A U.S. Senate subcommittee asked why insurers weren't paying. Here is what it heard.

order today's hearing entitled examining the insurance industry's claims practices following recent natural disasters. This is the first hearing of the subcommittee on disaster management and I am delighted to work on this committee with my colleague the ranking member Senator Kim. This has been a great uh a great start to our what I hope will be a great collaboration and I want to say a special thank you to our witnesses who are in the room. We'll have a chance to hear from each of you in just a moment. I'm going to introduce each of you, give you the opportunity to make an opening statement and then we'll have uh some rounds of questioning. Before we start that, let me just say a word about what brings us here and the significance of this hearing. In the last year alone, disasters have

devastated communities across our country. In the state of Missouri, where I am from, tornadoes have ripped across the state, leaving thousands without power, leaving homes damaged, in some cases, leaving families without loved ones. Hurricanes Milton and Helene have cut a brutal path through the southeast. Uprooting trees, destroying roofs, turning family lives into a nightmare on the other end of the country in California. Brutal wildfires have burned entire communities to the ground. And these disasters have done more than cause property damage, though that is quite significant. They have done more than cause inconvenience, though that can be harrowing. They have destroyed the lives of people. We're not talking here about minor inconveniences. We're

talking about moms who've had to haul 5-gallon buckets of water because the pipes are gone. We're talking about grandparents who've had to sleep in their cars because there's no roof over their heads. We're talking about families who are maxing out their credit cards because their insurance companies won't pay out any damage claims. And that's what brings us to today's hearing. Where do Americans turn after catastrophes like the ones we've experienced just in the last calendar year? The answer is they turn to their insurance companies. And they don't turn to their insurance companies for a handout. This isn't charity that we're talking about. They turn to their insurance companies because they pay premiums to those insurance companies.

It's a contract. And by the way, it's required in law. Americans are required to purchase. Property owners are required to purchase insurance. And so they do so dutifully in every state in the union. And they pay their premiums dutifully in every state in the union. And unfortunately, time after time, they find when disaster strikes in their moment of utmost need, the insurance companies come back to them and they delay and they deny and they offer excuses and they send out two adjusters and three adjusters and 15 adjusters and 25 adjusters and they constantly change the estimates and at the end of the day they

just won't pay what is due, what is required, what is just and it's not a one-off situation. It's not like it's happened to just one family. It is a deliberate strategy to maximize profits. We're going to hear about it today. We're going to hear about it on this panel. Let me just give a brief overview of how it works. It goes something basically like this. When a disaster destroys, let's say, your home, the insurance companies send out an adjuster, often a third party adjuster. That person writes up a report, often in good faith, doing their best to estimate the damages. And then what happens? Then

the insurance company intervenes. Then the insurance company says, "You need to change the facts that you found. You need to change your estimates. You need to change what's in the report." And they adjust arbitrarily the award down, down, down, down. And the policyholder never knows. And the policyholder gets no say in the process. And the policyholder is left to try and put back together her life as these insurance companies make billions and billions of dollars in profits. We're going to hear about it for the witnesses who are here today. And I will just say that even before today's hearing, committee staff, my staff working with Senator Kim has done a thorough investigation that we will continue. We will be submitting

into the record evidence today that we have gathered that will corroborate the testimony that you are about to hear. This is a system that we're talking about here. This is a system that promises homeowners that they are in good hands, that they will watch over them like a good neighbor. And after billions and billions of dollars in premiums are collected and pocketed by these insurance companies, the people who are left holding the bag are the policyholders, American citizens at their moment of maximum despair. There's something wrong with that system. There needs to be some accountability, and we're going to do our best to start

getting it today. With that, let me turn it over to Ranking Member Kim for his statement. Thank you, Mr. Chairman. As this is our first hearing, I just want to congratulate Senator Hawley on his chairmanship, and I hope we'll be able to continue a productive bipartisan work in this Congress. And I thought the chairman really laid it out strong, which is that this is about where do people turn when a crisis arises, when they're in their time of deep need. So, I'm grateful for the witnesses here for joining us and giving us your insights into the different experiences that you've had to try to elucidate what it is that we can do here in Congress to be able to make sure that the American people have that sense of assurance when

they when disaster strikes, when they are in their time of greatest need. And that is a time when, you know, survivors are most vulnerable. And that is when many Americans turn to their insurance company thinking that they have done everything right to prepare for the worst, thinking that the process would work for them. And unfortunately, that help doesn't always materialize. And instead of being handed solutions, they are often met with more problems. My home state in New Jersey is no stranger to this. And after Superstorm Sandy, insurance companies

that participated in the National Flood Insurance Program were found to be wrongly rejecting or underpaying valid claims. Since then, the problems have persisted. Hurricane Ida, another challenge that we faced, caused another wave of damage through my state, and it's not just in New Jersey, but across the country. In Florida after Hurricane Ian, third party adjusters came forward and accused insurance companies of altering their reports to underpay disaster survivors. Now, we are here to examine additional disturbing claims that insurance companies are continuing to deny coverage and underpay claims. This is an important topic. I also just want to take the time though to be able to raise that as we move forward with this subcommittee's work that we ensure that we're taking a holistic approach

grappling with the problems that American people face when they try to recover from a natural disaster. That includes having honest and productive conversations about the government's role, in particular FEMA. In the wake of a natural disaster, FEMA has been a critical lifeline for so many Americans on the road to recovery. Yes, it needs reforms. Yes, there are changes that need to happen. Uh, but that is something that we can try to work on in a bipartisan way. Emergency managers, first responders, and other people in my community are deeply concerned about some of the rhetoric coming out of this administration about abolishing or getting rid of it. Already, we're seeing some of the Trump administration efforts to chip away at some critical

programs. When we see the workforce shrinking, when we see cancelling of the building resilient infrastructure and communities program, we have to take a step to be able to think through our role here in Congress on this going forward. FEMA, like private insurance, is one of the tools that the American people have available to them. You need both market solutions and the federal government to strengthen resiliency and recovery in our country. And people in disaster-prone states that I have talked to have spoken about the fear and the uncertainty about what comes next when it comes to disaster recovery. And we owe it to them to be more transparent about this. The administration has assembled a council to review FEMA

and disaster response. I think this subcommittee could make sure that we do our own due diligence so we can be prepared to engage in discussion with the executive branch about that best way forward. And the goal is always to ensure that the American people in their time of greatest need and difficulty can feel reassured that they are not alone, that they can turn to others for help, whether that be FEMA, insurance, insurers, or others. We are facing some of the most intense natural disasters in our nation's history, but also living through a time of such distrust in government, public institutions, etc. Congress must be vigilant about any changes that may weaken the ability of the American people to tackle the disaster challenges they face. So, I

look forward to hearing from the witnesses today about their ground experiences and from the insurance companies about what they plan to do better in terms of serving policyholders. We may hear some harsh criticism, but criticism I hope that will work to rectify these problems. And I do want to make sure that we're commending some of the insurance companies for showing up today as well to be able to hear that feedback. Thank you and I yield back. Thank you very

much, Senator Kim. It's the practice of the subcommittee to swear in witnesses who testify in front of us. So now I'll ask you to rise and raise your right hands and repeat this oath if you're willing. Do you swear that the testimony that you will give today is the truth, the whole truth, and nothing but the truth? So help you God. Let the record reflect that each witness answered in the affirmative. That's a good start. And with this, uh, let me go down the line here and introduce each witness and then give each of you the opportunity for an opening statement. And we'll start with Natalia Migal. Natalia is an Allstate policyholder who lives in

Georgia and suffered extensive property damage following the devastation of Hurricane Helene. And with that, Natalia, please go ahead, take your time.

Chairpersons, senators, and members of the committee. My name is Natalia Migal, and I am here today representing my family. My husband Brad, our 11-year-old son and nine-year-old daughter. We live in Sandy Springs, Georgia, and our house is insured by an Allstate homeowners policy. On September 27th, 2024, at 5:30 a.m., our family was abruptly woken by a loud crack. A massive 70-foot oak tree fell onto our home. This happened after persistent rain from Hurricane Helene. We immediately called Allstate to file a homeowner's claim.

Allstate's intake process was quick and we were promptly assigned an adjuster. The general description of the damage is as follows. While we can still live in the house, there is severe and structural damage to our roof on two separate building structures. Damages are both internal and external. Um, in addition, electrical systems, brick work, gutters, lightings, doors, and more were damaged. The total damage was very extensive and has been thoroughly documented and shared with Allstate. Allstate's first inspection took place a few weeks later. Our first

adjuster visit took approximately 5 hours. The adjuster was very detail oriented and thorough. He spoke with us at length and took copious amounts of photos. He verbally confirmed what we suspected that this was a significant loss. After the initial inspection, I followed the adjuster's guidance and contacted a number of contractors, including but not limited to general contractors, roofing contractors, electricians, chimney, landscaping, and fence repairs. I was provided with a number of quotes which reflect the cost of living and cost of needed repairs to bring our house back to standard. These quotes were shared with

Allstate. However, before the adjuster could complete his report, Allstate removed him from this file, stating that the process was taking too long. We called Allstate many times about this to stress that we wanted to continue the process already in flight. Nonetheless, Allstate sent a new adjuster against our wishes. A new inspection was scheduled and the process started all over again. The second inspection lasted under two hours and significantly downplayed the damage. For example, the adjuster stated

that he would include money only for one half of the collapsed roof because he was not convinced that all of it needed repairs. I assure you that the entire structure did need repairs after the impact of the 70-foot tree. In December, we received Allstate's initial valuation of $46,000, and we were stunned. This amount did not begin to reflect the real world cost of the repairs and estimates from the contractors. It was perfectly clear that working with Allstate will be increasingly difficult. On January 6th, we retained Matthew Hunter of Hunter Public Adjusting for an independent view of the situation.

Matthew conducted a multi-day inspection and confirmed our fears. He also recommended hiring a structural engineer. We engaged with Shields Engineering Group whose report again confirmed our concerns. Our damage was extensive and the cost to restore our home was far beyond Allstate's offer. Matthew also formally requested that Allstate reassign our claim to the large loss division. Despite repeated requests, these were consistently denied. On March 14th, we submitted our sworn proof

of loss of $497,000. Only then did Allstate reassign our case to the large loss team who appointed a third adjuster. A few days later, Matthew met with the third adjuster on site. The adjuster reviewed both the engineering report and Matthew's estimate and expressed no disagreements. He stated he would submit the full estimate for approval. However, the final estimate came back from Allstate at just under $100,000. When Matthew contacted the adjuster for an explanation, the adjuster confirmed that Allstate had rejected his initial submission of over

$400,000, instructing him to remove numerous line items, not once, but twice until the amount was reduced to a fraction of the actual loss. This brings us to May, eight months since the tree fell on our house. No significant repairs have been made. 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. We respectfully call on this body for oversight to ensure that insurers are held accountable when they act in bad faith, delay resolution, or make it financially impossible for families to restore their homes and their lives. Thank you for

your time, your service, and hearing our story today. Thank you very much, Ms. Migal. Our next witness is Mr. Nick Schroeder. Mr. Schroeder is an adjuster who works for Allstate through Pilot Catastrophe. He was the first adjuster to inspect Ms. Migal's home. And uh he's sitting just to her left. Mr. Schroeder, go ahead.

