Allstate, State Farm defend claims adjusting practices in Senate hearing

By Isha Marathe

May 16 - (The Insurer) - Two independent claims adjusters at Allstate and a whistleblower at State Farm testified before a disaster management subcommittee that they were ordered to delete or reduce damage estimates for Hurricane Helene and faced retaliation after resisting.

Tuesday's hearing, chaired by U.S. Senator Josh Hawley, investigated the insurance industry’s claims practices following recent natural disasters. The hearing centred on two homeowners in Georgia and North Carolina who believe their payouts for damages from Hurricane Helene were lowballed by Allstate and State Farm after the on-site claims adjusters' estimates were suppressed.

Mike Fiato, executive vice president and chief claims officer at Allstate, told the committee that "Allstate pays claims with precision and fairness" and that he "disagree(s) with the statement(s)".

Michael Keating, operations vice president at State Farm, apologised to the homeowner testifying against the company, but said he was "unaware of the details surrounding these allegations".

State Farm did not immediately respond to a request for additional comment.

Allstate supported Fiato's comments and sent a statement from Neil Alldredge, president and CEO of the National Association of Mutual Insurance Companies, that said: “The swift response to the recent California wildfires and Hurricanes Helene and Milton show how committed carriers are to helping people recover and rebuild as quickly as possible.”

CLAIMS ADJUSTERS SAY THEY ARE PRESSURED

Nick Schroeder, a claims adjuster who worked for Allstate, said his damage estimate for the Georgia homeowner was deemed too high, and what he attributed to Hurricane Helene's hail damage was reviewed and amended to "wear and tear" not covered by the policy. When he refused to make the changes, he was removed from the case, Schroeder said.

"In my professional opinion, the claims handling process I observed from Allstate prioritised minimising payouts, often at the expense of accurately addressing documented storm damage," he said.

Clifford Millikan, a Pilot Catastrophe Service adjuster who has exclusively worked for Allstate for more than eight years, was then sent to reinspect the Georgia home. Millikan's estimate was also rejected, and he was told to alter it to a lower figure, he testified.

Both Schroeder and Millikan testified that their experience with the Georgia home was part of a larger pattern at Allstate.

Millikan testified that he had observed "significant changes" in Allstate's claims handling process starting in 2020, when the insurer began to increasingly rely on third-party non-licensed inspectors and "so-called picture takers" to inspect damaged properties.

"Allstate reviewers who have never been to the loss instruct the adjuster to alter and delete factual and causal findings in our estimate. Frequently, these alterations and deletions are simply false," Millikan said.

"Reviewers force adjusters to use material not of like kind or quality and not to consider engineer reports and to issue denial letters that the adjuster must sign even when the adjuster disagrees."

Both adjusters said they fear being placed on a "cut-off list" for pushing back against reviewers' orders to reduce damage estimates.

"No, we do not (retaliate against whistleblowers)," Allstate's Fiato said.

Hawley read out a letter from an anonymous whistleblower who worked as a claims adjuster for State Farm that said: "I observed routine and deliberate underpayment of claims, including the consistent removal or alteration of essential line items. These were not occasional discrepancies, but part of a broader and consistent pattern of low-balling estimates."

State Farm's Keating said these allegations were "not consistent with the State Farm (I) know".