damaged. this is about two hours.

>> this is the first hearing of the subcommittee on disaster and admit and i'm delighted to work with senator kim. this has been a great start to what i hope will be a great collaboration and i want to say special thank you to our witnesses were in the group. we will have a chance to hear from each of you in just a moment. i'm going to introduce each of you and giving opportunity to make an opening statement and they will have some rounds of questioning. before 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, tornadoes have ripped across the state leaving homes damaged, in some cases leaving families without loved ones. hurricanes milton and helene had

a brutal path through the southeast, uprooting trees, turning family lives into a nightmare. in california, brutal wildfires have burned entire communities to the ground. these disasters have done more than cause property damage, though that is quite significant. they have done more than cause inconvenience, they have destroyed the lives of people. we are not talking about minor inconveniences. we are talking about moms who had to haul five gallon buckets of water because the pots are gone. we are talking about grandparents who had to sleep in their cars because there is no roof over their heads. were talking about families who are maxing out the credit cards because their insurance companies won't pay out any damage claims. 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. this isn't charity we are talking about. they turn to their insurance 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 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, i 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 or three adjusters and 15 or 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 is 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 will hear about it today on this panel pay would 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 company sends out often a third party adjuster. that person writes up a report, often in good faith, doing their best to estimate the damages. then the insurance company intervenes. then the insurance company says you need to change the facts that you found. need to change your estimates. you need to change what is in the report and they adjust arbitrarily the award down, down, down. and the policyholder never knows. and the policyholder gets no say in the process. in the policyholder is left to try and put together her live as these insurance companies make aliens and billions of dollars in profits. we are going to hear about it from the witnesses that are here today. even before today's earring, committee staff, my staff,

working with senator kim, has done a thorough investigation, and we will be submitting into the record evidence today that we have gathered that will corroborate the testimony you are about to hear. this is a system we are talking about, system that promises homeowners that they are in good hands him a 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 will do our best to start getting it today. with that, let me turn it over to ranking member king for his statement. >> i want to congratulate senator hawley and i hope we will continue productive

bipartisan work. the chairman laid out strongly, this is about where do people turn when a crisis arises, when they are in their time of deep need. some grateful for the witnesses here for joining us and giving us your insights to the different experiences that you've had to try to elucidate what 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 survivors are most vulnerable, 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. unfortunately, that help doesn't always materialize and instead of being handed solutions, they are often met with more problems. my home state of new jersey is no stranger to this.

after superstorm sandy, insurance companies that participated in the national flood insurance program were found to be wrongly rejecting or underpaying valid claims. since income of the problems have persisted. hurricane ida, another challenge that we face, cost another wave of damage to my state. it's not just in new jersey but across the country. in florida after hurricane ian, third-party adjusters came forward and ensure -- accused insurance companies of altering their reports to underpay disaster survivors. 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 want to take the time as we move forward with these subcommittees work, to ensure that we are 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 him a

particularly fema, in the wake of a natural disaster, fema has been a critical lifeline for so many americans on the road to recovery. yes, he needs reforms, yes, there are changes that need to happen. but that is something we can try to work on in a bipartisan way. emergency managers, first responders and other people in my community are deeply concerned by some of the rhetoric coming out of this administration about abolishing or getting rid of it. we are seeing some of the trump administration efforts to chip away at some critical programs. we see canceling of the building of infrastructure, 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 make and people have available to them. we need both markets solutions people in disaster prone states i've talked to have spoken about fear and uncertainty about what

comes next when it comes to disaster recovery. we owe it to them to be more transparent about this. the administration has assembled a counsel to review fema disaster response and i think this subcommittee can do our own due diligence so we can be prepared to engage in discussion with the executive branch about the best way forward. the goal is always to ensure the american people in their time of greatest need into difficulty can feel reassured they are not alone, that they can turn to others for help, whether that be fema, 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 changes that could weaken the ability of the american people to tackle the disaster challenges they face. i look forward to hearing from the witnesses about their experiences and the insurance

companies about how they plan to do better. we may hear some harsh criticism, criticism i hope will work to rectify these problems. i want to make sure we are commending some of the insurance companies for showing up today to be able to hear that feedback. i yield back. chair hawley: it's the practice of the subcommittee to swear in witnesses who testify before us. i will ask you to rise and raise your right hands and repeat if you will. do you swear the testimony 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. with this, let me go down the line and introduce each witness and give each of you the opportunity for an opening statement. we will start with natalia, who is an allstate policy holder who lives in georgia and suffered

extensive property damage following the devastation of hurricane helene. go ahead, please take your time. ms. migal: my name is natalia migal and i'm here representing my family. my husband, our 11-year-old son and nine-year-old daughter. we live in sandy springs, georgia, and our house is insured by allstate homeowners policy. in september, 2024, our family was abruptly woken by a loud crack. a 70 foot oak tree fell onto our home. this happened after persistent rain from hurricane helene. we immediately called allstate to file a homeowners claim. the 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 internal and external. in addition, electrical systems, brick work, gutters, 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 five 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 -- this was a significant loss. after the initial inspection, i followed the guidance and contacted a number of contractors, including but not limited to general contractors, roofing contractors, electricians, chimney, landscaping and fence repairs.