Thank you. Senator, can you hear me? Uh so I have worked as a licensed insurance adjuster for nearly six years, holding licenses in six states. Uh during this time, I've inspected property damage and prepared repair estimates on behalf of over 17 insurance carriers uh including Allstate and State Farm. While handling claims for Allstate following Hurricane Helene, I was assigned to investigate a property damage claim submitted by Mrs. Natalia Migal. My inspection revealed significant structural damage, including uh a slate roof impacted by a fallen oak tree,

compromised framing in the breezeway, damage to an underground sprinkler system, uh and broken terracotta floor tiles. Uh although I was initially directed to attribute the floor tile cracks to settling. Um sorry I lost my spot here. One second here. Okay. I was initially directed to attribute the floor tile cracks to settling and to recommend a repair rather than a replacement uh of that breezeway roof. I concluded that a full replacement was necessary uh due to split rafters and a cracked concrete uh underlayment. Shortly before I finished

my estimate, however, I was taken off the case and the claim was reassigned to a different adjuster. In general, my experience handling Allstate claims was marked by repeated frustration. My estimates were frequently rejected or returned with requests or modifications uh that often reduced coverage. These changes typically involved reclassifying line items to minimize costs such as coding a job for an electrician to a roofer when other roof work is present.

Um as in replacing an electrically powered roof vent. Uh this recoding would then prevent the estimating software from prompting a labor minimum charge for an electrician to safely disconnect and reconnect uh the hardwired vent. But more commonly these changes were to simply exclude hail damaged shingles due to wear and tear. Um, in one case involving policyholders uh Suzanne and Dennis Carter, I was uh instructed to deny shingle damage as wear and tear despite visible hail

impact marks of consistent size and shape as nearby dented roofing metal. Although I provided a hail report confirming activity near the property uh on the reported date of loss, the claim was reassigned after I refused to amend the estimate to exclude uh the hail damage. In another case involving Nicholette Little, I was able to finalize an estimate uh only after arranging for my team lead to personally review and approve it. At one point, an Allstate staff adjuster who was assigned to assist me in getting claims

approved advised me to remove coverage for the wind damaged shingles based on a misunderstanding of standard damage indicators. He claimed a creased shingle was not wind damaged because it was not torn. However, industry standard indicators of wind damage recognized across all carriers I've ever worked for uh include torn shingles, blown off tabs, and shingle creasing. Uh making this directive contrary to basic industry training. In my professional opinion, uh, the claims handling process I observed from Allstate prioritized minimizing

payouts, often at the expense of accurately addressing documented storm damage.

Thank you very much, Mr. Schroeder. Our next witness is Mr. Cliff Millikan. Mr. Millikan is an adjuster who works for Allstate through Pilot Catastrophe. He has a connection to Ms. Migal as well. He was sent out to conduct a reinspection of Ms. Migal's home. Mr. Millikan, floor is yours. I've worked as a claims adjuster for Pilot Catastrophe since 2014. By 2016, I transitioned to full-time adjusting working primarily for Allstate and have been deployed consistently for over eight years. Since 2020, I've observed significant changes in Allstate's claim

handling that, in my view, undermine the interest of policyholders and erode trust in the insurance industry. First, Allstate has increasingly relied on third-party non-licensed inspectors or so-called picture takers instead of licensed adjusters to inspect damaged properties. These individuals are not trained nor licensed adjusters. They merely take random pictures and upload them to a portal where an often inexperienced inside adjuster grabs the photo package, reviews, and attempts to write an estimate. The estimate is then sent to a reviewer who then determines coverage and often mandates revisions. This is without transparency as the reviewer's name does not go on the estimate. This process confuses policyholders who mistake the picture takers

for adjusters and then the policyholder never has an in-person experience with the adjuster who actually submits the approved estimate. This process also increases the likelihood of missing damage which is often to Allstate's benefit. Field adjusters like me are in the best position to address the damage to a property. We are licensed and we are the ones who physically inspect the property in person and we have training to assess damage appropriately. After we as the adjuster inspect the property, we write an estimate which explains the observed damage and estimates the minimal cost of repair. Second, All state has stripped all field adjusters regardless of experience of decision-making authority. Adjusters now act just as glorified picture takers,

submitting our work to the reviewer who approves or denies the estimate and dictates revisions. In the overwhelming majority of cases, Allstate reviewers who have never been to the loss instruct the adjuster to alter and delete factual and causal findings in our estimate. Frequently, these alterations and deletions are simply false. Reviewers at times force adjusters to use material not of like kind and quality and not to consider engineer reports because they weren't ordered by Allstate and to issue denial letters that the adjuster must sign even when the adjuster disagrees with the decision

and believes it to be false. There is no option for a discussion. It's the reviewer's decision and that's final. If an adjuster resists, the claim is reassigned to someone who will comply. In most cases, the alterations and deletions drive the estimate down. Meaning the insureds receive less money than required to indemnify them for the loss. As adjusters, we pride ourselves in having integrity. So when forced to do things that we do not agree with, we feel obligated to express that with the insured. When I've explained this to policyholders that I didn't make the decision, I was reprimanded and told this is not permitted. In one case, I was sent out as a supplemental field

adjuster to look at the property for Ms. Natalia Migal and her husband. While on site with the public adjuster, I reviewed the engineering report that was provided by the public adjuster, a brick expert report, again provided by the public adjuster, and discussed the inspection results with the public adjuster. And while on site, I agreed with the PA that the estimate over $400,000 appeared to represent the covered damages. I then reviewed all the information and drafted an estimate that considered the recommendations laid out by that engineer that would have attempted to bring the Migals back to the pre-loss condition using the most

cost-effective option. My estimate totaled nearly $200,000. I felt I had figured a method of using chimney brick to make spot repairs and replace the full chimney with a similar product, saving Allstate from replacing all the brick on the entire home. I then submitted my estimate to the reviewer who instructed me to make changes to my estimate. After doing so, I submitted a revised approved estimate for $100,000 or thereabout. I believe some of these alterations were wrong because they contradicted the engineering report and the brick expert report without getting a second opinion from another engineer.

These new practices are wrong and the people most affected by them are the ones who lack the resources to fight back like the poor and the elderly. All state is even making it so difficult for those who do hire experienced contractors, public adjusters or attorneys to represent them that many merely lose interest and quit because the time involved is not worth the compensation and the effort. The tactic seems to be working as designed. As an adjuster, I'm ethically obligated to write accurate estimates that fully account for all covered damage regardless of a policyholder's demeanor or tenure. Insurance contracts are built on trust, promising ethical and fair claims handling. These new current practices risk violating that trust, leaving policyholders underserved. I

urge this committee to investigate these practices to ensure that the insurance industry upholds its duty to protect policyholders. Transparency in claims decisions, accountability for reviewers, and restoring the adjuster's authority could help rebuild trust and fairness. Thank you for

addressing this issue. Thank you very much, Mr. Millikan. Our next witness is Mr. Doug Quinn. Mr. Quinn is the executive director of the American Policyholder Association, which is a nonprofit that tracks and reports fraud committed by insurers against their policyholders. Mr. Quinn, it's good to have you. The floor is yours. I'm Douglas Quinn, executive director of the American Policyholder Association. We're a nonprofit watchdog group that monitors and reports on insurer fraud against property owners. The APA formed after Superstorm Sandy.

My home was flooded. I was at my weakest moment. And instead of helping me, my insurer hired US Forensic, an engineering firm who created a report that an independent engineer determined was false. My insurer denied coverage for the worst damage to my home. Despite being fully insured, it took me seven years to rebuild and get back home. At 61 years old, this is one of the most traumatizing betrayals of my life. I was not alone. And the Sandy engineering fraud scandal, CBS News, 60 Minutes, and PBS Frontline all reported on policyholders

wrongfully denied nearly half a billion dollars in claims. When asked if he participated in fraud, an insurer's claims executive pled the Fifth Amendment. Thousands of families paid for insurance as a safety net only to be betrayed on their claims. For many, it was the end of the American dream as they lost their homes. This wasn't the first time insurers defrauded policyholders, and it won't be the last. The APA routinely receives reports of insurer fraud. Often the insurer will hire an engineering firm to inspect the property and write a report which will then be manipulated to reach a predetermined outcome. Insurers

are shielded by plausible deniability that the engineers commit the fraud, but the insurers are the ones driving it. They continue to use US Forensic and other fraudsters. Insurers play the same shell game with adjusters. Many adjusters inspecting homes aren't employed by the insurer but rather by third-party administrators. They are technically a separate company. These TPAs are simply alter egos of the insurers and commit the same fraud the engineers do. Trained adjusters write an honest estimate only to be instructed to alter and delete facts by a reviewer. This isn't just a

few bad apples. It's industrywide and has been for decades. It happened in Katrina. It happened in Sandy. It happened in Irma. And it's happening right now. I worked in the insurance industry for 30 years. There are thousands of dedicated, honest professionals who take pride in helping families recover after a loss. Many of those professionals would be appalled to learn what happens to policyholders during claims. Those aware of the fraud are afraid to speak out and for good reason. In this regard, insurers are like gangsters. Those who speak out get

blacklisted, harassed, and sued. After Katrina, two employees blew the whistle on State Farm's plan to shift claims to the National Flood Insurance Program using systemic engineering fraud. State Farm sued the two sisters, but after years of litigation, State Farm agreed to pay the federal government $100 million to settle the case. Recently, Jordan Lee, a young insurance adjuster, reported that a TPA he worked for altered his reports. The insurer that hired the TPA, Heritage Insurance, is now suing Jordan for defamation, even though he did not accuse Heritage of

changing the reports, but rather the TPA they employed. However, Florida regulators recently hit Heritage with a historic $1 million fine for multiple violations in handling of insurance claims. Jordan's a kid. He doesn't have any money. Most people believe that they're suing Jordan not for money, but rather to silence he and other whistleblowers. Many assert that the insurance industry's playbook is break the law and ruin the whistleblower. I routinely speak to insurance insiders who are terrified of retaliation. If it

wasn't for whistleblowers like Jordan Lee, journalists like the Washington Post's Brianna Sachs, and honest plaintiffs attorneys like Stephen Bush, we would never even hear about the fraud. In fact, all too often, we don't. Insurers are committing fraud and ruining the lives of the very people who pay them for protection. Premiums are skyrocketing, but Americans receive less in claims. The American consumer is being squeezed. The fraud is about more than money. Americans buy insurance for protection in their weakest moments.

