Major Insurers Denying Nearly Half of Claims

In 2023, a significant number of homeowners faced unexpected challenges when filing insurance claims for property damage. According to a report by Weiss Ratings, 13 major U.S. property insurers denied payment on 47.5% of the 3.9 million homeowner claims they closed that year. This trend reflects a broader issue, as the overall denial rate across all reporting companies rose to 37.4% in 2023, up from 24.9% in 2004.

Several prominent insurance providers exhibited notably high denial rates.
– Farm Bureau Property & Casualty Insurance Co., based in Iowa, denied 70.5% of claims.
– Allstate Indemnity Co. of Illinois denied 51.2% and 50.5% of claims, respectively.
– Farmers Insurance Exchange in California denied payment on 49.7% of its 257,189 closed claims.

This escalating trend in claim denials has been ongoing for nearly two decades. Weiss Ratings attributes the rise to insurers attempting to offset increasing costs associated with natural disasters such as storms, floods, and wildfires. Instead of maintaining adequate reserves to cover potential damages, some companies have reportedly diverted funds to shareholders or other subsidiaries, leading to higher denial rates.

The implications for homeowners are profound. With denial rates approaching or exceeding 50% among major insurers, policyholders may face significant financial burdens when disaster strikes. The lack of transparency regarding claim denial rates further complicates the situation, making it challenging for consumers to make informed decisions about their insurance providers.

Homeowners are encouraged to research their insurance providers’ claim denial rates and consider this information when selecting or renewing policies. Being informed can help in choosing an insurer more likely to honor claims, providing peace of mind in times of need.

Read More: https://weissratings.com/en/weiss-ratings-daily/homeowners-beware-big-insurers-deny-half-of-damage-claims