as provided with a number of -- i was provided with a number of quotes that reflect of the cost of living and needed repairs to bring our house back to standard. these quotes were shared with allstate. however, before the adjuster could could complete his report, allstate removed him, stating the process was taking too long. we called allstate many times to stress we wanted to continue the process already in flight, but nonetheless allstate sent a new adjuster against our wishes, a new inspection was scheduled and the process started all over again. the second inspection was under two hours and significantly downplayed the damage. for example, the adjuster stated he would include money only for one half of the collapsed roof because he was not convinced all of it needed repairs. i assure you, 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 contractors. it was perfectly clear that working with allstate will be increasingly difficult. on january 6, 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 they reassign our claim to the large did -- the large loss division. despite repeated requests, these

were consistently denied. in march we submitted our 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 the engineering report and matthew's estimate and expressed no disagreement. 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 said that allstate rejected his submission, 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 a tree fell on our house. no significant repairs have been made, our roofing is damaged in -- and a hazard to our family. electrical wires invisible, doors difficult to close, fences broken and much more. as you can imagine is difficult to embark on a 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 to improve oversight to

make sure insurers are held accountable when they act in bad faith, delay resolution or make it financially impossible for families to restore their homes and lives. thank you for your time, your service and hearing our story today. chair hawley: thank you very much. our next witness is mr. nick schroeder, an adjuster who works for allstate through pilot catastrophe. he was the first adjuster to inspect ms. migal's home. go ahead. mr. schroeder: thank you. i have worked as a licensed insurance adjuster for six years, holding licenses in six states. during this time i have inspected property damage and prepared estimates on behalf of over 17 insurance carriers including allstate and state farm. while handling claims for allstate following hurricane helene, i was assigned to investigate a property damage claim submitted by ms. migal.

my inspection revealed significant structural damage, including a slate roof impacted by a fallen oak tree, compromised framing in the breezeway, damage to underground sprinkler systems and broken terra-cotta floor tiles. although i was initially directed to attribute the floor cracks to settling. sorry i lost my spot. ,one second. i was initially directed to attribute the floor tile to settling and recommend repair rather than replacement of the breezeway roof. i concluded a full replacement was necessary due to split rafters and a cracked concrete underlayment. shortly before i finished my

estimate, 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 for modifications that often reduced coverage. these changes typically involved reclassifying line items to minimize costs, such as coding a job for an electrician to refer. -- to a roofer whenever roof work is present. as in replacing electrically powered roof vents. this coding would prevent the estimating software from prompting a minimum labor charge for an electrician to safely disconnect and reconnect the vent. more commonly, these changes were to simply exclude hail damaged shingles due to wear and tear. in one case involving

policyholders, suzanne and dennis carter, i was 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, on the reported date of loss, the claim was reassigned after i refused to amend the estimate to exclude the hail damage. in another case involving nicolette little, i could finalize an estimate 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 include torn shingles, blown off tags and shingle creasing. making this directive contrary to basic industry training. in my professional opinion, the claims handling process i observed from allstate prioritized minimizing payouts, often at the expense of accurately addressing documented storm damage. chair hawley: thank you very much. our next witness is mr. cliff milliken, who is a property adjuster who works for allstate through pilot catastrophe, he has a connection to mrs. migal

as well. he was called out to do a second adjustment on the home. mr. millikan: i've worked as an adjuster for pilot catastrophe since 2014. in 2016i transitioned to working primarily for allstate. since 2020, i've observed changes in allstate's claim handling that in my view a road -- erode trust in the insurance industry. they increasingly rely on third-party, unlicensed inspectors or so-called picture takers instead of licensed adjusters to inspect damage properties. these individuals are not trained or licensed adjusters. they take random pictures and upload them to a portal where and often inexperienced adjuster grabs the photo package and writes an estimate. it is then sent to a reviewer who determines coverage and mandates revisions. this is without transparency as the reviewer's name doesn't 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 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 assess the damage to a property. we are licensed and we physically inspect the property in person and have training to assess damage appropriately. after we as the adjusters inspect the property, we write an estimate that explains the damage and estimates minimal cost of repair. allstate has stripped all field adjusters regardless of experience of decision-making authority. adjusters now act as glorified picture takers, submitting 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 ask the adjuster to delete findings.

frequently, these alterations and deletions are simply false. reviewers at times force adjusters to use material not of high quality and not to consider engineer reports because they were ordered by allstate and issue denial letters that the adjuster must sign even when the adjuster disagrees with the decision and believes it to be false. there's no option for 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 insured receive less money than required to indemnify them the loss. we pride ourselves as adjusters on having integrity, so being forced to do things we don't agree with, we feel obligated to express that with the insurer. when i explained this to policyholders that i did not make the decision, i was reprimanded and told this is not permitted. in one case i was sent out as a supplemental adjuster to look at