When their homes are wind damaged or burned, and they're scrambling to find housing for their family and schools for their children, the last thing survivors need is a war with their insurance company. The stress destroys marriages and spoils childhoods. The fraud also affects the federal government. When their insurer denies valid claims, homeowners are forced to rely on FEMA and federal aid. The American taxpayer is now subsidizing the fraud. This would not be possible if insurer fraudsters were held accountable for their actions, but states have proven incapable of doing so. The APA has given gift wrapped fraud cases to state

authorities only to have them languish without results. It's time for federal enforcement. It's time for federal prosecutions. It's time for these criminal organizations to be brought to justice. To this panel, I say the American public needs you. Thank you.

Thank you very much, Mr. Quinn. Our final witness is Mr. Jacob Vertel. Mr. Vertel is a husband, a father, and a State Farm policyholder. He resides in North Carolina. He and his family suffered devastating damage to their home after a tornado and he's here to testify to that effect. Mr. Vertel, the floor is yours. Thank you. Early on the morning of September 27th, my family was awoken by a tree crashing through our roof. My wife and in-laws, who were in town visiting at the time, rushed into our toddler's room to make sure he was unharmed. The storm was still raging, so we moved my pregnant wife and child to the floor next to our kitchen island in

our single-story ranch home where we felt it was safest. Before we lost power, I was able to file a claim with State Farm. At that moment, I didn't realize just how severe the storm was. I was simply focused on figuring out where my family would stay that evening. While on the call, we abruptly lost power and cell service. For the next several hours, we sought cover as a total of four trees fell on our home and water poured through half the house. Once the storm subsided, all five of us camped together for three days in what we assumed to be the safest section of the home. With my wife's pregnancy being high risk, it was critical that she had access to medical care and our 2-year-old son needed a safe environment. The moment I could, I

evacuated my family to my in-laws' home in Ohio. With them safe, I returned to North Carolina to begin the insurance process and to find a place for us to stay once water was restored to the area. Our first inspection was on October 7th, 10 days after Hurricane Helene. The inspection seemed to go well enough. While on site, I spoke to the inspector about the ample additional living expense coverage included in our policy. You can imagine my dismay when I received a voicemail the next day walking back the information he shared. Instead, stating that our home was being considered habitable by State Farm, a home where I watched water pour through the outlets where the sky is visible

from our 2-year-old's bedroom, our nursery to be, our living room, and our bathroom. At that time, cell service in Asheville was still limited. So, my wife from Ohio was trying to speak with State Farm. The few times I managed to get on the phone with her, she gave me agonizing updates about the undue stress being put on her as the basic commitments of our policy were already being aggressively denied. It became clear we needed support and did not have the capacity to take this on ourselves. So, we hired a public adjuster. Not long after, our decision to hire a public adjuster was reaffirmed when we received our first estimate of the damage from State Farm. The sum we were to receive would not even cover fixing the roof, let alone repairing our entire home.

From there, we watched as our case was handled with little communication from State Farm. Emails went unanswered for weeks at a time. We were told that State Farm had issued a payment on our claim on October 24th. That check did not show up. One month after the storm, I moved my family back to Asheville into a rental at our own expense. From this new home base, we spent months driving across town, trying to protect our house from further damage, draining tarps, resecuring them, setting rodent traps, doing all we could to prevent the pipes from bursting. Covered only by tarps, our home struggled to retain heat during the mountain winter. During this period, Buncombe County placed a placard on our home stating that the property was not

safe to occupy or enter. After three months of no movement, we were hopeful things would finally start progressing when State Farm assigned a new adjuster to our case. The damage payment that was supposedly issued in October was reissued in December. However, we quickly lost hope again when it became evident that we were starting over from scratch, having to provide all claim information again. It was as if all information from the previous 3 months was lost. All the while, State Farm communication remained scarce. Reinspections were discussed. Then no one would show up. In the little communication we did receive, it became clear that this new adjuster was not qualified to speak on general home construction and repair. We repeatedly

reaffirmed the need for critical repairs only to be met with the adjuster's opinion of I don't think that is necessary. He dismissed formal inspections conducted by contractors and mitigation specialists. The broken trusses struggling to hold up our roof simply were not a matter of opinion. After 123 days of our home sitting untouched and relentless communication on our end, a reinspection was finally scheduled. During this inspection, as we stood staring at our gutted home, State Farm's adjuster admitted that their initial estimate was too low and said he would be refiling for the policy limit. Even so, an hour later, we stood in front of the county's unsafe structure notice, as he told my now eight-month pregnant wife, that separate living accommodations for our family were not

required, and that the county notice, which we had provided at least half a dozen times, did not matter in the eyes of State Farm. Despite dismissing the need for coverage, this adjuster then admitted he was unfamiliar with our specific policy, instead citing a policy that did not apply to us. He went on to say that he would see what he could do about covering additional living expenses now that it was winter. After dealing with State Farm for 5 months, it was no surprise that when a revised estimate of the damages came through in February, only minuscule adjustments were made. Expenses we had already covered personally and for which we had provided State Farm with invoices were short paid. Again, we found ourselves needing to continue covering expenses out of pocket while

still being unable to fix our home. At that point, we sought legal assistance and were ultimately forced to file suit against State Farm. After 157 days, only after we took legal action, the structural engineer we had been requesting for months was finally sent by State Farm. Now, 228 days after the storm, our home remains untouched with no progress being made. My wife, who was three months pregnant at the time of the storm, gave birth to our daughter 2 and a half months ago. Our son turned three in April. What could have been just a blip in his childhood has become a major event in his life as he repeatedly asks to go back home. We need State Farm to give us our life back. Thank you for hearing our experience. Thank you very much, Mr. Vertel. Thanks to all of the

witnesses. We'll now have some rounds of questioning. Um, I will start and let me start with you, Ms. Migal. So, at September 27th, 2024, Hurricane Helene hits Georgia, hits your home, causing very significant damage. I think we've got a picture of some of the damage here. Let's have a look. Does this look pretty familiar to you? It does. It looks pretty severe. I mean, that's a massive tree right there in the front part of your home. And you're an Allstate policyholder. Is that correct? Correct. And Allstate sends out an adjuster. You said pretty quickly just a moment ago. Is that about 3 weeks after? Well, that's not very quick.

Okay. 3 weeks after. All right. And you were told at the time in this first inspection verbally that the adjuster agreed with you this was very severe damage. Is that fair to say? Correct. I think we maybe have a second picture. Let's look at another view of this just to give a real impression. Here's a breezeway that looks to be nearly completely destroyed. You can see some of that roof damage quite extensive that you were talking about in your testimony. All of this looks familiar to you, I'm sure. Yes. Now, after this first adjuster agrees with you that yes, there's very significant damage, what did Allstate when they finally came back with an actual assessment, a real number, what was that number again?

$46,000. $46,000. So, you went to considerable expense on your own. You hired your own independent adjuster to come back out and do all of this over again. And that person looking at all of this evidence, that person found that the damage was in the neighborhood of what? I'm sorry, can you repeat the question? Yeah. Your independent adjuster, how much did that person estimate the damage was? $497,000? $497,000. Allstate offered you 46 basically. Correct. And you're still

waiting for this process to be resolved all this time later. Is that right? That's right. Let me just ask you now, Mr. Schroeder, because you were that first adjuster who worked for Allstate who came out to look at this home. You were a field adjuster uh deployed for Allstate through Pilot Catastrophe. Is that correct? Yeah, that's correct. And you were the first one to inspect Ms. Migal's home after the hurricane. Is that right? Yeah. And you went in person, I think. Is that correct? Yes.

And you spent several hours, Ms. Migal said in her testimony a moment ago, you spent several hours doing a very thorough inspection. Is that your memory also? Yeah, that's correct. And how serious would you say the damage was in your own just personal recollection? Extremely. Probably the most serious that I saw on this deployment. Wow. The most serious that you saw on the deployment, which makes sense given these photos. So, you start, if I understand correctly, you start to prepare an estimate for a full replacement of this breezeway right here. Does that sound right? Yeah, that's correct. But then you were instructed, you were told by the higher-ups, "No, no, no, no, no. We're not going to do a full replacement of the breezeway." So, only do an

assessment for a partial replacement of the breezeway. Is that correct? Yes, that's correct. Okay. So, then you start working on that and you're working to get as big of a damage claim as you can for Ms. Migal in line with the facts after you've already been told, "No, we're not going to do the full thing." And then before you can even complete your work, you're taken off the case. Is that right? Yes. Why do you think that happened? I was told it was due to time I was taking too long, 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 uh an adjuster that would listen better. Yeah. An adjuster who would lowball the policyholder. Really? I mean, that's what we're talking about. You're removed from the case. It took three weeks to send you out to begin with and then all of a sudden, boom, you're removed

once it looks like you're actually going to do some justice for Ms. Migal. Let me just ask you more broadly, Mr. Schroeder, have you ever been told to change estimates to reduce payouts? Yeah, frequently. And when you've pushed back on this, if you've ever said no, what happens then? If I say no, um, then the claims typically get reassigned due to they say either lack of compliance or other reasons like I'm taking too long. In your experience, was this kind of thing a one-off thing or was this a pattern?

This was definitely a pattern. Is it fair to say then that Allstate's priority in your experience was not getting the best possible award for their clients? It was in protecting their bottom line. Certainly in protecting their bottom line. Yeah. Um Mr. Millikan, let me just come to you because you were then yet another adjuster in this same case sent out to look at Ms. Migal's property. You worked as a field adjuster for Allstate through Pilot Catastrophe for about eight years. Do I have that right? At least eight years. Yeah. In that time, you have personally inspected hundreds of properties damaged after storms and disasters. Is that fair to say?

Thousands. Thousands. And you're trained to determine the extent and cause of the damage and how much it cost to repair it. Is that fair to say? Yes, sir. All right. So, let me just ask you about uh Ms. Migal's claim. You were assigned to reinspect her home. Is that right? Yes, sir. And you testified earlier that you went about that diligently. You could see that there was very extensive damage. That was your initial impression. Is that fair to say? Yes, sir. And you reviewed all of the reports. There was an engineer's report by this time. There was the public adjuster's report. You reviewed all of those things diligently.

Is that fair to say? Yes, sir. When you submitted your report to Allstate recommending several hundred thousand worth of payments to Ms. Migal and her husband, what happened then? It was my estimate was rejected and I was advised to alter it to a lower figure. So, you were told to alter the estimate and to alter your findings as well. I was told to alter my estimate. I don't know that the findings was told to be altered.

