In a significant development for policyholders affected by Hurricanes Helene and Milton, House Oversight Democrats have taken decisive action to protect hurricane victims from potential insurance fraud. Representatives Jamie Raskin, Maxwell Alejandro Frost, and Jared Moskowitz have issued formal requests to insurance regulators in five states, including Florida, Tennessee, Georgia, South Carolina, and North Carolina. 1

This congressional action comes at a crucial time, as recent reports indicate that insurance companies have already denied more than 37,000 claims in Florida alone following Hurricanes Helene and Milton. The timing is particularly relevant given the recent 60 Minutes exposé that revealed troubling practices in the insurance industry’s handling of Hurricane Ian claims.

The congressional letters and the press release 2 emphasize the disturbing pattern of wrongful claims-handling behavior in the insurance industry. Following Hurricane Ian, evidence emerged of insurance carriers altering damage reports, misleading homeowners, and significantly reducing claim payments by 45 to 97 percent from initial estimates. These practices mirror the concerning testimony featured in the 60 Minutes report, where insurance insiders described systematic efforts to shortchange policyholders by 70 to 90 percent of their rightful claims.

Document Preservation and Oversight

The congressional representatives have made specific demands to state insurance regulators:

In this spirit of accountability, we ask that you request insurance providers in your jurisdiction to preserve the following categories of documents regarding all claims related to damage attributable to Hurricanes Helene and Milton:

1. For any claim where the claim payout is less than 90% of any loss estimate, including any initial damage estimate, damage estimate by a field adjuster, or damage estimate by a desk adjuster:

a. All loss estimates and insurance adjusters’ reports;
b. All documents and communications discussing payout amounts, loss estimates, or insurance adjusters’ reports;
c. All documents and communications discussing modifications or changes to any loss estimate or insurance adjusters’ report; and
d. All documents and communications identifying the individual or individuals responsible for any modifications or changes to any loss estimates or insurance adjusters’ report.

2. All documents and communications related to any claims denied or reduced by more than 10% because damages were designated as being the result of a flood event rather than a wind event.

3. All documents and communications related to guidance regarding claims adjudication, including guidance to employees, contractors, and third parties.

The letter does not just call for the insurance commissioners to ask the insurers under their jurisdiction to preserve these documents; the staff of the committee has asked the insurance commissioners to be briefed on these topics:

In addition, we request that you provide a briefing to Committee staff regarding your ongoing efforts to protect victims of Hurricanes Helene and Milton from dishonest insurance practices, including, as relevant:

1. Oversight you are conducting during the hurricane recovery process, such as spot checks on the claims adjudication process;

2. Inspections and field exams of ongoing insurance adjustment procedures you are conducting to ensure that fraudulent practices are identified as they occur; and

3. Regular reports you are requiring insurance companies to provide regarding the number of claims received and their status.

Industry-Wide Implications

This congressional oversight comes as the insurance claims handling industry faces increased scrutiny. The 60 Minutes investigation revealed systemic issues in claims handling, including pressure on adjusters to downplay damage and manipulate reports. These practices violate policyholders’ trust and regulatory obligations, which are increasingly failing at the state level for many reasons. One reason is that victims of these wrongful acts, the policyholders whose claims are underpaid or denied, do not have adequate extra-contractual remedies and private rights of action significant enough to deter wrongful conduct. It would be like a thief stealing your money, and all you can do is ask for it back and not be able to sue for more than that.

This congressional action represents a significant step toward addressing systematic issues in insurance claims handling. The involvement of federal oversight and state-level regulatory action may provide the necessary framework to protect policyholders from fraudulent practices. The insurance industry must recognize that the traditional approach of minimizing payouts at the expense of policyholders is no longer acceptable. As natural disasters become more frequent and severe, the need for honest, transparent, and fair claims-handling practices becomes increasingly important.

For policyholders affected by Hurricanes Helene and Milton, this congressional initiative offers hope that their claims will receive proper attention and fair treatment. It also serves as a warning to insurance companies that their claims handling practices are under intense scrutiny from both state and federal authorities. The success of these oversight efforts will ultimately depend on the cooperation of state insurance regulators and their willingness to implement robust monitoring and enforcement mechanisms. As these investigations proceed, policyholders should remain vigilant and document all interactions with their insurance carriers to protect their rights. Congress has the power to change current laws and pass new laws regarding the amount and manner of oversight that states have regarding insurance claims handling.

Thought For The Day  

It’s your reaction to adversity, not adversity itself that determines how your life’s story will develop.

—Dieter F. Uchtdorf

1 Letter to the Florida Office of Insurance Regulation
Letter to the Georgia Office of Commissioner of Insurance and Safety Fire
Letter to the South Carolina Department of Insurance
Letter to the North Carolina Department of Insurance
Letter to Tennessee Department of Commerce and Insurance
2 “Oversight Democrats Push Insurance Regulators in States Hit by Helene and Milton to Protect Hurricane Victims from Fraud” Press Release, Committee on Oversight and Accountability (Nov. 4, 2024).