the property for ms. migal. while on site with a public adjuster, i reviewed the engineering report provided by the public adjuster and expert report, provided by the public adjuster. we discussed the inspection results with the public adjuster and while on-site, i agreed that the estimate, over $400,000, appeared to represent the covered damages. i reviewed 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 and i felt a method of using chimney brick to make spot repairs and replace the full chimney would save allstate replacing all the brick. i submitted my estimate to the reviewer who instructed me to make changes to my estimate. after doing so, i submitted a

revised estimate for $100,000 or thereabouts. 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 elderly. allstate is making it so difficult for those who hire experienced contractors or attorneys to represent them that many lose interest and quit because the time involved is not worth the compensation and the effort. this tactic seems to be working as designed. as an adjuster, i'm ethically obligated to write estimates the -- accurate estimates that fully account for all covered damage, regardless of policyholders' demeanor or tenure. these current practices violate trust and leave policyholders underserved. i urge this committee to investigate these practices to ensure the insurance industry

upholds its duty to protect policyholders. transparency in claims decisions, accountability for reviewers and restoring the adjuster's authority can help rebuild trust and fairness. thank you for addressing this issue. chair hawley: thank you. our next witness is mr. doug quinn, executive director of the american policyholder association, a nonprofit the tracks and reports fraud committed by insurers against policyholders. good to have you. the floor is yours. mr. quinn: i'm the executive director of the american policyholder association, 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 u.s. forensics, 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. the sandy engineering fraud scandal, cbs news, 60 minutes and pbs frontline all reporting on policyholders wrongfully denied nearly half $1 billion in claims. when asked if he participated in fraud, an insurance claims executive pled the fifth amendment. thousands of families paid for insurance as a safety net only to be betrayed on 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 and

often the insurer will hire an engineering firm to inspect the property and write a report that 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 u.s. forensics and other fraudsters. insurers play the same shell game with adjusters. many adjusters inspecting homes are not employed by the insurer but rather by third-party administrators. they technically are a separate company. these are simply alter egos of the insurers and commit the same fraud the engineers do. trained adjusters right and -- 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 them, 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 is now suing him 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 insurance claims. jordan is a kid, he doesn't have any money. most people believe they are suing jordan not for money but to silence he and other whistleblowers. many assert that the insurance industry playbook is break the law and ruin the whistleblower. ever truly speak to insurance insiders who are terrified of retaliation. if it wasn't for whistleblowers like jordan lee, journalists

like the washington post's breanna sachs and honest point if attorneys like stephen bush, -- honest point if attorneys like stephen bush we would never , hear about 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 more than money. americans buy insurance for protection in their weakest moments, when their homes are wind damaged or burned and they are scrambling to find housing for their family and schools for their children, the last thing survivors need is a war with their insurance company. this stress destroys marriages and spoils childhoods. the fraud also affects the federal government. when their insurer denies claims, homeowners are forced to rely on fema and federal-aid. the american taxpayer is

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 criminal organizations to be brought to justice. to this panel i say the american public needs you. thank you. chair hawley: thank you very much. our final witness is mr. jacob vertel, a state farm policy holder who resides in north carolina. he and his family suffered devastating damage to their home after a tornado and he is here to testify. the floor is yours. mr. vertel: early on the morning of september 27, my family was woken by a tree crashing through our roof. my wife and in-laws in town

visiting, rushed into our toddler's room to make sure he was unharmed. the storm was still raging, so we moved our child and pregnant wife where we felt it was safest. before we lost power, i was able to file a claim with state farm. at that moment i did not realize how severe the storm was. i was he focused on figuring out where my family could stay that evening. while on the call, we abruptly lost power and cell phone service. the next several hours, a total of four trees fell on our home and water poured in the house. when the storm subsided, we camped together for three days in what we assumed was the safest section of the home. my wife's pregnancy was high-risk and it was critical she had access to care and our two-year-old son needed a safe environment. the moment i could i have -- evacuated my family to my in-law's home in ohio. with them safe, i returned to north carolina to begin the insurance process and find a place to stay when water was restored. our first inspection was state

farm was 10 days after hurricane helene. the inspection seemed to go well enough. 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 our home was considered habitable. a home where i watched water pours through the outlets, where the sky is visible from my two-year-old bedroom, living room, and bathroom. at that time, cell service 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 my wife, 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 so we hired a public adjuster. not long after, our decision was reaffirmed when we received our first estimate of the damage

from state farm. the summary we received would not even cover the roof let alone repairing the entire home. we watched as our case was handled with little communication from state farm. emails went unanswered for weeks at a time and we were told that state farm had issued a payment on our claim on october 24 and 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. we spent months driving across town trying to protect our house from further damage, setting tarps and trying to prevent the pipes from bursting. covered only by tarps, our home struggled to retain heat during the mountain winter. a placard was placed stated our home was not safe to occupy or enter. after three months of no movement, we were hopeful things would start progressing when state farm assigned a new adjuster to our case. the damage claim was reissued in december. however we lost hope and it

became evident we were starting over from scratch having to provide all claim information again. it was as if all information from the previous three months was lost. all the while, state farm communication remained scarce. reinspections were discussed, no one would show up and the communication we received, it was clear that the new adjuster could not speak on construction and repair. we reaffirmed the need for critical repairs only to be met with the adjuster's opinion of "i don't think that's necessary." he dismissed formal inspections by contractors and mitigation specialists. the broken trusses holding up our roof were a matter of opinion. after 123 days of our home sitting untouched, a reinspection was finally scheduled. during this inspection, state farm's adjuster admitted the 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 unsafe structure notice as he told my pregnant wife that separate living

accommodations for a family was not required and the county notice did not matter in the eyes of state farm. despite dismissing the need for coverage, the adjuster 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 five months, it was no surprised when a revised estimate of damages came through only , minuscule adjustments were done. expenses were short paid. 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 and only after we took legal action, the structural engineer we have been requesting for months was finally sent. now 228 days after the storm, , our home remains untouched.