Were the alterations that you were told to make, were those consistent with your own review of the property and your own assessment of the damage? No. No, sir. Did you write that up in a detailed estimate what you were told to do? I did. Yes, sir. Uh and Allstate then uh they send that estimate ultimately to the property owner. Is that correct? I'm obligated to send the estimate to the policyholder. And is there any record anywhere the policyholder would ever know that your initial findings, your recommendations were rejected and somebody told you to

come in and alter them? No, sir. Let me just ask you more broadly. Have you ever been told in other cases with Allstate to alter or delete your findings? Absolutely. In fact, you testified just a second ago, I think, that you were frequently asked to alter factual findings, delete material, and sometimes include items that were false. Did I hear you correctly when you said that? Yes, sir. In the overwhelming majority of cases where you were asked to do something like this, did that cause the estimate to the policyholder to go up or to go down? To go down. What is your assessment of what Allstate's ultimate goal here is? Is it to pay out the policy according to the terms of the policy to the best

extent they can or is it to protect their bottom line and to use you and your report as necessary to meet that end to make sure they make as much money as possible? 100% to use me to enable them to make as much money as possible. And you would say that this is a pattern. This isn't just something that happened one time like in Ms. Migal's case. You've been doing this for a long time and you've observed this to be a pattern with Allstate and in the industry. I have. Yes, sir. Thank you for your testimony, Senator Kim.

Yeah. Thank you, Chair. I'd like to just pick up right where we're at, actually, Mr. Schroeder or Mr. Millikan. You both refer to an ethical obligation with your work. Um can you explain to me and to those that aren't doing that work, what do you mean by that? Is there a code of conduct, a code of ethics uh that you have to abide by for your license, Mr. Schroeder? Um to do the you know an estimate that is true to you know um what is honest and true, my evaluation to be honest and true. That's what I commit to do. Yeah, Mr. Millikan.

Yes, sir. It's our ethical obligation is to take the damage that we identify, apply it to the policy and indemnify the insured for the full value of what we have found to be damaged. And so with that ethical obligation, you're now coming across uh people that you're engaged with in the insurance companies that are telling you to change your estimate. Can you give a little bit more detail? Who is it that you're interacting with? You know, who are the people?

What are their credentials in terms of being able to tell you or assess whether or not they think you're right or wrong, Mr. Millikan? So, there's a team of reviewers and I don't have access or know their experience or background. Their label I believe is a vendor oversight uh team or team member or training member, but I think I kind of got sidetracked on your No worries. I mean, but it sounds like they're not necessarily abiding by that same or have that same

obligation when it comes to uh ethics in terms of the code of conduct. They're not adjusters in the same way that you are. That's right. Yes, sir. So, there's been many times whenever as an adjuster, and I'm an experienced adjuster. I'm not saying I'm the best adjuster in the world, but there's been many times where I've went out to losses and inspected and identified with my own eyes um hail damage, for example, on roofs and then submitted my findings to this new process of the reviewers. And the reviewer tell me that what I'm seeing is not hail damage. Well, I was there. I

seen the hail damage to the siding. I seen the hail damage throughout the neighborhood. I saw the hail damage to the roof. They reject my estimate and tell me they're not going to approve it. So, but you're not necessarily certain what expertise they have to be able to make that assessment given that you were the one that was on the ground. I can't imagine they have any more expertise than I do. No, sir. Yeah. When you're being told I mean Mr. Schroeder, you were talking about how they were telling you it's taking too long and that's why you were removed from uh this particular case, but you know, correct me if I'm wrong, but it sounds like if they remove you, they'd have to basically start from scratch all over again. Isn't that right? Wouldn't that seem to take a

little bit more time, too? Yeah, that's correct. And that's exactly what happens. I actually uh had contacted Mrs. Migal just to see uh out of my own curiosity and to check in a month after I had been removed and uh she had not received an estimate yet for those repairs. Uh so I don't think that that was uh you know accurate in why I was removed and in fact it's you know it's not just about the work that affects with you Mr. Schroeder but Ms. Migal, you know, I keep hearing from people that feel like these delays are intentional, that

it's meant to try to discourage the consumers, the policyholders from continuing on. Did you feel that way with how you were treated and just how the lack of response and some of the delays were? Yes, absolutely. Mr. Vertel, you were also talking about just, you know, significant delays and lack of communication. And did you feel at times that this was intentional? Absolutely. I feel it's a battle of attrition at this point. Mr. Millikan, coming back to you with when you're being told to change and adjust, do you feel pressure or did you feel fear that if you don't

make changes that maybe you won't get future work from that insurance company before? Yes, sir. I do have that fear. I've had that fear, but I'm also a pretty stubborn person. So it's difficult for me to tell someone something that's not true. So I've battled that quite extensively. Mr. Schroeder, it seemed like you were kind of nodding your head as well. Do you feel that there have been times where you felt fear that hey look, if I don't make these adjustments, you know, they might be taken off that case or prevented or, you know, not given additional work by that company in the future.

Yeah, I certainly feel that way and I think that's happened um on this last deployment. Um you know, I had multiple claims that were at the end uh pulled, you know, and reassigned uh due to, you know, an explanation that to me just it didn't make sense. And uh it was coincidental with the timing of me um having disagreements with uh the virtual uh you know examiner that is just looking at a photo when I was the only one you know of the two of us

actually present in there's you know there's a difference in a photo compared it's only even a great photo is just a photo when you're there you not only get better look, but you can feel I mean, you know, you have a better perception of what's going on. And uh, you know, those disagreements to me, it didn't uh make sense and it definitely it wasn't true. I disagreed and got pulled off a lot of those. Thank you, Mr. Quinn. Uh, you know, you're hearing all this you hear all this constantly. I mean, you went through this experience yourself.

You're asking, you know, you're here in front of the US Senate. You're asking for the federal government to be able to step in on something that, you know, traditionally has been sort of state jurisdiction in terms of oversight. Why is it that you think the federal government needs to step in? What has been your experience engaging with the state level and how has that not satisfied uh you know the ability for policyholders to be able to get the kind of justice they deserve? We have noticed a lack of action, senator, on the state level against criminal fraud. I meet prosecutors and attorneys general all over America. I routinely ask them, "Have you ever prosecuted somebody from the carrier side for cheating a consumer?" Uh the answer is invariably no. We see

literally no prosecutions on the state level of people from the carrier side who are committing fraud to cheat consumers. We feel there's an issue with regulatory capture. In some cases, it's a limited capacity, budget strains, personnel strains. But we do believe that the federal government should be stepping in and investigating and prosecuting cases where the American consumer is getting cheated by their insurance company. Thank you, Mr. Quinn. I yield back. Senator Moody.

Thank you so much, Chair. You know, Florida is no stranger to disasters. In fact, my state uh has suffered through some incredibly serious, damaging, tragic storms. And all too often, I find myself speaking to Floridians who are struggling to put not just their homes back together, but their lives back together because so much of our lives is embedded and built within our homes. And uh let me just thank you all for taking time to be here today and talk to us. I know coming to a Senate hearing is no small thing. Uh I want to thank the chair for putting this together and for making sure that we have two panels

so that we can talk to a variety of people. We can only fit so many people here at the table right now. Uh I think making sure that we are paying attention to the public discourse right now in terms of challenges in recovery and even some public stories about what is being found underneath insurance companies and claims and helping people recover. And I think the worst thing we could do right now is to not have a hearing like this uh to address what is being said in the broader conversation in America,

especially in states where we have suffered storms and people are still right now trying to recover. Uh obviously as attorney general, I even had to sue a representative of FEMA after the last storm. And so we know that we can't just leave everything to happen and trust that everybody is going to play according to the rules without some sort of oversight. Uh and so I think it is important that you were here today to share your stories. And I also think it's important for our colleagues and for this subcommittee uh to learn more about what is going on. Uh just as we

would expect insurance companies to do the right thing and live up to the policies that they have offered and certainly have collected money and payment on, we know that is in every industry. We have those that are good faith players and we have those that may seek to do harm or take advantage of a tragic situation. Uh, and I wanted to ask you, uh, Ms. Migal, uh, I know that you have specifically had a bad experience, and I wondered, I think you mentioned you had the one adjuster come out and then another adjuster come out. Did anyone from Allstate ever call you and walk through the specifics of why

something may be covered by your policy or not covered by your policy, or was it just an adjuster coming out and communicating with you? No, no one called me to walk me through the details of the policy and how that would be applied. Um, I was called mostly regarding scheduling matters and the adjusters. So even after the multiple estimates as they gave you lower estimates than you had received, no one called to tell you line by line why something may or may not have been covered. That is correct. And uh, Mr. Schroeder, I'll ask you first. When you submitted your estimate, when you had discussions, did anyone go

with you line by line why something might not be worth what you estimated or might not be covered by the policy? Um, are you asking when I submit an estimate to the reviewers, do they go through — they, if there's something they disagree with, you know, they would say to remove it. There's typically not an explanation for why and when there is more often than not it's not um what I would say is legitimate, not according to the policy. It's uh you know that hail damage isn't hail damage, take it off, or that is wear and tear and

not hail damage, take it off. Those are the answers I would get. But no, they wouldn't go through my entire estimate line by line with me? No. And Ms. Migal, I'm going to come back to you for a moment. Um, when you didn't receive right away the money you needed to repair the home, were you forced to come out of pocket to repair the house? We have done relatively minor repairs so far simply because we do not have any insight into the budget that we might have at hand. So only the most crucial repairs um and for example putting a tarp up on the roof uh to prevent

further damage or rainfall um has been done so far. And you had to pay for that just out of your own money that was probably taxed on your income. Yes, that's correct. And of course engaging with um external experts such as the engineer was also out of pocket. Would that have been helpful to be able to deduct from your taxes the money you had to lay out to recover for your roof with storm damage? I have not deducted those um expenses from my taxes at this point. Would that have been helpful? Uh likely yes. I've been exploring with colleagues, you know, and a bipartisan

approach to trying to address uh money that people are having to use from their own pocket. They get money from their jobs and then they have to outlay it to stop rain from coming into their home and then they still have to pay taxes on that money. Would that have been helpful to you and your family? Absolutely. That would have been helpful. And I don't want to go over time, but Mr. Quinn, I would like to follow up with you. I know that you've been so focused on this and I know a lot of your energy and time and talent has been focused on this issue. Do you believe it would be helpful and I know many states are set up and structured different ways, right? Um one agency may have statutory authority to investigate these matters where another agency wouldn't and so if

that one isn't moving fast enough or this one wants to complement it sometimes that's not available and it looks different in different states. Do you think it would be helpful to have a cross-section from different agencies being able to within one state task force or even federally a task force where the agents or the officers are specially trained in this area? Yes, ma'am. I believe that would be very helpful. Thank you, Chair.

