Rising trend of claims denials heightens scrutiny on US carriers

By George Abbott

Jan 30 - (The Insurer) - Something is wrong with Florida’s insurance claims process, Dr Martin Weiss, founder of Weiss Ratings, has warned, after nearly half of claims made to certain insurers in the state were denied in 2023.

​​The white paper discussing these issues was released in October 2024, but has gained traction after Republican Senator Josh Hawley cited the report in his invitation for US insurers to publicly testify over what he called "morally obscene" disaster claim denials related to hurricanes Helene and Milton.

Weiss’s report reveals that nearly half of the claims received by insurers in Florida in 2023 were denied, a stark contrast to the industry average of 35-37 percent. “This is much worse than it was 10, 20 years ago," the report warns.

Weiss also warned that the trend is not limited to Florida and could be an early warning for the broader US insurance industry.

“The Florida region is a good starting place – the crisis here is the canary in the coal mine for the whole country,” Weiss explained. “Florida insurers typically don’t write policies outside the state, and out-of-state companies don’t often write premiums here. That makes it easier to isolate and study the problem.”

However, some industry groups have pushed back against criticism of insurers. In November 2024, the Personal Insurance Federation of Florida (PIFF) warned that certain reports on the market were misleading consumers.

“Unfortunately, recent media stories and self-interested statements by some critics of the insurance industry have created confusion, leading consumers to believe that property insurers are unjustly denying claims,” said PIFF president Michael Carlson.

He argued that much of the damage from Hurricane Ian was caused by storm surge — typically excluded from standard homeowners' insurance policies — rather than wind damage, which insurers cover, hence the high number of claims denied.

When asked about the role of fraud in high denial rates, Weiss dismissed that argument, pointing to the high number of lawsuits filed by policyholders. According to the report, more than 20 percent of denied homeowners’ claims resulted in lawsuits — 18 times the national average.

“If these were frivolous or fraudulent claims, no lawyer would take them on, let alone win the case,” Weiss said.

Weiss also warned that the increasingly “antagonistic relationship” between insurers and policyholders could end up being more costly for insurers in the long run, given that litigation leads to insurers facing mounting legal expenses.