During a Senate subcommittee hearing investigating claim handling during recent natural disasters, Sen. Josh Hawley (R-Missouri) grilled Allstate and State Farm executives saying testimony from adjusters and policyholders, along with previous lawsuits, appears to show the companies are “running a racket” and a “pattern of fraud” while making “outrageous profits.” 

The Homeland Security & Governmental Affairs Subcommittee on Disaster Management, District of Columbia, and Census heard from two homeowners on May 13 who are still fighting claims from Hurricane Helene. Two adjusters testified that they were pressured to lower estimates. 

According to Hawley, the hearing was held to review findings of an investigation into the handling of claims following multiple natural disasters across the nation in the past year, including tornadoes in Missouri, Hurricane Milton and Helene, and the California wildfires. 

Michael Fiato, Allstate executive vice president and chief claims officer, told the subcommittee that the company responded to 132 catastrophe events in 2024, up from an average of 85 about 10 years ago. 

The company paid out more than $37 billion in claims, with $4.6 billion paid out specifically to catastrophe claims, including $57 million for Hurricane Milton damages, $527 million to Hurricane Helene, and $924 million in the aftermath of the California wildfires. 

Fiato addressed previous testimony from Natalia Migal, a policyholder, who said Allstate originally offered $46,000 to fix her Georgia house extensively damaged by Hurricane Helene on Sept. 27, an offer more than $350,000 lower than what an independent adjuster later estimated. He also addressed testimony from Clifford Millikan, a property adjuster for Pilot Catastrophe, who alleged he faced pressure from the company to reduce his estimate. 

“On behalf of Allstate I regret that Miss Migal is unhappy with her settlements of her claims, our business is to help customers during some of their toughest times,” Fiato said. “We are willing to work with our customers when new information is presented to ensure that claims are settled fairly and accurately.” 

He claimed that some of the information heard by the subcommittee is not correct. 

“Miss Migal settled the claim for approximately $100,000,” Fiato said. “This covered structural damage and repair or replacement of aesthetic damage. Allstate provided for all remediation under the policy.” 

Fiato said 70% of the difference in the estimate was not from structural damage, which Allstate covered but cosmetic damage, such as the appearance of undamaged bricks. 

“Millikan’s estimate included replacing bricks on the entire side of a house for aesthetic reasons,” Fiato said. “Allstate’s policy and Georgia law does not provide for such coverage when there is no damage.” 

He argued that Millikan also did not agree with the public adjuster’s estimate of $500,000 and noted the adjuster demanded excessive roof repairs. He said Millikan’s original estimate was roughly $200,000, and when Allstate sought clarification on the estimate, it was reduced to $100,000. 

Hawley asked if Fiato had any regrets about how Migal’s case was handled. Fiato responded that he regretted Migal was unhappy. 

“That’s like saying, ‘Sorry that you are unhappy,’” Hawley said. “That’s, ‘I apologize but I don’t apologize.’” 

During Fiato’s testimony, he noted that he tells his team that customers’ worst days need to be Allstate’s best. 

“Based on the testimony I’ve heard today, based on the witness statements, it sounds like to me that should be amended to say, ‘Our customers’ worst day is your big profit opportunity,’” Hawley said. “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.” 

Fiato responded, “That would be incorrect.” 

He also denied that Allstate directed adjusters to delete materials or make them factually incorrect for the purpose of driving down the award. 

“I have to notice that your profits have never been better, they’re really quite extraordinary,” Hawley said. “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, while Miss Migal can’t get her claim paid out, but Tom Wilson, whoever the heck he is, gets $26 million.” 

Fiato asserted that Migal’s claim was paid. 

Hawley responded that Allstate did not pay her claim and instead gave her a low sum. 

He followed with a whistleblower statement from an unnamed source who supported statements made by the adjusters. The whistleblower claims they’ve watched a progression of controlling claims from Allstate worsen throughout the 12 years they’ve worked as an independent adjuster. This included deleting factual findings and altering estimates. 

“This looks like a pattern,” Hawley said. “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.” 