Mr. Millikan, can I just come back to you for a second? Can I just ask you, did you think that Allstate might retaliate against you for your testimony here today? Did that ever cross your mind? Yes, sir. Yes, sir. And why did you think that might happen? Well, I mean, I got a phone call from Pilot management uh indicating that they were aware of it and then got word from people in the office that I was going to be on a uh cut off list, which has not happened in probably six years. Okay. So, wait a minute. I just want to make sure that I got this right and I want to be sure everybody in the room understands it. You're telling me that after you agreed to testify here

today, you got word that you were on a blacklist essentially from Allstate and that you were going to be penalized in some way. I've been told yesterday I've been told that I'm going to be worked out of the storm in Georgia. Um, which is 100%. I mean, it's cutting me off. It's eliminating me guaranteed. So, they're retaliating against you. It sounds like they've already set in motion is what you're telling me. That's what you've heard because you testified as to what happened. Yeah. Because I was going to testify. Yes, sir. Yeah. Even before you got here today, they were doing this. I mean, that's just that is

really unbelievable. Absolutely unbelievable. Um why do you think they Why would they do that? Because they don't want the truth to be known. I mean, what are they so afraid of in your testimony? I honestly couldn't tell you. I thought that by telling the truth, I wouldn't have any problem. Swear to goodness, I had no idea that the company I work for would hold a grudge about speaking the truth. And I just want to underline what you've said today and you too, Mr. Schroeder, because I want to be sure people get it. What you've testified to is not only did Allstate not do right by Ms. Migal, not only did they tell both of you to alter your evaluations, they told you to alter your findings too, they pushed down the estimate lower and lower

and lower. But you both have testified today that you saw this happen over and over and over, that you were told, you said, Mr. Millikan, you've been told multiple times to alter factual findings, to delete information, uh, to lower your estimate. That's happened repeatedly. It's a pattern. Yes, sir. And you said the same thing, Mr. Schroeder. It's a pattern over and over. Yeah, it's a pattern. Not just in this one deployment, not just one little thing, not one little area, but this has happened over and over again. Seen for years. I've seen this trend for years. I mean, that's really that's extraordinary, I have to say. And I want to say thank you to all the witnesses. I want to say thank you to the two of you in particular because you've really risked a lot by being here

today. And I'm sorry, Mr. Millikan, that they're retaliating against you. Mr. Schroeder, I know that they retaliated against you by yanking the case right out from under you when you were working with Ms. Migal to try to get a fair award for her under the policy. Uh, that's just outrageous. It may be illegal. If it's not, it should be. And I just want to tell you, we're going to do everything we can to make sure that you are done right by and that people like Ms. Migal across this country are done right by. And that brings me to you, Mr. Vertel. I want to give you the chance just to say a little bit more about your story. We've been talking about Allstate, but you were a policyholder of State Farm. I think we've got a picture of your house as well. Let's take a look here just so people get a sense of it.

This is your home after Hurricane Helene. Is that right? That's correct. That's a lot of damage right there. Now, did you say that you had a small child at this time? Two years old. Yes. And your wife was pregnant with our second. Yes. Wow. And this was taken right after the hurricane back in September, about October something like that. Right after the storm. Yes. So, and did you say State Farm has now fixed it all up and it's all good? Uh, State Farm has not, and sorry, the home sits untouched. Uh current condition is uninhabitable.

So they've done nothing in those you said the number of days 228 days of our home being uninhabitable. Excuse me. 228 days. And your wife has since had your second child. Is that correct? Two and a half months ago. Yes. So you've got a 2 and 1/2-month-old. You've got a 2-year-old. Nobody gets any sleep in your house, I suspect. I've got this this keeps us up more at night than they do. I bet that's true. And you are coming out of pocket to pay for your own housing because you can't live here. Is that right? Uh we've received drips of reimbursement, but we've had to fight tooth and nail for every one of those. So, you know, I mean, just tell

us what it's like to go through this with this company. I mean, how long you'd had your policy for a little while, I imagine. I mean, you didn't get it the day before the storm. We've been State Farm customers probably for the better part of a decade. Wow. And so, you pay your premiums like everybody else, right? Always. And yet, they won't work with you. They won't give you any help. Your home still hasn't been touched. You've got a little kid. You've got a little baby. They're not doing anything for you. Um, you decided ultimately that you needed to stand up for yourself and actually try to fight State Farm on this. Is that fair to say? That's

correct. What would have happened if you hadn't have done that? You know, what was the strategy here if you hadn't — you still haven't gotten your appropriate damage award. So, what would have happened though if you hadn't have stood up and started to demand your rights? I feel that we were perceived as an easy mark, that we needed to be in our home quickly and so we were going to take this on ourselves. Uh right now, we simply have not received any funds that would allow us to fix our home. So if we had to come out of pocket, it changes everything about our life, where we live, if our kids could go to school, uh everything. It's just extraordinary. You should never have had

to go through that, Mr. Vertel. I want to offer my sympathies, my apologies to you, to your wife, to your little ones. Uh that's absolutely outrageous. And the kind of behavior we've heard testified to here today, it sounds like to me you're a victim of another one of these massive insurance companies who takes your money. They're happy to take your money, but when this happened to you, they won't give you anything. It's delay, delay, delay. Mr. Quinn, let me just ask you. You've heard this testimony today. You're very familiar with it. You hear it all the time. Can I just ask you, you've heard testimony about Allstate and about, frankly, fraud that goes on

there. In your view, in your professional judgment, is that kind of fraud limited to Allstate? No sir, it is not. It's pretty much industrywide. Tell us more about that. I mean, it's industrywide because why? Tell us what the industry looks like, how it runs. You know, we believe this goes back to the '90s with what's called the McKinsey report. A consulting firm sort of trained insurance companies to use their claims department as a profit center. Um, and they actually trained their staff to come in and short people on claims. Uh they did it specifically starting out with Allstate and then they took it on the road for almost every other insurance company and it is now basically

industry standard. I will say there's nothing you're hearing that's unique. The people that are speaking are unique because they had the courage to do it. But I hear these stories every single day and they are the exact same stories over and over and over and working-class families getting taken advantage of by insurance companies without any ability to fight back. So what you're telling us is these big insurance companies went to a consulting firm, McKinsey, and asked them to design a program to help rip off policyholders. That is correct, sir.

And has that been successful? I mean, has their program been successful in ripping off policyholders? It's been incredibly successful, sir. It is actually part of the systemic fraud that's occurring every day now. That's extraordinary. Senator Kim. Yeah, thank you, Chair. Um, Mr. Millikan, Mr. Schroeder, I wanted to just kind of zoom out a little bit. You know, we talked about major disasters, but Mr. Millikan, you were talking about just in general there's a lot more higher volume in your work and you in particular said

that that has increased use of people that are just kind of relying on photographs, right? Is that correct? In terms of just, you know, trying to get out there people that might not have the skill set that you and Mr. Schroeder have, uh, but they're out there taking photographs. Can you tell us a little bit more about that? Yes, sir. So, when I first started, uh, photographs — you never adjusted an estimate by photographs. You went out and put eyes on. Now, the whole process is set up on photographs. So, the reviewers are reviewing pictures that I took at my inspection where I identified hail damage to a roof. And this reviewer, who's never been to this

house, tells me that that's not hail. So, I go back out to the house. I take more pictures with a phone and a camera. I submit these pictures, and this reviewer tells me this is not hail. I'm 100% certain this is hail. But yet, this is still the process. And this isn't just one time. This is multiple times. And the same thing goes with mislabeling material. If I go out and I identify a certain material, uh, pre-engineered flooring versus finished-in-place flooring, and they tell me that it's not what I say it is. Well, I mean, I know that's what it is.

It's 100% factual, and they're making me write something that's not factual and submit this to the homeowner. So, yes, that happens on a regular basis. And with this reliance on photographs to try to determine, you know, what the level of damage is, do you think that that is sort of predisposed? Is that something that seems to be uh when you are relying upon photographs, does that seem to be something where you're more likely to underestimate the damage or overestimate the damage? 100% underestimate damage. I think that the whole process is designed to miss damage.

You know, I just kind of raise this because it's not just about the major disasters. You know, we're certainly catching that because we're seeing and hearing some incredibly powerful stories, but I think this committee should be thinking through just systemically certain types of steps like what you're saying that seem to just always kind of tip the balance away from the consumers, away from the policyholders and kind of always geared towards underestimating. And I think that that's something that becomes much more clear to me when I hear from you on this front. You know, Mr. Quinn, I wanted to turn to you because the devil's advocate, the argument on the other side is saying, "Hey, look, we have very

low rates of complaints, you know, some percentage 1% or whatnot." I guess I just wanted to hear from you. What is your response to that type of argument in terms of saying like you know satisfaction's high, you know, these problems are outliers rather than systemic? I assure you senator satisfaction is not high. We hear the complaints regularly. What we understand is most consumers when they complain they're dealing with their insurance company. So they'll complain to the insurer and we believe those statistics get buried. Um, most people don't understand how to complain to their insurance department, how to complain to the National Association of Insurance

Commissioners. Uh, they don't get it. They don't understand how to do that. So, whatever the companies are claiming are their complaints are not representative of the amount of extreme dissatisfaction amongst their policyholders. Ms. Migal, Mr. Vertel, you know, when you were going through that difficult process, probably for the first time where you had to engage with claims of that magnitude, is it right that, you know, you have a hard time understanding at that time all the different tools at your disposal, the process that you need to go through? Am I right in kind of assuming that you're going through a lot of trauma as well, just emotionally, and trying to figure out how to file an official complaint or

this or that might be more opaque to the average person. Is that right, Ms. Migal? I would say that is correct. It is not very user friendly. It's not very intuitive because you — I mean you were talking about how you had to bring in an outside adjuster, right? That was probably not something that you knew you could do right away. Is that correct? That's correct. It took us months to learn enough about the environment with which we're working in, about the situation and how it works to even recognize that that was an option for us. Mr. Vertel, could you imagine policyholders that are going through this,

they're frustrated, but they might not know that there are ways to file official complaints or take other actions to be able to raise some of their concerns or see if there are outside entities that might be able to help take another look. Yeah. I'm not sure exactly what a complaint would have done in this scenario. Yeah. Mr. Quinn, I just want to go back to something I asked you at the end of the last round. You were talking about the states versus this federal approach. And you know, certainly I'm more familiar with this in terms of New Jersey, but I think part of what I'm hearing as well from you as you're hearing this from a

lot of people is yes, states are often not meeting the bar, but am I also correct that part of the problem is that every single state probably does this differently. You know, has different levels of engagement. Some states maybe do better than others but without that sense of level playing field it's very difficult for the American people and the policyholders to be able to have a chance of fairness. Is that an accurate way to describe it? That is correct sir. Every state has their own procedure and there's not necessarily consistency between one state and the next. Yeah. Mr. Millikan, Mr. Schroeder, Mr. Quinn earlier was saying that he felt that this was kind of

across the industry. We've certainly talked about certain insurance companies here, but is that your understanding as well from your experience? Did you feel like there were some that were abiding very differently and very much focused on the consumer or do you feel like this is a problem that you see across the industry no matter which insurance company that you are working with? Mr. Schroeder, I would say, and I work for many different insurance companies. I kind of spread myself out that way um for the purpose of getting different exposure and experience. And I do see this as

a systematic general consensus, a standard for practice amongst all insurance companies. Some though are better than others. Um, and you know, there's a couple standouts that I would say are really fair. And uh, for the most part, all the rest are in the same group of consistently denying unfairly claims where there's owed damage. Mr. Millikan, anything to add here?