no progress being made. my wife, who was three months pregnant at the time of the storm, gave birth to our daughter, two and a half months ago. our son turned three in april. what could have been 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. chair hawley: thank you very much and thank you to all of the witnesses. we will have some rounds of questioning. i will start. let me start with you, ms. migal. september 27, 2024, hurricane helene hits georgia and hit your home, causing significant damage. i think we have a picture of some of the damage, let's have a look. does this look familiar to you? ms. migal: it does. chair hawley: it looks pretty severe. that is a massive tree in the front part of your home and you are allstate policyholders, correct? ms. migal: correct. chair hawley: you said they sent out an adjuster pretty quickly? ms. migal: three weeks after. chair hawley: that is not quick.

you were told at the time that -- in this first inspection verbally, that the adjuster agreed it was very severe damage, is that correct? ms. migal: correct. chair hawley: let's look at another view of this, just to give a real impression. here is a breezeway that looks nearly completely destroyed, you can see the extensive roof damage that you were talking about in your testimony. this all looks familiar to you i am sure. after this first adjuster agrees with you that there is significant damage, what did allstate when they finally came back with an actual assessment, a real number, what was it again? ms. migal: $46,000. chair hawley: you went to considerable expense on your own, you hired your own independent adjuster to do this over again and that person looking at the evidence, that person found the damage was in the neighborhood of what? ms. migal: can you repeat the question? chair hawley: your independent

adjuster, what did they estimate? ms. migal: $497,000. chair hawley: $497,000. allstate offered you $40,000, basically. ms. migal: correct. chair hawley: and you're still waiting for this to be resolved? ms. migal: that's right. chair hawley: mr. schroeder, you were the first adjuster who worked for allstate to look at the home. you were a field adjuster deployed through pilot catastrophe, correct? mr. schroeder: correct. chair hawley: and you were the first to inspect the home after the hurricane? mr. schroeder: correct. chair hawley: and you went in person. you spent several hours doing a very thorough inspection, is that your memory? mr. schroeder: correct. chair hawley: how serious would you say the damage was? in your own personal recollection. mr. schroeder: extremely. probably the most serious i saw on this deployment.

chair hawley: wow, the most serious on the deployment, which makes sense given the photos. you start to prepare an estimate for a full replacement of the breezeway, does that sound right? mr. schroeder: that's correct. chair hawley: but you were told by the higher-ups, we aren't going to do a full replacement of the breezeway, only do an assessment for a partial replacement, is that correct? mr. schroeder: yes. chair hawley: you start working on that and you are working to get as big of a damage claim as you can with the facts, and before you can even complete your work, you are taken off a -- off the case, is that right? mr. schroeder: yes. chair hawley: why do you think that happened? mr. schroeder: i was told it was due to the time i was taking, it was too long. i don't believe that's the case. i think allstate saw from this

and my recently prior estimates of being very thorough and complete and going back and forth with reviewers on coverage that it was going to be a higher estimate and it would be more cost-effective to reassign it to an adjuster that would listen better. chair hawley: an adjuster who would lowball the policyholder. that is what we are talking about. you were moved from the case. they took you three weeks to send you out to begin with and then you were removed when it looks like you are going to do some justice. have you ever been told to change estimates to reduce payouts? mr. schroeder: frequently. chair hawley: when you push back on this, if you've ever said no, what happens? mr. schroeder: if i say no, the claims typically get reassigned due to they say i am out of

compliance or other reasons like i'm taking too long. chair hawley: was this a one-off thing or was this a pattern? mr. schroeder: definitely a pattern. chair hawley: is it fair to say allstate's priority in your experience was not getting the best possible award for their clients, it was protecting their bottom line? mr. schroeder: certainly protecting their bottom line. chair hawley: mr. milliken, you were another adjuster in the same case sent out to look at the property. you worked as a field adjuster for allstate for pilot catastrophe about eight years, is that right? mr. millikan: at least eight years. chair hawley: in that time you personally inspected hundreds of properties after storms with damage? mr. millikan: thousands. chair hawley: and you are trained to determine the extent and because of the damage and how much it costs to repair it. mr. millikan: yes. chair hawley: let me ask about

ms. migal's claim. you were assigned to reinspect her home, is that right? mr. millikan: yes. chair hawley: you testified earlier that you won about that diligently, you could see there was extensive damage, that was your initial impression? mr. millikan: yes. chair hawley: there was an engineer's report by this time, the public adjusters report, you reviewed all of those things diligently, is that fair? mr. millikan: yes. chair hawley: when you submitted your report to allstate recommending several hundred thousand dollars worth of payments, what happened? mr. millikan: my estimate was rejected and i was advised to alter it to a lower figure. chair hawley: you were told to alter the estimate and your findings as well? mr. millikan: i was told to alter my estimate, i don't know if the findings were told to be altered.

