pocket change for claims payment. Miguel’s Georgia home was crushed by a 70-foot tree after Hurricane Helene. Allstate’s initial offer? $46,000. Her contractor’s estimate? North of $497,000. It took months, multiple adjusters, and the intervention of a public adjuster and an engineer just to get Allstate to grudgingly up their offer to under $100,000. Meanwhile, the roof still leaks, the wires still spark, and Allstate still insists everything’s working as intended. ²

Vertel’s story was just as stomach-churning. ³ His North Carolina home was rendered uninhabitable by a tornado while his wife was pregnant with their second child. State Farm told them the house was livable, even after the county slapped a “do not enter” notice on the front door. After 228 days, they still haven’t made repairs. At this point, the only thing less responsive than the State Farm claims department is a taxidermied cat. At least the State Farm claims executive apologized for the claims handling.

But the most explosive testimony didn’t come from policyholders. That testimony came from the people who were sent to help them. Two independent adjusters, Nick Schroeder and Cliff Milliken, testified under oath that Allstate reviewers regularly instructed them to alter or delete estimates to minimize payouts. ⁴ They described a system where estimates were scrubbed of inconvenient facts by reviewers who had never set foot on the property, and if an adjuster pushed back? They were yanked off the file or blacklisted entirely. Milliken even stated that after agreeing to testify before the Senate, he got the dreaded call that he was being “cut off.” So much for the industry’s endless blather about integrity.

Senator Hawley laid into the Allstate executive whom I wrote about in Understanding Leadership from Inside the Insurance Claims Machine: Reflections on Mike Fiato’s Vision. My bet is he enjoyed reading about his leadership in my blog more than his day in the chair responding to Allstate’s handling of claims.

Doug Quinn, director of the American Policyholder Association, added a pointed reminder that this isn’t new. He cited systemic fraud going back to Superstorm Sandy, Katrina, and beyond. He urged the committee to consider what many of us in the trenches have long been saying: State regulators are asleep at the wheel, and state regulation is not enough. His view is that we need federal enforcement, not just to punish fraud, but to prevent it. He made the point that the dollars insurers withhold unfairly from a disaster-struck homeowner often cause the American taxpayer to cough up federal aid through FEMA. ⁵

Now, here’s where things really got interesting. During a podcast conversation I had with insurance defense attorney Steve Badger just last night, he made an offhand observation that deserves more airtime. He stated that aside from the Big Four—State Farm, Allstate, Progressive, and Farmers—and the unique breed of Florida insurers, he rarely hears of systemic insurance claims abuse. That’s right. According to Steve, the bad behavior seems concentrated in a specific herd.

Shouldn’t the next Senate hearing feature the other two claims executives from the Fab Four? How about the Florida-based carriers and their executive leadership?  What about the Florida Insurance Commissioner? It’s no secret that Florida is a petri dish of high-risk property insurance and political theater. It’s time to put the spotlight where the policyholder pain is most acute.

There’s another piece missing from this conversation. The brave souls who testify against their employers are usually the field adjusters sent to help the policyholders. They deserve more than applause. They deserve protection and maybe even a little gratitude. Congress should consider an Insurance Whistleblower Protection Act that not only shields truth-tellers from retaliation but requires companies to self-report violations and prove that internal whistleblowers are promoted, not punished. The adjusters at the hearing shouldn’t have to choose between their careers and their conscience. It should be extended to engineers and staff who know about altered engineering or outcome-based reports.

Shouldn’t there be a federal unfair claims practice law that gives disaster survivors the right to sue when insurance companies stall, lowball, and outright sabotage valid claims? The current patchwork of state-level remedies leaves too many without recourse. If a tree falls on your house and your insurer sends you a check for lunch money, there should be a clear, federal remedy. If Congress is serious about protecting Americans from disaster, it’s time to start holding insurers accountable under federal law. And maybe, just maybe, we can get back to the idea that insurance is a safety net, not a trap door.

The photo above shows Merlin Law Group attorney Steven Bush in the background at the Senate hearing. If you have any inside information about insurance company fraud, please contact Steven Bush. We are fighting for these whistleblower protection laws, which are desperately needed to help keep the insurance claims industry in check and honest.

Thought For The Day    

“It is by doubting that we come to investigate, and by investigating that we recognize the truth.”
—Peter Abelard

¹ Transcript of hearing before the Senate Homeland Security and Governmental Affairs Subcommittee on Disaster Management, May 13, 2025.

² Written testimony of Natalia Miguel submitted to the Senate Homeland Security and Governmental Affairs Subcommittee on Disaster Management, May 13, 2025.

³ Written testimony of Jacob Vertel submitted to the Senate Homeland Security and Governmental Affairs Subcommittee on Disaster Management, May 13, 2025.

⁴ Written testimony of Nick Schroeder and Cliff Millikan submitted to the Senate Homeland Security and Governmental Affairs Subcommittee on Disaster Management, May 13, 2025.

⁵ Written testimony of Doug Quinn submitted to the Senate Homeland Security and Governmental Affairs Subcommittee on Disaster Management, May 13, 2025.