Even short delays in home insurance claims add millions of dollars in investment income for insurers. For every extra day home insurance claims remain unpaid, the industry earns another $8.8 mn in interest and investment income, according to Weiss Ratings and the nonprofit Consumer Federation of America.
Across property and casualty insurance lines, including home and auto, plus business coverage and other policies, each additional day of claim delay produces $52.3 mn in industry investment income, the analysis found.
In Illinois, 21.7% of home insurance claims in 2024 took 60 days or longer to settle, according to National Association of Insurance Commissioners data cited by the consumer group.
Douglas Heller, director of insurance at the Consumer Federation of America, said the investment income insurers earn on unpaid claim funds creates a “perverse incentive” to slow payment.
Heller said premium income and claim payments roughly balance over time, along with administrative costs. The industry earns money in the interim by investing premiums before paying claims.
Insurers would have stronger incentives to move quickly if they had to pay consumers interest on delayed claims.
He supports a 30-day deadline for insurers to pay the depreciated value of the property lost. After that payment, negotiations over additional amounts owed would continue.
The Illinois Insurance Association, American Property Casualty Insurance Association and National Association of Mutual Insurance Companies rejected the analysis in a joint statement. They said it oversimplifies a complex claims process to score political points.
The groups said insurers work to make customers whole as quickly and accurately as possible, calling that the central objective of the business.
