WSJ finds auto insurers refused to pay 45% of liability and medical claims last year

A Wall Street Journal (WSJ) analysis finds that insurance companies didn’t pay 45% of auto liability and medical claims resolved last year. 

The rate has increased from a decade ago when the rate was 35%, the article says. 

“Americans are required to pay for car insurance as a condition of driving,” the WSJ says. “Yet often, the insurance doesn’t provide the financial backstop that car owners were expecting.”

A graphic in the article shows how the percentage of liability/medical claims were closed by insurance group between 2016 and 2025: 

• • Liberty Mutual: 29% to 54% 
  • State Farm: 26% to 47%
  • Farmers: 19% to 39% 
  • Auto Club: 29% to 39% 
  • Progressive: 35% to 46% 
  • Allstate: 46% to 54%
  • Travelers: 13% to 20% 
  • American Family: 22% to 28%
  • USAA: 46% to 50% 
  • GEICO: 35% to 37% 

Insurers told the newspaper that no-payment tallies reported to regulators include claims that were paid by the other driver’s insurer, withdrawn by customers, outside the policy terms or for less than the deductible. 

The article describes how auto damage claims under collision are more likely to be resolved, adding that 1 in 4 were closed without payment. Data shows this has changed little in the past decade. 

Medical costs and liability claims are more likely to not be paid, the article says. 

“Claims for liability and medical coverage are typically more complicated, more likely to involve lawyers and more expensive than those for auto damage,” the article says. 

GEICO’s most recent financial report shows that its pre-tax underwriting earnings fell about 45% in the second quarter. It attributes this partly to an increase in frequency and severity of auto claims for bodily injury and collision. 

The data shows frequency of bodily injury claims increased 5% to 7% with severity increasing 10% to 12%. In comparison, property damage and collision claims increased 3% to 5% with severity increasing 0% to 3%. 

“Berkshire’s filing reflects a broader trend in the insurance industry where bodily injury claims have surpassed auto physical damage payouts for the first time in history,” Forbes writes.  

While GEICO saw increases in both collision and bodily injury claim frequency during the first half of 2026, broader industry data from CCC shows a longer-term divergence where collision and property damage claim frequency has generally declined, and bodily injury claims frequency has increased. 

CCC data showing bodily injury claims are up 11% over the past two years, with the cost increasing 10.3% last year and 32% over the past three years.  

Forbes also points to advanced driver assistance systems (ADAS) for reducing minor, low-speed collisions, leaving the remaining claims pool “disproportionately weighed toward more intense crashes that may result in physical injuries.”

There have been multiple stories at the local news level recently, where consumers were denied coverage of their claim by the party deemed at fault for a collision. In one case, State Farm refused to pay for damage to a parked vehicle. 

Andrew Batenhorst, Pacific Collision Center body shop manager, asked the Collision Industry Conference (CIC) to create a panel to look at insurance subrogation recovery because he was told by insurers that this was cause for more short-payments on collision damage claims at his shop. 

The WSJ article looks into why insurance companies are using tighter controls on payouts. 

“We have to pay what we owe, not a dollar more,” Jess Merten, Allstate’s head of property-liability, told a conference in March according to the WSJ. “The better we are in claims, the less that we have to charge customers.”

The insurance industry has also pointed to an increase in fraud, driven by fake claims, partly enhanced with AI tools, the article says. The industry also claims another issue is higher litigation pay-outs. 

“A State Farm spokesman said the factors affecting no-payment rates included higher deductibles and claims from third parties, such as public adjusters and ‘advertising-driven attorneys.’”

State Farm made changes to its appraisal clause language in 2022, a clause that insurance companies have historically used as an alternative to lawsuits. 

Sean Kevelighan, chief executive of the Insurance Information Institute, told the WSJ that people are using litigation as a first step, instead of a last resort. 

“Litigation is increasing because more claims are being denied — not the other way around,” said John Morgan, founder of Orlando, Florida-based law firm Morgan & Morgan, according to the WSJ. 

Douglas Heller, director of insurance at the Consumer Federation of America, told the WSJ that insurer behavior is a way for the insurance industry to make extra profit. 

“The industry uses claim lowballing and denials to wring extra profit out of customers who don’t have the resources or, in some states, the rights to fight back,” Heller said in the article. 

State Farm started issuing cash back dividends earlier this month after doubling its profit in 2025. 

The WSJ also found in a review of State Farm documents, that the company has started “cracking down” on accidents where the driver is not identified on the policy. This includes a change in the terms of renewal for auto policies, requiring policyholders to notify State Farm of new regular drivers of the car. 

Even as GEICO sees a decrease in earnings, the company continues to have a significantly low loss ratio, 76.6% at the end of the second quarter. The decrease in earnings also follows years of massive earnings increases.

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