On Tuesday, executives from (among others) the insurance company Allstate were called to testify before the Senate Homeland Security Subcommittee on the topic of claims resulting from the damage done to American properties by natural disasters, including Hurricanes Helene and Milton. Chairman Josh Hawley (R-MO) engaged full-on beast mode and went through them like a wrecking ball through a wad of tissue paper. It was a sight to see, and you can, right now.
It's an eight and a half minute beat-down. In pro rodeo, a saddle bronc rider has to stay on the horse for only eight seconds, which I have it on good authority can seem like eight months; this Allstate executive, Mike Fiato, must have felt like the ride he was on lasted eight years.
Here are a couple of highlights.
Senator Hawley: So, I noticed that you said in your written testimony, you just repeated it here, let me sure I get this right. I'm going to quote you now - we live and breathe our motto, "Our customer's worst day needs to be our best." I have to tell you Mr. Fiato, based on the testimony I've heard today, based on the witness statements I've taken from witnesses, it sounds like to me that it really ought to be amended to say "Our customer's worst day is your big profit opportunity." I mean, we've just heard testimony here, sworn testimony, from multiple adjustor, that your company ordered them to delete, or alter damage estimates, to reduce payouts and to make you profits. It sounds to me like you're running a system of institutionalized fraud.
Mike Fiato: Yeah, that would be incorrect, Senator. That's not what we do.
Senator Hawley: So you have never ordered, Allstate has never asked an adjustor to change an assessment on their report.
Mike Fiato: When we review an adjustor's estimate, most often for authority requests, so, most adjustors have an amount of financial authority that they can settle claims to without having to...
Senator Hawley: Now wait a minute, that's not what they testified to.
I'm not an attorney, and I'm not an insurance adjustor, but this sounds a lot like (at the very least) an unethical business practice, if not outright fraud.
But it wasn't over yet for Mike Fiato:
Senator Hawley: Listen to another piece of testimony from another witness, this is a whistleblower report that has come in to us. This person says, "I've dedicated my entire adult life to the claims adjusting world in numerous roles, I worked for Pilot and Allstate 12 years, as an independent adjustor. I wrote claims all over the country regularly throughout the years. And I have watched the progression and the controlling nature of claims worsen progressively. Allstate created an internal review team with the sole purpose of making sure claims were paid as low as possible. Allstate reviewers instructed adjustors to alter and delete factual findings in their estimates to drive down the cost of a claim.
"Alter or delete" would be the key term here; that's dishonest, it's breaking faith with their customers, and it's fraud.
See Also: Senator Josh Hawley Reintroduces Aptly-Named Pelosi Act
It remains to be seen what the fallout of all this will be for the insurance companies. Some may be tempted to claim that these companies were caught off-guard by a considerable natural disaster that caused billions in property damage, but that's a canard; we have had hurricanes before, along with earthquakes, wildfires and other large-scale disasters; the insurance companies should factor those into their plans, and almost certainly do.
At least, today and in other hearings certain to come, the executives of those companies are being called to answer for their actions, and unless I'm very gravely mistaken, a few heads will roll in those companies.
But will they be the right heads?
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