No, sir. I've worked exclusively for Allstate for the most part. So I only can speak to that. Okay. Thank you. Well, look, I just want to say first of all what you were saying both Mr. Schroeder, Mr. Millikan about the risk that you are taking when it comes to your career, your work. Um, I just wanted you to know that's incredibly powerful to hear and it just lends added gravity to your testimony, to your answers today. And I want you to know, this is not some just check the box thing that the chairman and I are engaged on. You know, we want to make sure that we are invested in the follow-up to make sure that it's worth the risk that you took.

And to Ms. Migal, Mr. Quinn, Mr. Vertel, um, just hearing about the impacts this has had on you all, your family, your kids, I just, you know, as a father of a seven-year-old and nine-year-old and hearing from families across New Jersey that years later still, you know, they were saying that — I mean you may very well agree but people I talked to in New Jersey they're saying like the storm was in some ways the easier part, you know, that that was — you know they thought that was going to be the worst of it. They didn't expect all the, you know, and I'll exclude the words that people use, but all the other stuff that comes later, they

didn't expect that that would be so damn difficult. And I just think that that's something I think the American people really need to understand. Like, why is it that in your time of greatest need, not only are you not able to rely upon those that are supposed to help you, but they're actually making things worse. And I think that that's something that just eats away. I mean, it just hurts so much to hear your stories and I'm sorry for what you all have gone through and the fact that you're sharing it. It's for the betterment and hopefully we can use this to help fix and make it easier for other families uh in the future to be able to go through this.

I want to thank all of the witnesses for being here today on this panel. Thank you. Thank you for your testimony. Thank you for being willing to share with us your stories, your expertise, uh, your knowledge of this industry. I want to say again, I'm sorry for what you've had to go through, particularly you, Ms. Migal, you, Mr. Vertel, and we'll continue to do everything we can on this committee to get the facts, and you've helped us a lot with that today, and to get some accountability. We're going to take a five minute break here, and the committee will stand in recess while we change the panels, and we will reconvene in about five minutes subject to the call of the chair.

The committee will return to order. We now will welcome our second panel of the day. It is our practice uh witnesses. As I said to the first panel, it's our practice in this committee and in the subcommittee to swear our witnesses before we begin. So, let me ask you to rise and raise your right hand and repeat after me if you would. Do you swear that the testimony you're about to give is the truth, the whole truth, and nothing but the truth? So, help you God. Very good. And now we will hear from each of the witnesses in an opening statement. We'll start with Mr. Michael Keating. Mr. Keating is the operations vice president at State Farm. Mr. Keating, the floor is yours.

My apologies. Chairman Hawley, Ranking Member Kim, distinguished members of the subcommittee, thank you for the invitation to appear before you today. I appreciate the subcommittee's interest in insurance claim handling, and I am grateful for the opportunity to provide insight regarding State Farm's approach to helping our policyholders after disaster strikes. But before I begin my formal statement, I do want to address the difficult situation I heard with Mr. Vertel's testimony. Um, State Farm is made up of 66,000 employees and we're human beings. We make mistakes. I listened to Mr.

Vertel's testimony and it quite frankly was difficult to hear. Um, we made mistakes in the handling of this claim. As a 30-year employee of this company, I know the actions did not reflect the values of State Farm. On behalf of State Farm, I want to sincerely apologize to Mr. and Mrs. Vertel, their family, and again, we're not satisfied with how this claim was handled. And we're going to work hard with them and are already working hard with them to get this resolved. And if I may, I'd like to acknowledge Mr. Vertel. So, I'll continue. Um, State Farm is the largest provider of personal home and auto insurance in the United States.

Headquartered in Bloomington, Illinois. Our mission for over a hundred years has been to help our policyholders manage the risk of everyday life and recover from the unexpected. As a mutual insurance company, State Farm operates for the benefit of our policyholders. State Farm has no shareholders seeking a quarterly return. So our organization is able to focus on the long-term interests of our policyholder group as a whole and deliver on the promises we make to them.

I joined State Farm nearly 32 years ago as a homeowners claim representative. Currently I serve in the role of operations vice president where I help lead State Farm's claim process. How I work and how I lead my team are direct reflections on those experiences over three decades. And the values of customer service, integrity, they are what we hold dear at State Farm. From my first day at State Farm, I've had the privilege of helping people put their lives back together after the unexpected.

It has shaped my role in how I lead others to fulfill State Farm's commitment to our policyholders to ensure that we pay policyholders what we owe under the terms of their policy promptly, courteously, and efficiently. Our commitment to our policyholders navigate some of the most difficult moments of their lives. That is especially critical in light of the recent devastation caused by natural disasters across the country. We share the subcommittee's concern for the families and communities impacted by these events. At State Farm, our policyholders are also often our neighbors.

And as the largest claims force in the industry, we take seriously our role to help communities recover and rebuild. In the southeast, damage from hurricanes Helene and Milton resulted in approximately 129,600 property claims. And State Farm has already paid out nearly $1.28 billion under those claims. Of these claims, less than 1% have received one or more policyholder complaints. In California, as of May 6 of this year, State Farm companies have handled approximately 12,600 wildfire related claims and have paid out more than $3.4

billion. In the wake of these natural disasters, State Farm is hard at work on the ground so policyholders can return to their communities and to their homes. To put this into further context, State Farm receives approximately 30,000 claims every single day. And we understand behind every claim is a person, a family or a small business who needs our help. No two disasters are the same. And each claim is different just as each individual submitting that claim is different. Our goal in claims handling is to understand the scope of the damage, identify the cause, and determine what we may owe. This is how I've instructed my teams to approach

claims: listen carefully, show empathy, investigate thoroughly, and pay what is owed under the terms of the policy. Now, we try to respond to most of the claims handling work ourselves, but sometimes we need to work with external independent adjusters to help us process a large volume of claims in a timely way. Similarly, when a claim is particularly complex or requires special expertise, we may use engineers to help us resolve it. In such cases, we require that engineers are appropriately licensed, independent, and objective, and base their analysis on facts. So,

thank you again to the subcommittee for having me here today, and I do look forward to answering your questions. Thank you very much. Our next witness is Mike Fiato of Allstate. Mr.

Fiato is the executive vice president and chief claims officer of the Allstate Corporation. Mr. Fiato, the floor is yours. Chairman Hawley, Ranking Member Kim, and members of the subcommittee. Thank you for inviting Allstate to share how we help customers recover when disaster strikes. My name is Mike Fiato. I am the executive vice president for claims at Allstate, leading a team of 23,000 claims professionals who help customers when they have fender benders or when their home burns to the ground. I joined Allstate about a year and a half ago after having spent more than three decades leading claims organizations at several other leading insurers. In my opinion, Allstate is among the finest in the industry and is exceptional when it comes to helping customers after natural disasters. All

state's purpose is to serve customers from small setbacks to large-scale disasters. We help customers recover from life's toughest moments so that they can move forward with confidence. I like to tell our team that our customer's worst day needs to be our best. My written testimony discusses in detail Allstate's claims process. Allstate responds with urgency to get accurate payments to customers for their recovery. Last year, Allstate paid customers over a hundred million a day on average, enough to rebuild an entire community every day. This adds up to more than 37 billion in claims payments and includes 57 million following Hurricane Milton and 527 million after

Hurricane Helene where I have personally visited damaged areas and witnessed widespread destruction that our customers live through. Given the nature of this hearing, I would like to address the testimony of the preceding panel and to provide the subcommittee with a more complete picture of what happened with Ms. Migal's claims of September 2024. Let me start by saying that on behalf of Allstate, I regret that Ms. Migal is unhappy with the settlement of our claims. Our business is to help customers during some of their toughest times. We're willing to work with our customers when new information is presented to ensure that claims are settled fairly and accurately. Some of what you heard in the first panel is

just not accurate, and it's important that the record is correct. I will focus on a few key points. First, our adjuster performed a comprehensive in-person evaluation of Ms. Migal's home after the storm, completed a thorough estimate of the damage covered, and Ms. Migal settled the claim for approximately $100,000. This covered structural damage and repair or replacement of aesthetic damage. Allstate provided for all remediation under the policy. Secondly, roughly 70% of the difference in estimates was attributable not to structural damage, which Allstate covered in full, but to cosmetic damage, such as the appearance of undamaged bricks. Mr. Millikan's estimate included replacing the bricks on an entire side of the house for aesthetic reasons. All

state's policy and Georgia law does not provide for such coverage when there is no damage. Third, an estimate of five times that amount by a public adjuster must include undamaged or uncovered items and is simply not credible. Fourth, Mr. Millikan did not agree with the public adjuster's estimate of $500,000 and in fact noted that the public adjuster demanded excessive roof repairs. Fifth, Mr. Millikan's original estimate totaled roughly $200,000. An Allstate adjuster sought clarification on some of the areas. Mr. Millikan updated his estimate and came back with an estimate of approximately $100,000, which is where the claim settled. We have reached out to Ms.

Migal's public adjuster to see if there is new information related to the claim that we can review and consider. Given my extensive experience in the claims business, I can speak confidently that Allstate pays claims with precision and fairness. At Allstate, we have robust internal risk oversight and compliance protocols to ensure our customers' claims are paid accurately and efficiently. Additionally, as part of our commitment to quality, consistency, and customer experience, we have a separate quality department that reviews oversight standards for consistent application. Claims, like most components of the property casualty business, are also heavily regulated

through our state departments of insurance. 51 regulators oversee and regulate everything from pricing and underwriting to policies and claims where we are routinely subject to market conduct exams, including following large catastrophe events like hurricanes. Let me close with four key points. Allstate's claims practices are fair, fast, and have high customer satisfaction. Allstate helps millions of homeowners rebuild after severe weather events, paying over 17 billion over the last 5 years for catastrophe events alone. All state helps one in 10 homeowners protect one of their most important assets with affordable, simple, and connected insurance. Allstate is constantly

investing in innovation to better serve customers, leveraging technology, connectivity, and industry-leading analytics. I look forward to discussing the role of our claims organization with you today. Thank you.

