WASHINGTON, D.C. — For each day homeowners insurance companies delay claims payments, the industry collectively takes in an extra $8.8 million in interest and investment income, according to a new analysis released today by the Consumer Federation of America (CFA) in partnership with Weiss Ratings. If claims payments are not issued to policyholders until one week after the insurer should have paid, home insurers collectively realize a $61.6 million windfall while adding stress and financial hardship to customers waiting for their claim check to arrive. 

“Insurance companies cancel us if we are late on a premium payment, but when they are late on a claim payment, they make money,” said Douglas Heller, CFA's Director of Insurance. “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.”

Data provided by the independent financial institution rating firm Weiss Ratings reveals that U.S. property and casualty insurance companies – those selling homeowners and auto insurance, as well as business and other coverages – averaged about $241 million in investment income every day in 2024. Approximately $24.7 million of that income can be attributed to the homeowners insurance premium and surplus that the companies invest. 

Based on this Weiss Ratings study that accounts for each insurance group’s average investment yield and their annual claims payments, Weiss Ratings calculated that the effect of delaying homeowners claims industrywide by one day would yield $8.8 million of income. Across all lines of property and casualty insurance, the industry earns a combined $52.3 million in investment income for each additional day claims are delayed.

Notably, delayed payments on insurance claims represent the single largest complaint category recorded in the National Association of Insurance Commissioners (NAIC) database of state insurance complaints, representing 22% of the approximately 65,000 complaints received by state insurance commissioners in 2025. After investigating a sample of 220 State Farm claims stemming from the 2025 Los Angeles wildfires, the California Department of Insurance found that, among the subset of its sample in which State Farm agreed to make a claim payment, in 27 instances the company failed to pay its policyholder within 30 days.

Legislation currently under consideration in California (SB 878 – Pérez) sets timeframes for insurers to respond to policyholder claims in writing. The bill would require insurers to pay interest to policyholders if claims are not paid within 30 days of certain claims handling thresholds being met, such as the insurer’s acceptance of all or a portion of the claim or after it is determined that the property is a total loss. 

According to a separate Weiss Ratings analysis, insurers in 15 disaster-prone states delayed payment for 60 days or more on 28.1% of claims in 2024, up from 25.6% in 2018.

“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% of homeowner claims with no payment, up from 25.7% 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.” 

The insurance industry is built on a financial model that relies on investment income as its primary source of profit. The ratio of premium dollars received by insurers compared with money spent on claims and business administration is roughly 1:1 over time, but because premiums come in well before claims payments are made, companies earn their profit by investing the premium dollars (and additional surplus they build up over time). Warren Buffett – whose Berkshire Hathaway company owns several insurers including Geico – calls this ‘the float.’ In his letter to shareholders in 2008, he explained why this financial model was so appealing to him and Berkshire partner Charlie Munger: 

“This means that our $58.5 billion of insurance ‘float’ – money that doesn’t belong to us but that we hold and invest for our own benefit – cost us less than zero. In fact, we were paid $2.8 billion [the insurers’ underwriting profit that year] to hold our float during 2008. Charlie and I find this enjoyable.”

“The insurance business model is built on the investment opportunity that arises in the time between premium inflow and claim payment outflow,” said Heller. “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. Removing that incentive, by requiring insurers to pay interest on claim delays would not only serve to hold insurers accountable to standards of good faith and fair dealing, it would make it easier and faster for people to begin the process of rebuilding their lives after a disaster.”