chair hawley: were the alterations you were told to make consistent with your own review of the property and your own assessment of the damage? mr. millikan: no, sir. chair hawley: did you write that in a detailed estimate which you were told to do? mr. millikan: i did. chair hawley: allstate sent the estimate ultimately to the property owner, is that correct? mr. millikan: i'm obligated to send the estimate to the policyholder. chair hawley: is there any record that the policyholder would ever know that your initial findings and recommendations were rejected and somebody told you to alter them? mr. millikan: no sir. chair hawley: let me ask you more broadly, have you been told in other cases with allstate to alter or delete your findings? mr. millikan: absolutely. chair hawley: you testified a second ago that you were frequently asked to alter factual findings, delete material and sometimes include items that were false, did i hear you correctly? mr. millikan: yes. chair hawley: in the

overwhelming majority of cases when you were asked to do some thing like this, did it because the estimate to go up or down? mr. millikan: go down. chair hawley: what is your assessment of what allstate is -- what allstate's ultimate goal here is? is it to pay out the policy to the best extent they can or is it to protect their bottom line and use you and your report as necessary to meet that end and make sure they make as much money as possible? mr. millikan: 100% to use me to enable them to make as much money as possible. chair hawley: you would say this is a pattern, it didn't just happen one time, you've been doing this a long time and have observed this to be a pattern within allstate and in the industry? mr. millikan: i have. chair hawley: thank you for your testimony. ranking member kim: i would like to pick up where we are at, mr. schroeder and mr. millikan, you refer to an ethical obligation with your work. can you explain to me in those

-- and those not doing that work, what do you mean by that? is there a code of conduct, a code of ethics you have to abide by for your license? mr. schroeder? mr. schroeder: to do the estimate that is true, what is honest and true, for my evaluation to be honest and true. that's what i commit to do. sen. kim: mr. millikan? mr. millikan: our ethical obligation is to take the damage that we identify, apply it to the policy and indemnify the insured for the full amount that we found of the damage. ranking member kim: with that ethical obligation you are coming across people you are engaged with in insurance companies telling you to change your estimate. can you give a little more detail of -- who is it you are

interacting with? who are the people, what are their credentials in terms of what they are able to tell you or assess whether or not they think you are right or wrong? mr. millikan: there is a team of reviewers and i don't have access or know their experience or background. their label i believe is vendor oversight team or team member or trained member. but the -- i think i got sidetracked. ranking member kim: no worries. it sounds like they are not necessarily abiding by that same or don't have the same obligation when it comes to ethics in terms of the code of conduct. they are not adjusters in the same way you are? mr. millikan: that's right, yes sir. there have been many times, i'm an experienced adjuster and i'm not saying i am the best in the world but there have been many times when i have gone out to

losses and inspected and identified with my own eyes hail damage, for example, on roofs and submitted my findings to this new process of the reviewers and the reviewer tell me what i'm seeing is not hail damage. i was there, i saw the hail damage to the siding and through the neighborhood. i saw the hail damage to the roof. they reject my estimate and tell me they are not going to approve it. ranking member kim: but you are not necessarily certain what expertise they have to be able to make that assessment given that you were the one on the ground. mr. millikan: i can't imagine they have any more expertise than i do. ranking member kim: when you are being told -- mr. schroeder, you are talking about how they said it was taking too long and that is why you were removed from this particular case. correct me if i am wrong, but it sounds like if they remove you, they would have to start from scratch. wouldn't that take more time? mr. schroeder: that is correct

and that is exactly what happens. i had contacted ms. migal, just to see out of my own curiosity, and to check in, a month after i had been removed. she had not received an estimate yet, for those repairs. i don't think that was accurate in why i was removed. ranking member kim: and it's not just about the work with you, mr. schroeder mr. schroeder -- with you, mr. schroeder, ms. migal. i feel like -- i keep hearing these delays are intentional, to discourage the policyholders from continuing on. did you feel that way with how you were treated and the delay in the responses? ms. migal: absolutely. ranking member kim: mr. wert tell, you are also talking about that. did you feel at times that this

was intentional? mr. vertel: absolutely. i feel like it is a battle of attrition at this point. ranking member kim: mr. millikan , when you are being told to change an adjustment. do you feel pressured or that if you don't make these adjustments that you won't get future work from that insurance company? mr. millikan: yes i do have that fear. i have had that fear but i am also a pretty stubborn person so it is difficult for me to tell someone something that is not true. i have battled that quite extensively. ranking member kim: mr. schroeder, you were nodding your head as well. do you feel that there have been times when you felt fear that if you don't make these adjustments , you might be taken off that case or prevented or not given additional work by that company in the future? mr. schroeder: i certainly feel that way and i think that has happened, on this last