Thank you very much to both of the witnesses. We will now have five minute rounds of questions. We'll do a couple of rounds here and I will start. Let me just start with you, Mr. Fiato. So, I take it from your statement just now that you don't have any regrets about Ms. Migal's case. Mr. Keating apologized to Mr. Vertel and promised to work with him, resolve his case. Thank you for that, Mr. Keating. I didn't hear anything to that extent from you, Mr. Fiato. So, you think Allstate handled it just fine? No, I stated uh in my statement that I regret that Ms. Migal is unhappy with the — Yeah. Well, that's like saying I'm sorry you're unhappy, right? That's — I apologize, but I don't apologize. Would you like to apologize to her now? Maybe I just misunderstood her. I would like to say, is Ms. Migal here? Go ahead. I'm sure she's watching. Hi, Ms. Migal.

I'd like to say I want to make sure that we get your claim resolved to your satisfaction. And if there's additional information or things that we can do to continue to work with you, we'll do that. So, I noticed that you said in your written testimony, you just repeated it here. Let me make 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 that our customer's worst day is your big profit opportunity. I mean, we've just heard

testimony here, sworn testimony from multiple adjusters 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. Yeah, that would be incorrect, Senator. That's not what we do. So, you have never ordered — Allstate has never asked an adjuster to change an assessment on their report. When we review an adjuster's estimate, most often for authority requests. So, most adjusters have an amount of financial authority that they can settle claims up to without having to — Now, wait a minute.

That's not what they testified to. That's not what they just testified to. You just heard sworn testimony from multiple adjusters and they said it happened. One adjuster had only ever worked for you over years in the industry and he said he was repeatedly directed by you, by your company Allstate, to change factual findings, to delete material in his reports, to alter his reports to make them factually incorrect, all with the purpose of driving down the award and padding your profits. I disagree with his statement. Well, you know, I have to notice that. I mean, your profits have never been better. I mean, they're really quite extraordinary. Fiscal year 24, Allstate had $64 billion in

revenue. That's 12% above the previous year. You made $4.6 billion in profits. And your CEO, Tom Wilson, last year was paid $26 million. Now, Ms. Migal can't get her claim paid out, but Tom Wilson, whoever the heck he is, gets $26 million. I mean, that's really extraordinary. Do you not have the money to pay people like Ms. Migal? Why is she not a priority? But Tom Wilson's salary is. We We've paid Ms. Migal's claim. No, you didn't. You have given her a paltry sum. Your own adjusters — you said in

your testimony just a second ago, you sent out an adjuster. In fact, you sent out three. And two of those adjusters testified just now under oath that your company ordered them to alter their reports against their will, contrary to their advice, and in fact to render them factually inaccurate. That's extraordinary. I disagree with their statement. You disagree that's what they said. I disagree that that's our process. So they're just they're lying. That's what you're saying. I can tell you that for example Mr. Schroeder wrote 15 estimates for us. None of those were reviewed by Allstate. 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 for 12 years as an independent adjuster. I work claims all over the country regularly throughout the years and I have watched the progression and 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 adjusters to alter and delete factual findings in their estimates to drive down the cost of the claim. The alterations and deletions were often factually wrong. During

Hurricane Isaac in 2012, an email was sent out that no adjuster could buy a roof no matter the damage present." This looks like a pattern. This is someone who's not even involved in this case in Hurricane Helene. We've heard from person after person. All this testimony is on the record. It sounds to me like your company is running a racket and you're making more than you ever have. Those are not our processes, Senator. But multiple people have testified that they are. In fact, this really all goes back to a strategy that your company pioneered with the McKinsey company back in the 90s. Isn't that right? Let's just take a look here at what McKinsey advised Allstate as early as the 1990s. You went to McKinsey and

asked them, "How can we get rich?" And McKinsey gave you this advice. Sit and wait. They said, "Delay, delay, delay. It's a zero sum economic game. There can only be one winner, and the winner is going to be Allstate. It's not going to be the policyholders." And then good hands or boxing gloves. McKinsey suggests Allstate make a low offer on a claim like you did to Ms. Migal. And then if the policy owner has the temerity to protest, you go after him hard, just like you did to her. Her home hasn't had one lick of work done on it. Not one lick. And yet you sit here today and say you're sorry she feels badly about it. I mean, this is really your strategy, is it not? And it's made

your company just filthy rich. That report is over 25 years old. We've never implemented it to the tee. In those 25 years, we've had multiple departments of insurance indicate that this is not an issue or that we're doing anything untoward. What do you mean it's not an issue? You're saying that you don't follow McKinsey's advice? That's not the way we handle claims. You've never have done it this way. You didn't go and seek their advice. I've been at Allstate for about a year and a half. I can't speak to what happened 25 years ago. Oh, I see. This all predates you. You don't know anything about it. I don't know anything about the McKinsey report. Oh, of course. Of course. Right. Deny, delay. Right. It's the same tactics over and over. Let me

ask you, do you ever engage in retaliation for employees who come before committees like this one or who raise objections to what you're doing, to the fraud that you're engaged in? Would you ever retaliate? It's a hypothetical question, but the answer — it's actually it's not hypothetical, but go ahead. What's the answer? The answer would be of course not. Well, we just heard sworn testimony from Mr. Millikan that you have retaliated against him, that he has been informed by Allstate that he is not going to be doing any further work. I see your suits behind you are shaking their heads. No, Allstate didn't have any communication with — Never had any communication with Mr. Millikan on this subject. You're under oath now. I just — of this specific — we've communicated with Mr. Millikan

many times. He's worked for Pilot for — Oh, it sounds like now we're prevaricating. No, we're not. Now we're prevaricating. So my question is, have you retaliated against Mr. Millikan? Of course not. Did you tell Mr. Millikan that he won't be doing any further cases with Allstate? Not that I'm aware of. Not that you're aware of. Of course not. Have you or Allstate taken any adverse action against Mr. Millikan ever at all? No. Has Allstate ever done that against any other employee? I can't answer that question. I can only answer what I've done. No. In fact, you've been sued multiple times in court after court after court for retaliation. You've been sued for fraud successfully time after time after time.

Mr. Fiato, I have to tell you, I find your testimony absolutely stunning here today. I can't believe after what we've heard, I can't believe after what Ms. Migal has been through that you would sit here and insist that everything is fine and above board. I can't believe that this pattern of fraud that you would have nothing to say about and these outrageous profits. I mean, don't you think that your policyholders deserve better than this? I'm not sure what the question is, Senator. Don't you think they deserve better than what you're giving them?

That's my question. I think we do our best to service our policyholders every day. Oh, I think you do your best to make profits and I think you're very good at it. And I think your policyholders are getting the shaft. Senator Kim.

In the previous panel, we continue to hear from adjusters talking about how they send forward, you know, their numbers and it goes to the insurance company and then they're being told to change it. So, Mr. Keating, I guess I just wanted to get a sense from you. What is your response to that type of claim? Who is it going to? What expertise do they have? You know, why is it that they are saying, you know, constantly it seems like the number is too high? Thank you, Senator Kim, and appreciate that question. It's an important one. The

process that was described by the first panel is something that's different from what State Farm does. Um we do not have that inside review, I think, as they were describing it. That's just not part of the process when we're using independent adjusters. Uh we provide them with authority and they go out, inspect losses, all in an effort to pay what we owe in accordance with the policy that the customer has. And so that review from an in-office perspective that's not part of our policy. You're saying from your company's standpoint there isn't that practice that was talked about in terms of saying you

know change this part of the estimate or that's too high or that's not the right material. That's correct. That's not one of the processes we use at State Farm. Mr. Fiato, can you explain the process on yours? And would you mind pulling the mic up closer? Sure. Could you repeat the question for me? Yeah. So, I guess I'm just trying to get a sense. In the previous panel, we hear them talk about the adjusters talking about how they come up with their number, they send it forward to the insurance company, and then they're being told you know, that's too high or they're being said, oh, maybe this part needs to be changed or this needs to be changed. And they're saying that it seems like a constant effort to try to bring the

number down in terms of what the policyholders are owed. Most often when a — Sorry, can you pull it up close to you? Yeah, there you go. Uh, most often when we review an adjuster's work, it's for authority purposes. So, most adjusters have a set level of financial authority in which they can resolve a claim without having to have anybody else look at that work. And that could be dependent upon whether or not they're tenured, how many estimates they may have written for us, a bunch of things that would qualify them for different levels of authority. When they submit a

claim to us for review, it goes to a senior technical reviewer who's going to look at a number of things. They're going to look at the documentation that was presented to support the decisions that the adjuster made. It's also going to be a technical review of did you estimate according to the standards that we set forth? And what expertise do these senior technical reviewers have? They're senior technical adjusters. They're very tenured adjusters, probably for the most part uh have written a lot of highly complex losses. Home differs from auto in this respect. Senator, if you write an auto estimate, we use a

software to do that. It's going to give you every part. It's going to have a number. It's going to have a price. It's going to have the number of hours it takes to put that part on a car. When you write an estimate for a home — So, I just want to make clear here. So, you're saying you would disagree with what you heard that there's a pattern of trying to bring that number down. Is that — Yes. You know, I guess I'm just trying to think through here. You know, if there are these senior technical reviewers, why does it always seem like what's being reviewed brings the number down, not up, you know? I mean, are there circumstances in which you can think of?

