MEDIA STATEMENT: UNDERSTANDING CLAIMS CLOSED WITHOUT PAYMENT: CONTEXT BEHIND THE NUMBERS

The following information was released by the Insurance Information Institute:

Claims closed without payment occur for many legitimate reasons and should not be confused with an insurer's obligation to pay covered losses.

Insurance claims may be closed without payment for a variety of legitimate reasons, including when damages fall below a policy's deductible, the loss is not covered under the terms of the policy, duplicate claims are submitted, or an investigation determines no payment is owed. Importantly, claims closed without payment are not synonymous with denied claims, and neither should be automatically interpreted as evidence of improper claims handling or an unwillingness to pay covered losses. Moreover, treating all claims closed without payment as evidence of insurer misconduct or failure to pay covered losses creates a misleading picture of how claims are handled and resolved.

Several factors can influence trends in claims closed without payment over time. Inflation-driven economic pressures, increased claims activity following catastrophes, advances in fraud detection, and increased claims solicitation following severe weather events can all contribute to more claims being opened and later closed without payment. In some cases, consumers may be urged to file claims for damage that ultimately falls below policy deductibles or does not meet coverage requirements.

Deductibles are a longstanding feature of insurance designed to keep coverage affordable and encourage risk-sharing between policyholders and insurers. As reconstruction costs, inflation, and catastrophe losses have increased, deductibles have evolved to help maintain the availability and affordability of coverage. Consumers have the choice to select a deductible that fits their budget and risk tolerance. Claims falling below a deductible are functioning as intended under the terms of the policy, not evidence a valid claim was improperly denied.

It is also important to recognize claims data is not always directly comparable across insurers. Companies may differ in how they report claims, count exposures, administer policies, and serve different customer segments. A single loss may involve multiple exposures, some of which are paid while others are closed without payment. As a result, aggregate statistics may not accurately reflect consumer outcomes or the percentage of policyholders who receive payments following covered losses. Methodology matters, and caution should be exercised when using data to conclude claims practices, consumer outcomes, or insurer performance.

Large catastrophe events can further complicate the picture. Following floods, hurricanes, wildfires, and other disasters, insurers often open claims ultimately determined to be covered by another source, such as the National Flood Insurance Program. These claims may still require review and administrative handling before being closed without payment by the private insurer, which can affect reported statistics.

Property/casualty insurers have served as America's financial first responders for nearly 250 years, helping families, businesses, and communities recover from unexpected losses. In 2024 alone, U.S. natural catastrophes caused an estimated $112.8 billion in losses, with insurers paying billions in claims backed by nearly $1 trillion in policyholder surplus. Paying covered claims promptly and fairly remains central to the industry's purpose and is subject to extensive regulatory oversight. Following disasters, insurers deploy catastrophe response teams, establish recovery centers, and increasingly use technologies such as drones, artificial intelligence, and electronic payments to help accelerate claims decisions and provide support to policyholders when they need it most.

Ultimately, claims closed without payment data should not be construed for insurer performance, claims fairness, or willingness to pay covered losses. They reflect a wide range of outcomes driven by policy terms, deductibles, coverage determinations, consumer decisions, and claim-specific facts. As policymakers, regulators, and consumers evaluate claims data, it is important to consider the broader context behind the numbers and recognize insurers remain committed to paying covered claims and helping policyholders recover from loss.

About the Insurance Information Institute (Triple-I)

Since 1960, the Insurance Information Institute (Triple-I) has been the trusted voice of risk and insurance, delivering unique, data-driven insights to educate, elevate and connect consumers, industry professionals, policymakers and the media. An affiliate of The Institutes, Triple-I represents a diverse membership accounting for nearly 50% of all U.S. property/casualty premiums written. Our members include mutual and stock companies, personal and commercial lines, primary insurers and reinsurers serving regional, national and global markets.