deployment. i had multiple claims that in the end were pulled and reassigned, due to an explanation that to me did not make sense, and it was coincidental with the timing of me having disagreements with the examiner that is just looking at a photo, when i was the only one of the two of us actually present. there is a difference between a photo -- even a great photo is just a photo. when you are there, you get a better look, but you can feel. you have a better perception of what is going on, and those disagreements to me, they didn't make sense and it definitely

wasn't true. i disagreed and got pulled off a lot. ranking member kim: mr. quinn, you are hearing all of this. you hear all of this constantly. you went through this yourself. you are in front of the u.s. senate, asking for the federal government to be able to step in on something that is traditionally been state jurisdiction. why do you think the federal government needs to step in? what has been your experience engaging at the state level and how has that not satisfied the ability for policyholders to get the justice they deserve? mr. quinn: we have noticed a lack of action on the state level against criminal fraud. i meet prosecutors and attorneys general all over america. i routinely asked them, have you ever prosecuted someone from the carrier side for cheating a consumer? the answer is invariably no, we see no prosecutions on the state

level of people from the carrier side committing fraud to cheat consumers. we feel there is an issue with regulatory capture, and some cases it is limited capacity, budget constraints, 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. ranking member kim: thank you mr. quinn. i yelled back. chair hawley: senator moody. sen. moody: thank you so much chair. florida is no stranger to disasters. my state 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. because so much of our lives is embedded and built within our homes. let me just thank you all for taking time to be here today and

talking to us. i know coming to a senate hearing is no small thing. i want to thank the chair for putting this together and making sure that we have two panels so that we can talk to a variety of people. we can only fit so many people at the table right now. i think making sure that we are paying attention to the public discourse right now, in terms of challenges and 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 can do right now is not have a hearing like this 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.

as attorney general i even had to sue a representative of fema after the last storm. we know that we can't just leave everything to happen and trust that everyone is going to play according to the rules without some sort of oversight. i think it is important that you are here today to share your stories and i think it is important for our colleagues and for this subcommittee to learn more about what is going on. just as we would expect insurance companies to do the right thing and live up to the policies they have offered and certainly have been collecting money on, we know that isn't in every industry. we have good-faith players and those who may seek to take advantage. i wanted to ask you, ms. migal. i know you have specifically had a bad experience. you mentioned that one adjuster

came out and then another came out. did anyone from allstate ever call you and walk through the specifics of why something may be covered or not covered? was it just an adjuster coming out and communicating? ms. migal: no one called me to walk me through the details of the policy and how that would be applied. i was called mostly regarding scheduling matters for the adjusters. sen. moody: so even after the multiple estimates as they gave you lower estimates than you received, no one called to tell you why something may or may not have been covered? ms. migal: that is correct. sen. moody: mr. schroeder, i will ask you first. when use amid your estimate, 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? mr. schroeder: when i said

minute estimate to the reviewer, did they go through -- if there is something they disagree with, they would say to remove it. there is typically not an explanation for why, and when there is, more often than not it is not -- not according to policy, it is something like that hail damage isn't hail damage. or that's where and tear and not damage. those of the answers that i would get. they would not go through my entire estimate line by line with me. sen. moody: ms. migal, i want to come back to you. 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? ms. migal: we have done

relatively minor repairs so far, simple he because we do not have any insight into the budget we might have at hand. only the most crucial repairs, for example putting a tarp on the roof to prevent further damage or rainfall has been done so far. sen. moody: and you had to pay for that out of your own money? money that was probably taxed on your income? ms. migal: that is correct. of course engaging with external experts such as the engineer was also out of pocket. sen. moody: what that have been helpful to be able to deduct from your taxes, the money you had to lay out to recover for your roof? ms. migal: i have not deducted those expenses from my taxes. sen. moody: would that have been helpful? ms. migal: likely. sen. moody: i have been exploring a bipartisan approach to try and address 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 coming into their home and then they still have to pay taxes on that money. with that have been helpful to you? ms. migal: absolutely. sen. moody: mr. quinn, i would like to follow up with you. i know you have been 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 -- i know many states are set up and structured in different ways. one agency may have statutory authority to investigate these matters. where another agency wouldn't. if that one is not moving fast enough or this one wants to complement it, sometimes it is not available but it looks different in different states. do you think it would be helpful to have a cross-section of different agencies within one state to be able to task force or even federally, where the agents or the officers are specially trained in this area? mr. quinn: yes ma'am, i believe

that would be helpful. sen. moody: thank you. chair hawley: mr. millikan, can i come back to you for a second? did you think that allstate might retaliate against you for your testimony today? did that ever cross your mind? mr. millikan: yes sir. chair hawley: why did you think that might happen? mr. millikan: i got a phone call from pilot management indicating that they were aware of it. and then i got word from people in the office that i was going to be on the cut off list, which has not happened in six years. chair hawley: i want to make sure i got this right and that the room understands it. you're telling me that after you agreed to testify here today, that you got word that you were on a black list essentially from allstate and that you were going to be penalized in some way? mr. millikan: yes sir, i've been

told i'm going to be worked out of the storm in georgia, which is 100% -- it is cutting me off. it is eliminating me guaranteed. chair hawley: so they are retaliating against you. it sounds like they've already set it into motion, because you testified as to what happened. mr. millikan: because i was going to. chair hawley: even before you got here today they were doing this. that is unbelievable. absolutely unbelievable. why do you think -- why would they do that? because they don't want the truth to be known? what are they so afraid of in your testimony? mr. millikan: i couldn't tell you. i thought that by telling the truth i would not have any problem. i had no idea that the company i worked for would hold a grudge about speaking the truth. chair hawley: i want to underline what you said today, and you to mr. schroeder. what you have testified to is that not only did allstate not do right by ms. migal.

