Two Words That Haunt So Many Hurricane Victims: ‘Claim Denied’

Do you know that you’re in good hands with Allstate? Or how about State Farm? Do you know that, like a good neighbor, State Farm is there? Of course you do. Insurance companies have been blasting slogans like these at us for years now. In 2022 alone, Allstate spent $617 million on advertising. State Farm spent an even more whopping $1.05 billion.

But if insurance giants like State Farm truly rated as our “good neighbors,” they’d be behaving — in real life — quite a bit differently than their award-winning advertising suggests.

In hurricane-plagued Florida, for instance, State Farm last year denied 46.4 percent of homeowner claims, refusals that directly impacted over 76,000 households.

“Property insurers who deny legitimate claims,” notes Martin Weiss, the founder of the nation’s only independent insurer rating agency, “are sending the implicit message, ‘If you don’t like it, sue us.’”

To add injury to that insult, Weiss adds, Florida governor Ron DeSantis had just before last year signed into law new legislation that makes policyholder lawsuits against insurers “far more difficult.”

For recently retired State Farm CEO Michael Tipsord, insurance industry lobbying victories along that Florida line have helped him pocket some stunning personal rewards. Tipsord pulled down $24.4 million in compensation two years ago, almost $4 million more than his industry’s second-highest 2022 CEO pay total. Tipsord had pocketed even more, $24.5 million, in 2021.

“CEOs are living high on the hog while increasing insurance premiums for people living paycheck to paycheck,” the Consumer Federation of America’s Michael DeLong charged last October. “Insurers are telling regulators that ordinary consumers have to pay much more for auto and home insurance because the companies are struggling with inflation and climate change, but they are quietly handing CEOs gigantic bonuses.”

Overall, DeLong’s Consumer Federation reports, the chief execs at America’s ten largest personal insurance lines collected over a quarter-billion dollars in CEO compensation for their services in 2021 and 2022.

If we really had a “good neighbor” at State Farm — or any other insurance giant — those companies wouldn’t have been spending recent years denying relief to the victims of climate change. They would have been insisting instead that lawmakers crack down on the fossil-fuel corporate giants doing so much to foul our planet.

Top insurers did make an early feint in that direction over a half-century ago. Way back in 1973, notes Peter Bosshard, the global coordinator of the U.S.-based Insure Our Future campaign, “the insurance industry first warned about climate risks.” But that warning, in the years to come, wouldn’t stop insurers from “underwriting and investing in the expansion of fossil fuels.”

Giant insurance companies that actually took climate science seriously, Bosshard observes, would have been “suing fossil fuel companies, to make polluters pay for the growing costs of climate disasters and keep insurance affordable for climate-affected communities.”

Insurers haven’t been doing any of that.

”Insurers talk a lot about their climate commitments and supporting their clients through the energy transition, but this is plain greenwashing,” charges Ariel Le Bourdonnec, a Reclaim Finance insurance activist. “They are still profiting from providing cover that allows companies to develop new fossil fuel projects. Insurers could be a force for change, but instead they are undermining climate action.”

Other critics are emphasizing that insurance industry execs have gone beyond “greenwashing” to “bluelining,” as Lilith Fellowes-Granda, a Center for American Progress associate director, points out. These execs are increasing prices and withdrawing services “from regions they perceive to be at high environmental risk.” These moves typically hit hardest on the “communities most vulnerable to the effects of climate change.”

Climate activists are advocating for a variety of policy changes to reverse these dynamics, everything from making sure property insurers must share the risks they cover to ensuring underserved communities access to affordable insurance.

Another reform approach might more quickly catch the attention of top insurance industry boards of directors: tying an insurance company’s tax rate to the ratio between that company’s CEO pay and the paychecks of the firm’s workers.

Inside the insurance industry, as in every other major U.S. economic sector, that ratio between CEO and worker has soared over recent decades.

In 2023, the chief executive at Chubb Ltd., Evan Greenberg, took home $27.7 million, enough to make him that year’s top-paid American property and casualty insurer. Those millions added up to 452 times more than the annual pay of the typical Chubb employee. In 2022, Greenberg pocketed a mere 346 times his company’s typical employee pay.

Back in 1965, the Economic Policy Institute noted last month in its latest annual CEO pay report, the top execs at major U.S. corporations only averaged 21 times what typical American workers earned. Nearly a quarter-century later, in 1989, CEOs were still only averaging 61 times worker pay.

How could we restore greater equity to corporate compensation and, at the same time, give top corporate executives an incentive to care about more than simply maximizing their own personal compensation? Lawmakers at the state and federal levels have over recent years advanced dozens of proposals that tie corporate tax rates to the size of the gap between top executive and worker pay.

In all these proposals, the higher a corporation’s CEO-worker pay ratio, the higher that corporation’s tax rate.

The Institute for Policy Studies has compiled an exhaustive guide to these CEO-worker pay gap proposals. Maybe the winds of Hurricane Milton will help give these moves the momentum they need to turn into law — and give top execs a reason to care about something more than the size of their own personal pay.

Sam Pizzigati, an Institute for Policy Studies associate fellow, co-edits Inequality.org. His latest books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970.