The strategy goes back to a report completed by McKinsey & Co., a management company, in the 1990s, Hawley said. 

“McKinsey gave you the advice to sit and wait, they said, ‘Delay, delay delay,’” Hawley said. “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 those good hands are boxing gloves.” 

Hawley said the McKinsey strategy is to make a low offer on a claim like Migal’s and, if the policy owner protests, go after them. 

“Her home hasn’t had one lick of work done,” Hawley said. “This is really your strategy, is it not? And it’s made your company just filthy rich.” 

Fiato responded that the McKinsey report is more than 25 years old. 

“Multiple departments of insurance have indicated that this is not an issue or that we are doing anything untowards,” Fiato said. 

Hawley asked if Allstate has ever retaliated against employees who have testified about the company’s practices. 

“The answer would be, of course not,” Fiato said. 

Hawley noted that the company has been sued multiple times for retaliation and fraud. He listed suits filed in 1998 after adjusters reported changes to estimates regarding damage from the California earthquake, and then a similar suit in 2007 from Hurricane Katrina, where a grand jury found Allstate altered adjustments and engineering reports. 

“You haven’t changed a lick,” Hawley said. “We’ve got your word against everybody else’s. Why should we believe you?” 

Fiato responded, “Because I’m telling the truth, Senator.” 

“Right,” Hawley shot back. “Just like you apologized to Miss Migal.” 

Michael Keating, State Farm operations vice president, also testified before the subcommittee on Tuesday. 

Prior to starting his testimony, Keating apologized to a policyholder, Jacob Vertel, who testified earlier in the hearing. 

Vertel testified that his family, including two young children, is still living in temporary housing as it battles with State Farm over a claim for his North Carolina home, which was significantly damaged during Hurricane Helene. 

State Farm has repeatedly said the home is livable, Vertel says. Despite water pouring through outlets and the sky visible in multiple rooms, including his children’s, the living room, and bathroom. 

Vertel said he was forced to seek legal advice and has filed suit against the company.

“State Farm is made up of 66,000 employees,” Keating said. “We are human beings, we make mistakes. I listened to Mr. Vertel’s testimony, and quite frankly, it was difficult to hear. 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. Vertel and their family. We are going to work hard with them to get this resolved.” 

Keating told the subcommittee that it had about 129,600 property claims from Hurricane Helene and Milton and has paid out about $1.28 billion. He said less than 1% of those claims received policyholder complaints. 

“We closely review each of those complaints, take appropriate action, and work to mitigate against future complaints,” Keating said.

As of May 6, State Farm has handled about 12,600 wildfire-related claims and has paid out more than $3.4 billion, he said. 

Hawley asked Keating similar questions to those that he had asked Fiato. 

“Does State Farm deliberately underplay claims?”  

“No, Senator, we do not,” Keating responded. 

Hawley then again read a whistleblower statement that outlined routine and deliberate underpayment of claims by State Farm. The statement outlined an alteration of essential line items that was a broader and consistent pattern of lowballing estimates. 

“That’s not consistent with the State Farm I know,” Keating said. 

Hawling asked if State Farm retaliates against whistleblowers. 

“No, we do not,” Keating responded. 

Hawling said that the whistleblower noted a professional concern and said that retaliation is a very real threat within the State Farm system. 

Keating said he couldn’t speak to the specifics of the case because they were not provided, but that the statement is inconsistent with what he knows of State Farm. 

“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,” Hawley said. “You’ve never heard of any of the stuff that’s happened? Sadly, your policyholders don’t have it and they’re suffering because of it.” 

Hawley said Missouri lost 12 people to tornadoes more than two months ago. 

“A lot more people than that lost their homes,” Hawley said. “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 or Miss Migal and her husband were treated. The people of Missouri and the people of the country deserve better, and given your profits you are making, I certainly think you can afford it.”

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Michael Fiato, Allstate executive vice president and chief claims officer, speaks before the Homeland Security & Governmental Affairs Subcommittee on Disaster Management, District of Columbia, and Census May 13, 2025/screenshot