not only did they tell both of you to alter your evaluations and findings and push down the estimate lower and lower. but you both have testified today that you saw this happen over and over and over. mr. millikan, you were told multiple times to alter findings, delete information, lower your estimate. that that has happened repeatedly. it is a pattern. mr. millikan: yes or. chair hawley: and you said the same thing mr. schroeder. not just this one deployment, not one area, but this has happened over and over. mr. schroeder: for years i have seen this trend. chair hawley: years. that is extraordinary. 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 have rest a lot by being here. i'm sorry mr. millikan, they are retaliating against you. mr. schroeder, i know they retaliated against you by yanking the case right out from under you when you are working with ms. migal to try and get a

fair award for her. that is just outrageous. it may be illegal. i want to tell you we will 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. that brings me to you mr. vertel . i want to give you a chance to say more about your story. we've been talking about allstate but you were a policyholder of state farm. i believe we have a picture of your house as well. let's get a look. this is your home after hurricane helene. mr. vertel: that is correct. chair hawley: that is a lot of damage. you said you had a small child at this time? mr. vertel: two years old. chair hawley: and your wife was pregnant? mr. vertel: yes. chair hawley: and this was taken right after the hurricane, back in september, october? mr. vertel: right after the storm. chair hawley: and you said they fixed it all up and it's all good?

mr. vertel: the home sits untouched, current condition is uninhabitable. chair hawley: so they've done nothing in those -- you said the number of days. mr. vertel: 228 days uninhabitable. chair hawley: 228 days. your wife has since had your second child. mr. vertel: two and a half months ago. chair hawley: so you have a two and a half month old, a two-year-old. nobody is sleeping in your house. mr. vertel: this keeps us up at night more than they do. chair hawley: i bet that is true. you are coming out of pocket to pay for your own housing because you can't live here. mr. vertel: we have received drips of reimbursement that we have had to fight tooth and nail for everyone. chair hawley: tell us what it is like to go through this with this company. you had your policy for a while i imagine. you didn't get it the day before the storm. mr. vertel: we've been state farm customers for the better

part of a decade. chair hawley: so you pay your premiums like everyone else. yet they won't work with you. they won't give you any help. your home hasn't been touched. you've got a kid, a baby. they aren't doing anything for you. you decided ultimately that you need to stand up for yourself and actively -- actually tried to fight state farm. mr. vertel: that is correct. chair hawley: what would have happened if you didn't do that? what was the strategy here? you still haven't gotten the appropriate award. what would have happened if you hadn't stood up and started to demand your rights? mr. vertel: i feel that we were perceived as an easy mark, that we needed to be in our home quickly so we were going to take this on ourselves. right now, we sent we have not received any funds that would allow us to fix our home. if we had to come out of pocket, it changes everything about our life, where we live, where our kids can go to school. chair hawley: it is just

extraordinary. you should never have had to go through that. i want to offer my sympathies and apologies to you, your wife, your little ones. it is outrageous. the kind of behavior we have heard testified to today, sounds like you are a victim of another one of these massive insurance companies that take your money, they are happy to take your money but when this happened to you, they won't give you anything. it is delay, delay, delay. mr. quinn, you have heard this testimony today. you are very familiar with it, you hear it all the time. you've heard testimony about allstate and fraud that goes on. in your professional judgment, is that kind of fraud but did allstate? mr. quinn: no sir. it is pretty much industrywide. chair hawley: tell us more about that. tell us what the industry looks like. mr. quinn: we believe this goes back to the 1990's with the mckinsey report. a consulting firm trained insurance companies to use their claims department as a profit

center. they actually train their staff to come in and short people on claims. they did it specifically starting off with allstate and then they took it on the road for every other insurance company and is now basically industry-standard. i will say there is nothing you are hearing that is unique. the people speaking our unique because they have the courage to do it but i hear the stories every single day, and they are the same stories over and over again. working class families getting taken advantage of by insurance companies any ability to fight back. chair hawley: so what you are telling us is these big insurance companies went to a consulting firm, mckenzie and asked them to design a program to help ripoff policyholders. mr. quinn: that is correct. chair hawley: has that been successful? has that program been successful? mr. quinn: it has been incredibly successful.

