Property insurers are likely to continue denying property insurance claims in the wake of major natural disasters like Hurricanes Milton and Helene, according to insurance ratings company Weiss Ratings.
Hurricane Milton barreled through Florida last week, killing at least 16 people and leaving millions without power. It came not long after Hurricane Helene, which tore through six states and killed more than 200 people. Now, Dr. Martin Weiss, founder of Weiss Ratings, has said a trend of non-payments to claimants is likely to continue—although insurance companies have firmly denied this.
“Over the long term, we’ve seen a worsening trend in the denial rates by property insurers. At a minimum, this trend is bound to continue,” Dr. Weiss told Newsweek. “With this year’s jump in damages, insurers are bound to come under even greater pressure to deny legitimate claims, potentially accelerating the worsening trend.”
The comments come after Weiss released a report in June that found nearly half of all damage claims made by Florida homeowners with three of the state’s large providers—Castle Key Indemnity, State Farm, and Castle Key Insurance—last year did not result in a payment.
CHANDAN KHANNA / AFP/GETTY
According to Weiss Rating’s analysis, Castle Key Indemnity Company rejected 47.1 percent of the claims it finalized in 2023, highest denial rate among insurers in the state. State Farm Florida Insurance Company denied 46.4 percent of closed claims, while Castle Key Insurance Company denied 46 percent of claims in the same period. Insurers have denied that this was the case, saying the data is inaccurate.
Newsweek has contacted Allstate, the parent company of Castle Key Indemnity and Castle Key Insurance, for comment on Friday, October 11.
A spokesperson for State Farm told Newsweek: “The cited data on paid claims in Florida is inaccurate, incomplete, and presented in a way that artificially underrepresented payments to our customers. The information is cherry-picked to drive an inaccurate narrative.
“As an organization, we take great pride in our customer service and are committed to paying what we owe promptly, courteously and efficiently. Many factors affect claim payouts including the type of loss and the amount of a customer’s deductible or hurricane deductible. In some weather events, the cause of damage is flood, which is excluded from the homeowners policy. If an individual does not have a flood policy to cover that damage, the policyholder may file a claim with their insurance company to obtain the necessary paperwork to pursue disaster assistance from the federal government.”
Mark Friedlander, director of corporate communications at the Insurance Information Institute, agreed with State Farm, telling Newsweek that “insurers serve as financial first responders to their customers when catastrophes strike like Milton to help their policyholders recover as quickly as possible” and that “they deliver on their promise to pay claims in exchange for the premiums paid by their customers.”
He said Weiss Ratings “cherry-picked insurance claim data without context” and that the results have “no validity in our opinion.”
“The Florida insurers being accused of not paying claims are among the highest-rated companies in the business by their customers for their claims handling and customer service. This is why they maintain their roles as industry leaders,” he said. “There are a variety of reasons why a property insurance claim may be closed without payment. Most likely, these are primarily flood claims that are not covered by a standard property insurance, condo insurance or flood insurance policy. You need flood insurance to cover a flood claim.”
Photo-illustration by Newsweek/Getty
When asked about State Farm and Friedlander’s position, Dr. Weiss told Newsweek: “The data that State Farm is refuting was sourced directly from their own annual statutory financial filing with the NAIC (National Association of Insurance Commissioners). If they are disputing the accuracy of their own data, then we would ask why they failed to file accurate data. Additionally, we would be delighted to receive a comprehensive data set covering each claim and the reasons that they were closed without payment if they would like to reach out to us.”
The NAIC filing from State Farm, seen by Newsweek, shows the same number of denied claims reported by Weiss Ratings. In 2023, there were a total pf 19,022 claims made with State Farm, 8,829 of which were closed without payment, amounting to 46.4 percent.
Why insurance claims are denied
Insurance claims can be denied for a number of reasons, including but not limited to insufficient information, missed premium payments, fraudulent claims, or missed filing deadlines. The Weiss Ratings report does not detail the reasons why these claims were denied.
Florida homeowners who had filed claims with other insurance companies faced similar difficulties. According to Weiss Ratings, half the 40 insurance companies they analyzed failed to pay on at least 30 percent of claims. Additionally, three smaller insurers—Kin Insurance Network, American Integrity Insurance Company of Florida, and PURE Specialty Exchange—did not make payments on over 40 percent of the claims they closed in 2023, with rates of 44 percent, 43.9 percent, and 40.5 percent, respectively.
Newsweek also contacted Kin Insurance Network, American Integrity Insurance Company of Florida, and PURE Specialty Exchange for comment via email on Friday, October 11.
“In the wake of increasing property damage from storms and record insurance company bankruptcies, this high rate of claims denials is severely compounding the hardships for Florida homeowners,” Dr. Weiss said in a press release at the time.
Florida residents are grappling with some of the highest home insurance rates in the U.S. According to Bankrate, the average insurance cost for a home valued at $300,000 in October 2024 is $5,527 per year—way higher than the rate for a home of the same value in neighboring Georgia ($2,071) and Alabama ($2,745).
The average home insurance premium in Florida is $3,242 more expensive than the national average of $2,285. In some areas, costs can climb to in excess of $8,000. The state average is second only to Nebraska, where the average premium on a $300,000 home is $5,652.