Are there reviews or data that you have that show that actually in some cases the senior technical reviewer will say that no, actually the amount for the claim should be higher, not lower. The data that I've seen would tell me that we reduce an estimate generally 27% of the time we review it and 9% of the time we increase the estimate and the rest of the time we do not change the estimate at all. Is there a practice in your company, Mr. Fiato, of removing

adjusters just in general when they're on a claim or on a particular case? Are there reasons why an adjuster would be removed from that case? There are reasons why if you think about — particularly let's use cat as an example. If you think about the logistics of managing a catastrophe event, an event happens, we assign adjusters and another event will happen a few days later and then another event. And as that happens, logistically we try to ensure that when somebody is getting close to finishing a deployment, which means, you know, working for a period of time on a

cat, that we want to move them to a new cat and give them a new set of files. If they have one or two files remaining, we'll reassign them to somebody who is not as far along so that we can ensure that we're being efficient and getting to as many customers as quickly as we can. But doesn't that just start the process over? It doesn't start the process over because we document our work and people should be able to pick up where that adjuster left off. Mr. Keating, is this a practice that your company uses in terms of removing adjusters? So there are instances where in catastrophes if one of the either independent or even one of our

deployed claim specialists — you know they could — you could have some turnover. You could have someone go out on a medical leave or if we redeploy them to a new event. You do have a scenario where if that claim is not closed we will reassign it to a next adjuster. And in that case, we have a warm transfer process that should ensure good clarity as to what has been done on the claim, what's still outstanding, and ultimately what are the next steps that need to take place to make sure that that customer gets

their claim resolved. Just one more question this round. Um Mr. Keating, is there a blacklist? Is there some list where you know if there's an adjuster that you didn't like the previous work that or other sorts of complaints you might have that you'll say that person is not going to work for us anymore. So, uh, Senator, um, we do have the ability to request the removal of an independent adjuster through that firm if, you know, they had customer experience issues or lack of

technical capabilities, whatever it may be, we do have that ability. Yes, Mr. Fiato. Uh I don't have anything to add to that. Similar process, same general process. Okay. With that I'll yield back. Mr. Fiato, just to come back to

you. If an Allstate supervisor, manager, employee directed an adjuster to delete or to alter or to falsify a report — that would be fraud, wouldn't it? Would you agree with that? I would. And your testimony is that that doesn't happen at Allstate. However, that's not our procedures. Correct. Yeah. Your testimony is that the people who testified today under oath that they're wrong or lying. You don't do that. Is that correct? I just have a different view. My view of the work is different than what they believe happened. Let's take a little trip down memory lane. As early as

1998, Allstate was sued because adjusters had multiple times reported changes to policies. This is as far back as the 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. That was in 1998. Or how about Hurricane Katrina in 2007? 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. A judge also found that All state had paid $3 million — $2.8 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. What's amazing is it's exactly what these two gentlemen said is still happening in your company. Now, your testimony is that none of this ever happened. My testimony is that I wasn't involved with that. Yeah, but you're responsible for it now. And you're here before this committee, correct? So, this happened. Do you acknowledge that this has been a pattern in practice of your company since the '90s? It's not a pattern in practice today. What? You've changed it. You're saying you rooted this out at some point. That's not the way we handle claims. It has been the way you've handled claims historically. We've seen

it from the 90s through the 2000s. And then we had today two additional witnesses here under oath. And we have multiple whistleblowers and written testimony who say it's exactly the same thing. You haven't changed a lick. We've got your word against everybody else's. Why should we believe you? Because I'm telling the truth, Senator. Right. Right. Just like you apologized to Ms. Migal. Right. I mean, it's really extraordinary. You're asking us to look at all the evidence and don't believe our lying eyes, right? I mean, just

ignore the fact that your company has over and over and over again been sanctioned, lost lawsuits, paid out multi-million dollar verdicts, all for this exact same thing. Falsifying reports, interfering with adjusters' reports, hiring firms to send in false estimates, all to pad your profits, and you're just sitting here saying it never happens. It's an alternate reality, isn't it? I don't believe so. No. On what basis? What world do you live in? On the basis that I lead this organization every day. Right. Which means you're responsible for it. Which

is why I can't believe you wouldn't come in here and take responsibility for what your company is doing. I can't believe you wouldn't turn around and say to Ms. Migal, "We will make this right no matter what." And 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. It's a pattern in 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. 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. What do you make? I'd be happy to discuss that after. You can tell us. I mean, what do you make a year? Your CEO makes 26 million a year. What do you make? I'm not comfortable discussing that in this forum. Why not? I mean, I wouldn't be comfortable either if I represented a company like this. If you won't tell us, I will. I won't.

It's amazing. Well, Mr. Fiato, all I can say is I think your testimony here today is pretty shameful, just like I think your company's behavior is pretty shameful. Mr. Keating, let me just ask you, does State Farm

deliberately underpay claims? Do you engage in that behavior? No, Senator, we do not. Let me read to you a letter from a whistleblower who's a longtime State Farm employee adjuster. And without objection, I'll have this entered now into the record. The whistleblower says the following. "I observed routine and deliberate underpayment of claims, including the consistent removal or alteration of essential line items. These were not occasional discrepancies, but part of a broader and consistent pattern of lowballing estimates." What's your response to that? That's not consistent with the State Farm I know, and I'm certainly not familiar with the individual that's making those allegations. Would you ever alter

factual findings from an inspection report like Allstate? No, we would not do that, nor do we direct anyone to do that. Well, this same whistleblower says, and I quote, "More concerning was the alteration and deletion of factual findings in my reports. In many cases I documented legitimate damage to vinyl siding that warranted full elevation replacement only to have the estimate changed to reflect piecemeal spot repairs contrary to manufacturer specifications and professional standards." Respectfully, Senator, I'm unaware of the details surrounding these allegations. Uh but we certainly

follow the recommendations based on the standards as that person referenced. Um do you retaliate against whistleblowers? No, we do not. This witness says, and I quote, "It is also my professional concern that whistleblower retaliation is a very real threat within the State Farm system. Others before me have experienced severe consequences for speaking out and I have reason to believe similar retaliation could result in the end of my ability to work in this industry." End quote. What's your response to that?

So again, I can't speak to the specifics because the individual is not here or I don't know of those specifics, but it's inconsistent with the State Farm that I know and that I've experienced for 32 years. It's amazing to me that both of your testimonies are very consistent in one respect, which is that it's a sudden case of amnesia before this committee. You've never heard of any of this stuff that's happened. You're unfamiliar with your own company, in your case, Mr. Fiato, before like yesterday. There's no knowledge whatsoever. I have to say, it's awfully convenient. That witness, that sworn testimony, that oath — it's amazing how often it produces amnesia at these hearings. Sadly, your policyholders don't have it and they're suffering because of it. Senator Kim.

I want to pick up where I left off when it came to, you know, is there a blacklist or some type of list which is being kept track of who is able to work with your company or not? I heard your explanation of certain types of behavior such that you would want to remove but would you both agree that the practice of removing people from working for your company or as a third party contractor because they are not agreeing to change or lower cost estimates — that that should not happen. Would you both agree that that is not a practice that you

think would merit being put on that kind of list? Mr. Fiato, that's correct. Mr. Keating, I would agree as well, but it's not part of our process as I stated earlier. Mr. Fiato, do you have a rule on the books within your company that prohibits that type of potential retaliatory action? We do. Would you mind afterwards sharing that with us? My pleasure. Um, can you both assure us that those who testified here today will not be retaliated against, Mr. Fiato? Absolutely. Mr. Keating. So, those individuals haven't worked for State Farm, but we certainly wouldn't retaliate against them.

I wanted to just raise an issue that the chairman kind of pointed out with that slide that you had about McKinsey. I mean, I think regardless of that, having not seen that slide before, we have heard numerous witnesses today raise the concerns about delays and that's something that I just wanted to hear your side of this. I mean, I'll be honest with you, these are — I get it, some high volume disasters and circumstances on which that can happen, but also just some really excruciating circumstances in which people and families are wading through — you know, having a wife that is expecting a child,

little kids at home, other types of circumstances like — how do you respond to that and how do you get better at this especially when there are such challenges facing these families at that point? Mr. Keating. Thank you, Senator Kim. Yes, as you referenced, resourcing something like a Hurricane Helene and Milton shortly thereafter is really challenging. And in our case, we had close to 130,000 claims. And so what we do is really we look to resource it locally with people that we have that work in those territories initially.

We deploy our resources — so folks that their job is to deploy to catastrophes. So again, these are State Farm representatives. And then that third layer really is the need for independent adjusters if we don't have that internal resourcing first. And so the goal is always to serve our customers and do this promptly and efficiently. And it gets back to the heart of your question. It does become challenging when you have not only the Helene provide a lot of claims but it also stretched across the entire southeast. So resourcing

becomes an issue for us. We continue to look at ways to improve that resourcing piece. How can we increase our overall internal staffing so that we can deploy more and more resources, more effectively provide more oversight so that in the scenario of Mr. Vertel's issue that those type of gaps do not exist. Are there guidelines or certain types of performance indicators in terms of how quickly you should be responding to these types of cases? We certainly track that. Every storm is unique and, you know, again the Helene

and Milton one being really unique from a standpoint of just the overall geography that it impacted, the volume of claims we had. And so we track the cycle times that we have with those claims and what we're trying to do is certainly handle these claims promptly so customers are not impacted the way that Mr. Vertel described. Look, I mean, this will be something that we try to dive into more because I do think that, you know, as you said, these are the moments of such crisis and challenge for these families and the promise. I mean, I get it. Both of you

are a part of wildly successful insurance companies, but perhaps we see a situation in which the level of resourcing, the level of trying to meet that moment, is not keeping up with just the level of intensity that we're experiencing when it comes to these crises that are out there. I wanted to just sort of raise one more issue here. Do either of your companies continue to do work with third-party contractors that have been found guilty of fraud? Mr. Fiato, I do not believe we do. Mr. Keating, I'm not aware of any of those companies that have been found guilty. So, I don't believe we do either. Well, we'll make sure we follow up with you. I

mean, in one of the testimonies here by Mr. Quinn, raising these concerns that insurance companies are continuing to work with companies and organizations or individuals that have been known to commit fraud. You know, the concerns that we saw when it came to my home state, when it came to Superstorm Sandy and other issues of that nature. So, I guess I just want to ask you, do you commit to not contracting with these third party firms — when you have the review process of who you're working with, do you have in there a review that would weed out and ensure that those that have been found guilty of fraud cannot work with your

company again? Is that something that you have on the books as part of the process? I can certainly commit. I will go back and look at if they are in the contracts. I'm unaware of the specifics around that, but we'll certainly look into that. Mr. Fiato, I agree. We will do the same. We do our best to vet every vendor that we use to ensure that we're making a good selection in that regard. So, if you don't mind, we'll follow up with that after this. And I just ask that the two of you come back to us with that kind of assurance of what is your policy when it comes to your company. Okay. Thank you. With that, I'll yield back. I'm

sorry. Is your testimony that neither of you do business with US Forensic? Go ahead, Mr. Keating. I'm unaware of that firm that you're referring to. You're not familiar with it, Mr. Fiato? Same. I'm — You're not familiar with US Forensic? I'm not familiar with US Forensic. US Forensic, which has been sued multiple times, was found civilly liable for widespread fraud in Katrina and Superstorm Sandy. Both of your companies have contracted with US Forensic for years, for decades. But your testimony is today that — per what I think you just said to the ranking member — you no longer contract with US Forensic. Is that right? I want to be clear on this.

Is that right, Mr. Fiato? I don't know if we do. Okay, Mr. Keating. Unaware. So, in other words, the testimony is, Senator Kim, that maybe they continue to contract the fraudsters. I think they can't recall, which is I think the theme of today's testimony. I'll just end by

saying in Missouri two months ago, we lost 12 people to tornadoes. A lot more people than that lost their homes. And that happens in my state sadly every year, every tornado season, every flooding season. And in those times of crisis, these good folks look to you for help. And I'm sad to say that more often than not, they're disappointed. And it shouldn't be that way. They shouldn't be victims of fraud and abuse. They shouldn't be treated the way that Mr. Vertel and his wife were treated, Ms. Migal and her husband were treated. The people of Missouri and the people of the country deserve

better. And given the profits you're making, I certainly think you can afford it. With that, we will conclude today's hearing.