New Analysis: Homeowners Insurance Companies Earn Millions in Interest and Investment Income with Every Day of Claim Delay

A new analysis by the Consumer Federation of America and Weiss Ratings reveals that homeowners insurance companies collectively earn an additional $8.8 million in investment income for every day a claim payment is delayed. This financial windfall, which totals $61.6 million for a one-week delay, highlights a systemic incentive for insurers to prolong the claims process at the expense of policyholders. The report underscores growing concerns regarding industry practices and the need for legislative reforms to ensure timely payouts in the property insurance sector.

According to data from Weiss Ratings, U.S. property and casualty insurers averaged approximately $241 million in daily investment income in 2024, with $24.7 million of that total tied specifically to homeowners insurance premiums and surplus. When accounting for average investment yields and annual claims payments, the study found that delaying homeowners claims by just one day generates $8.8 million in income for the industry. Across all property and casualty lines, this daily windfall for delayed claims reaches $52.3 million. Douglas Heller, CFA’s Director of Insurance, noted that while insurers penalize policyholders for late premiums, the current system rewards companies for late claim payments, creating what he describes as a perverse incentive to squeeze extra income out of policies.

The report highlights that delayed payments are the primary source of consumer frustration, accounting for 22% of the approximately 65,000 complaints filed with the National Association of Insurance Commissioners (NAIC) in 2025. In California, an investigation into State Farm claims following the 2025 Los Angeles wildfires revealed multiple instances where the insurer failed to issue payments within 30 days of agreeing to a claim. Furthermore, Weiss Ratings found that in 15 disaster-prone states, the percentage of claims delayed for 60 days or more rose to 28.1% in 2024, up from 25.6% in 2018. Martin D. Weiss, founder of Weiss Ratings, also pointed to other industry tactics, such as closing 42.1% of homeowners claims without payment in 2024, a significant increase from 25.7% in 2004.

In response to these findings, California is considering SB 878, a bill introduced by Senator Pérez that would establish strict timeframes for insurers to respond to claims in writing and mandate interest payments to policyholders if claims are not settled within 30 days of certain thresholds. The insurance industry’s reliance on the float—a term popularized by Warren Buffett to describe the investment of premium dollars before claims are paid—serves as the primary driver of profit. Heller argues that requiring insurers to pay interest on delayed claims would remove the financial incentive to stall and hold companies accountable to standards of good faith. This shift is seen as critical for property insurance policyholders who face increased financial hardship and stress while waiting for funds to rebuild after disasters.