14 May, 2025
Allstate, State Farm blasted at Senate hearing over claims practices
By Hailey Ross
 Sen. Josh Hawley (R-Mo.) swears in Allstate Executive Vice President and Chief Claims Officer Mike Fiato and State Farm Vice President of Operations Michael Keating during a May 13 hearing of the Senate Committee on Homeland Security and Governmental Affairs.Source: S&P Global Market Intelligence |
Sen. Josh Hawley (R-Mo.) did not mince words when he criticized The Allstate Corp. for engaging in a "hellscape of fraudulent behavior" in its claims handling during a May 13 hearing of the Senate Committee on Homeland Security and Governmental Affairs.
The hearing, titled "Examining the Insurance Industry's Claims Practices Following Recent Natural Disasters," kicked off with five witnesses who accused Allstate and State Farm Mutual Automobile Insurance Co. of failing to meet their obligations to pay claims to policyholders. Two former adjusters who were contracted by Allstate also said they were instructed by the company more than once to "alter" evaluations and findings in a way that would lower the estimates of how much the insurer would need to pay out to cover a claim.
Hawley, who chairs the Homeland Security and Governmental Affairs Committee, used letters written by whistleblowers and the testimony of five witnesses throughout the hearing to paint a picture of Allstate as a company that, in his words, should have the motto: "our customer's worst day is our big profit opportunity."
When asked for comment, Allstate directed S&P Global Market Intelligence to a press release that highlights the insurer "providing $37 billion to customers" in 2024. State Farm did not respond prior to publication. During the hearing, executives from both companies denied that their companies engaged in poor practices.
Claims gone wrong
A focal point of the hearing involved testimony from Natalia Migal, who owns a home in Sandy Springs, Georgia. Migal said her home was damaged during Hurricane Helene when, among other things, a 70-foot oak tree fell on her house. During her sworn testimony, she accused Allstate of delaying its payment of a claim and drastically underestimating the cost to repair the damage to the home.
Migal's testimony was bolstered by accounts given by Clifford Millikan and Nick Schroeder, who are both property adjusters with Pilot Catastrophe Services and worked for Allstate to evaluate Migal's property. Schroeder said Allstate took him off Migal's case and alleged that it was because the insurer felt he was going to provide a higher estimate than the company wanted. Both Schroeder and Millikan also testified that they have been instructed numerous times by Allstate to alter estimates in a way that would benefit the company.
State Farm was not immune to criticism either, as Jacob Vertel relayed to senators how he and his family ultimately had to sue State Farm for delaying the payment of a claim and for not fully covering damages after their house was damaged in Asheville, North Carolina.
Insurers respond
During the second part of the hearing, Allstate Executive Vice President and Chief Claims Officer Mike Fiato and State Farm Vice President of Operations Michael Keating responded to the allegations as they fielded questions from senators.
Keating began his remarks by saying it was "frankly difficult to hear" about the trials Vertel and his family had endured in trying to get State Farm to meet its claims obligations. Keating stood and turned away from the senators to address Vertel, who was sitting two rows behind, to apologize to him directly.
"We made mistakes in the handling of this claim," Keating said. "As a 30-year employee of this company, I know the actions did not reflect the values of State Farm."
 Allstate's Fiato and State Farm's Keating answered questions from senators at a May 13 committee hearing that scrutinized the insurance companies' claims practices following natural disasters. |
In contrast, Allstate's Fiato pushed back on claims that his company had done anything wrong. He said he was "sorry that [Migal] was unhappy" and came prepared with a multiple-point explanation of the "inaccuracies" he believed Migal's testimony contained.
This did not sit well with Hawley and other senators present at the hearing, with Hawley accusing Fiato of working for a company that is "running a racket."
Sen. Richard Blumenthal (D-Conn.) told Market Intelligence after the hearing that there are "options for Congress to impose guardrails" on the insurance industry to ensure claims get paid. These would include "certain timelines and deadlines to ensure claims are addressed much more promptly than they are now," Blumenthal said.
According to a Market Intelligence analysis, subsidiaries of both Allstate and State Farm received six out of the 10 largest personal auto insurance rate increases by calculated premium change during the first quarter of 2025.