For each day homeowners insurance companies delay claims payments, the industry takes in an extra $8.8 million in interest and investment income, according to a new analysis released Thursday by the Consumer Federation of America, or CFA, an advocacy group, in partnership with Weiss Ratings, a financial institution rating firm.
If claims payments aren’t issued to policyholders until one week after the insurer should have paid, home insurers realize a $61.6 million windfall while adding stress and financial hardship to customers waiting for their claim check to arrive, the study found.
“Insurance companies cancel us if we are late on a premium payment, but when they are late on a claim payment, they make money,” Douglas Heller, CFA’s director of Insurance, said in a statement.
Heller said instead of incentivizing insurers to delay claims, there should be consequences.
“The customer waiting for their claim to be paid, not the company causing the delay, should earn the interest that accumulates,” he said.
Data provided by Weiss Ratings show that those selling homeowners and auto insurance, as well as business and other coverages – averaged about $241 million in investment income every day in 2024. About $24.7 million of that income can be attributed to the homeowners insurance premium and surplus that the companies invest.
Delayed payments on insurance claims represent the largest complaint category on the National Association of Insurance Commissioners, or NAIC, database of state insurance complaints. It’s 22 percent of the about 65,000 complaints received by state insurance commissioners in 2025.
After investigating a sample of 220 State Farm claims from the 2025 Los Angeles wildfires, the California Department of Insurance found that, among those which State Farm agreed to make a claim payment, in 27 cases the company failed to pay its policyholder within 30 days.
Legislation is currently being considered in California to set timeframes for insurers to respond to policyholder claims in writing.
Insurers in 15 disaster-prone states delayed payment for 60 days or more on 28.1 percent of claims in 2024, up from 25.6 percent in 2018, according to a separate Weiss Ratings analysis.
“And this is just one of six tactics insurers are using to stiff homeowners,” said Weiss Ratings founder Martin D. Weiss. “Other tactics include closing over 42.1 percent of homeowner claims with no payment, up from 25.7 percent in 2004; cutting claims payments to the bone; surplus line price gouging; and lobbying hard for tort reform that makes it much harder for consumers to get satisfaction in court.”
Weiss said the insurance industry is built on a financial model that relies on investment income as its primary source of profit.
“That creates a perverse incentive for insurers to increase the time before paying a claim in order to squeeze extra income out of the policy,” Heller said.
