Insurance executives ran into a Category 5 hurricane of outrage from Missouri Sen. Josh Hawley at a hearing this past week highlighting how companies leave homeowners high and dry after disasters – even allegedly rigging repair estimates to do it.

On Saturday, after a tornado in St. Louis Friday killed at least five while injuring nearly 40 and damaging some 5,000 homes, Hawley sent a letter to insurance companies demanding assiduous service for the insured.

“Following these devastating storms, I expect they will provide FULL COVERAGE for any and all damage. If they don’t, they will get a subpoena from me,” Hawley posted on X.

It’s not an idle threat, based on what happened earlier in the week.

At his hearing Tuesday, Hawley was particularly enraged at Allstate, which testimony indicated had lowballed Natalia Migal after severe destruction of her Georgia home by hurricane Helene.

Allstate offered her $46,000, while an independent adjuster hired by the family estimated the damage to be worth nearly $500,000.

The company ultimately offered $100,000 – but not before discharging the company’s first adjuster.

That adjuster, Nick Schroeder, told Hawley Allstate told him to lower his estimate. Then he was taken off the case altogether, he said.

“I was told it was due to time – I was taking too long,” Schroeder testified, “but I don’t believe that is the case. I think that Allstate saw from this, and my recently prior estimates of being very thorough and complete and going back and forth with reviewers on coverage, that it was going to be a higher estimate and it would be more cost-effective to reassign it to an adjuster that would listen better.”

‘Pervasive’ fraud in insurance

Hawley was still breathing fire in an exclusive interview Thursday with The Heartlander, well after the Tuesday hearing of the Homeland Security & Governmental Affairs Subcommittee on Disaster Management, District of Columbia, and Census that he chairs.

What is the problem with insurance companies, and what’s the extent of it?

“Well, the problem is their industry is full of fraud, and Allstate is committing it left, right and center,” Hawley told The Heartlander. 

“And how extensive is it? It’s pervasive. I think we saw that at the hearing. I mean, here’s how it works. And I would just say almost anybody, I bet, in Missouri who’s had to file an insurance claim has dealt with some aspect of this. 

“They lowball you on what they owe you under the policy. If you come back to them and say, ‘Wait a minute, wait a minute, that’s not going to cover my damages, you owe me more, I’ve been paying my premiums’ – then they delay. Then they deny, then they stonewall. And they do it forever. 

“And that is their whole business model. And they make millions of dollars, in fact, billions of dollars in profits on this. These companies have never been more profitable. Their CEOs have never made more than they’re making now. 

“Who’s paying for that? It is Missouri policyholders and others across the country who pay into these insurance programs, and then they can’t get a legit damage award when their home has been destroyed. It is wrong.”

Still waiting on repairs from Helene

Some eight months later, Migal testified her family’s home is much the same as it was the day after the hurricane.

“No significant repairs have been made,” she told Hawley. “Our roofing remains damaged and a hazard to our family: electrical wires visible, doors difficult to close, fences broken and much more. 

“As you can imagine, it is difficult to embark on a repair and reconstruction project without clarity on the budget.  

“We are homeowners – not lawyers, not engineers, not insurance experts. We have been Allstate customers for six years, since October 2019. During that time, we have paid our bills on time and in full. But when we needed Allstate the most, they failed us.  

“This is no longer about just a roof; it’s about the failure of a system that leaves families vulnerable after catastrophic events.”

At the hearing, Hawley repeatedly pummeled Mike Fiato, Allstate’s executive vice president and chief claims officer – noting that similar complaints have been made about the company since as early as a 1998 earthquake.

“Allstate was sued because reports had been changed to indicate that damage was unrelated to the earthquake and thus not reimbursable by the homeowners policy,” Hawley noted at the hearing.

Then, after Katrina, “In 2007, a federal grand jury found that Allstate had altered adjustment and engineering reports to defraud homeowners and the federal government. Exact same thing that these gentlemen testified to here today,” Hawley said.

“A judge also found that Allstate had paid $3 million — $2.8 million, to be exact – to hire a forensic company that falsified engineering reports. Exact same type of behavior that these gentlemen testified to today.

“Then there was Superstorm Sandy, where Allstate was accused of engaging in widespread falsifying of engineering reports to benefit insurers. 

“I mean, it just goes on and on and on.”

‘Hellscape’ of fraud

Hawley pressed Allstate’s Fiato hard to take responsibility for the company’s actions and explain whether it had changed its ways.

“I can’t believe you won’t take responsibility for the fact that your company, as we’ve heard from sworn testimony, is continuing to engage in this behavior – continuing to engage in this behavior – and now is also engaging in retaliation,” Hawley assailed him.

“It’s a pattern and practice if I’ve ever seen one, Mr. Fiato. It’s unbelievable. Do you have anything else you’d like to say in defense of Allstate?”

“It’s not our pattern or practice,” said Fiato, who also said he disagreed with witness testimony.

Hawley sharply disagreed.

“We’ve just seen the record. And it is a hellscape of fraudulent behavior to punish your policyholders, rip off the public, rip off the federal government too, by the way, which you did multiple times in past years when you moved over funding and claims to the federal government so FEMA would have to pay more, the taxpayer would have to pay more, and you would have to pay less.  

“And I have to tell you, it’s worked great for you. I mean, your profits are unbelievable.”

Problems are ‘industrywide’

State Farm was also in the eye of the Hawley hurricane, but he says it’s not just those two companies.

“I think it’s industrywide, to be honest with you. Those are the two biggest. They’re probably the two worst offenders,” Hawley tells The Heartlander.

“You know, we had testimony from whistleblowers who worked for those companies who say they were repeatedly instructed to change their damage estimates; to change their factual findings; to lie, basically, about what homeowners deserve. 

“These are people who worked for these companies for years, and they testified earlier this week that they were told over and over and over for years to do this. Now, that’s a problem. That is fraud. 

“So, I hope a couple of things happen. 

“Number one, I hope these companies get their socks sued off of them. And if we need to pass legislation to allow Americans and Missourians to get into court against these companies, we ought to do it. 

“Number 2, I hope that the state oversight agencies in every state, including Missouri, will go hard after these people. They are ripping off Missourians, they are ripping off working people in this country. That should not happen.”

‘It’s all over every state’

On that last point, Hawley says it was actually insurance complaints from his fellow Missourians that led to last week’s hearing after months of research.

“Complaints from Missourians,” he says when asked how he got onto the problem with insurers. “Complaints that they weren’t able to recover what they were due under their policies from Allstate, from State Farm – looking at the damage in other places of the country where we heard the same thing. 

“My staff and committee started investigating this months ago. This hearing is the result of months of investigation, and to be honest with you, we couldn’t believe what we found. I thought, well, maybe this is an isolated issue with just a few cases. No, it’s industrywide. It’s all over Missouri. It’s all over every state. 

“And as we talked to these whistleblowers and they kept coming forward to us, I couldn’t believe it. But we exposed it on Tuesday, or at least began to, and now we need to hold these people accountable and get the rights that policyholders deserve, get those protected.”