mr. quinn: it is part of the systemic rod that is occurring every day now -- fraud that is occurring every day now. >> we talked about major disasters but you are talking about just in general, there's a lot more higher volume in your work and you in particular said that has increased use of people that are just relying on photographs, right? trying to get out there, people that might not have the skill set you and mr. schroeder have but they are out there telling us, you know, taking photographs. can you tell us a little bit more about that? >> yes, sir. when i first started photographs, you never adjusted an estimate by photographs. you went out and put eyes on it now, the whole process is focused on the grass so the reviewers are reviewing pictures

i took at my inspection where i identified hail damage to a roof and this reviewer who had never been to this house tells me that that is not hail. so i go back out to the house, i take more pictures with the phone and camera, i submit these pictures in this reviewer tells me this is not hail. i am 100% certain this is hail yet this is still the process and this isn't just one time. this is multiple times. in the same thing goes with mislabeling material. if i go out and identify a certain material, pre-engineered flooring versus finished flooring and they tell me that it is not what i say it is, well, i know that is what it is. it's 100% factual and they are making me write something that is not factual and submit this to the homeowner, so yes, that happens on a regular basis. >> with this reliance on photographs, do you try to determine what the level of damage, do you think that is --

is that something that seems to be when you are relying upon photographs, does that seem to be something where you are more likely to underestimate the damage or overestimate the damage? >> 100% underestimate damage. i think that the whole process is designed to miss damage. >> mr. chair, you know, it's not just about, you know, the major disasters. we are certainly catching that because we were seeing and hearing some incredibly powerful stories but i think this committee should be thinking through just systemically like certain types of steps like what you are saying that seem to always tip the balance away from the consumers, away from the policyholders and kind of always geared towards underestimating and i think that that is something that becomes much more clear to me when i hear from you on this front. you know, i want to turn to you because the devil's advocate, the argument on the other side is saying, look, we have theory

low rates of complaints. some percentage, 1%. i just wanted to hear from you, what is your response to that type of argument in terms of saying satisfaction is high, you know, these problems are outliers rather than systemic? whiteside assure you, senator, satisfaction is not high. we hear the complaints regularly. what we understand as most consumers, when they complain, they are dealing with their insurance company so they will complain to the insurer and we believe those statistics get buried. most people do not understand how to complain to their insurance department, how to complain to the national association of insurance commissioners. they don't get it. they don't understand how to do that so whatever the companies are claiming our complaints are not representative of the amount of extreme dissatisfaction amongst our policyholders. >> you know, when you are going through that difficult process, you know, probably for the first time where you had to engage

with claims of that magnitude, is it right that you have a hard time understanding all the different tools at your disposal, the process you need to go through? am i right in assuming that, you know, you were going through a lot of trauma 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? >> i would say that is correct. it is not very user-friendly, not very intuitive. >> you were talking about how you had to go to -- you had to bring in an outside adjuster and that was probably not something that you knew you could do right away, is that correct? >> that's right. it took us months to learn enough about the environment with which we were working in about the situation and how it works to even recognize that that was an option for us. >> could you imagine, you know, policyholders that are going through this, they are 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? >> yes. i am not sure exactly what a complaint would have done in this scenario. >> mr. quinn, i 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 am more familiar with this in terms of new jersey but you know, i think part of what i am hearing as well from you as you are 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 and has different levels of engagement? some states may be do better than others but without that sense of level playing field, it is very difficult for the american people and the policyholders to be able to have a chance at fairness. is that an accurate way to

describe it? >> that is correct. every state has their own procedure and there is not necessarily consistency between one state and the next. >> mr. quinn earlier was saying he felt that this was across the industry. we 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 in a matter which insurance company that you are working with? mr. schroeder? >> i would say i work for many different insurance companies. i kind of spread myself out that way for the purpose of getting different exposure and experience and i do see this as like a systematic, general consensus, a standard for

practice amongst all insurance companies. some are better than others. and you know, there's a couple standouts that i would say are really fair and for the most part, all the rest are in the same group of consistently denying, unfairly, claims where there is a ode to damage. >> anything to add here? >> no, sir. i worked exclusively for allstate for the most part so i can only speak to that. correct luck, i just want to say, first of all, what you were saying about the risk that you are taking when it comes to your career, your work, i just want you to know that is 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 check the box thing

that the chairman and i are engaged on. we want to make sure we are invested in the follow-up to make sure that is worth the risk that you took. mr. quinn, you know, just hearing about the impact 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, they were saying that -- i mean, you may very well agree but people i talked to in new jersey were saying the storm was in some ways easier part. you know, they thought that was going to be the worst of it. they did not expect all the, you know, i will exclude the words that people use, but all the other stuff that comes later. they did not expect that that would be so difficult and i just think that that is something that i think the american people really need to understand. like why is it that been a time

of greatest need, not only are you not able to rely upon those that are supposed to help you but they are actually making things worse and i just think that that is just something that just eats away -- it just hurts so much to hear your stories and i am sorry for what you all have gone through and the fact that you are sharing it, it's for the betterment. hopefully, we can save this to help fix and make it easier for other families in the future to be able to go through this. >> i want to thank all the witnesses for being here today on this panel. thank you. thank you for your testimony. think you be -- thank you for being willing to share with us your stories, your expertise, your knowledge of this industry. i want to say again, i'm sorry for what you have had to go through and we will continue to do everything we can on this committee to get the facts till you helped us a lot with that today and to get some accountability. we are 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