Regulators Criticized for Prioritizing Insurance Prices Over Claims Service

Experts say insurance regulators focus too much on sales and solvency, neglecting oversight of claims handling performance

Published on Feb. 23, 2026

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A claims practice expert has criticized insurance regulators for prioritizing the sale of insurance policies and ensuring insurer solvency over regulating the actual delivery of claims services to policyholders. The expert argues that regulators' focus on market conduct exams, pricing, and capital reserves has come at the expense of meaningful oversight and accountability for how insurers handle claims, especially in the aftermath of major disasters like wildfires. The expert cites a recent Los Angeles Times investigation that found California regulators did little to address complaints from wildfire victims about delays, denials, and underpayments from their insurer, State Farm.

Why it matters

This issue highlights the tension between regulators' dual mandates of ensuring insurance affordability and solvency, versus holding insurers accountable for fulfilling their promises to policyholders when claims arise. Experts argue that an overemphasis on the 'sale' of insurance rather than the 'delivery' of the product can leave consumers vulnerable, especially in the aftermath of major disasters when they need their insurers the most.

The details

The anonymous claims expert argues that regulators have historically focused more on overseeing the sales and pricing of insurance policies, rather than closely monitoring insurers' claims handling practices. This is partly because solvency and premium revenue are seen as more critical to regulators' primary goal of ensuring the financial stability of the insurance industry. However, the expert contends that this approach has allowed insurers to prioritize profits over customer service, with some companies allegedly delaying, denying or underpaying claims, even in the face of policyholder complaints. The expert cites the recent LA Times investigation, which found that California regulators did little to address complaints from wildfire victims about State Farm's claims handling, and that a regulator who criticized the insurer's practices was later disciplined after a complaint from a State Farm lawyer.

  • The LA Times article was published on February 19, 2026, with an update on February 21, 2026.

The players

Paige St. John

A Pulitzer Prize-winning investigative journalist at the Los Angeles Times.

State Farm

A major insurance company that was the focus of complaints from wildfire victims in California about delays, denials, and underpayments of claims.

California Department of Insurance

The state regulatory agency that was criticized in the LA Times article for doing little to resolve complaints about State Farm's claims handling practices.

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What they’re saying

“Regulators have a tough choice: Do we regulate the 'sale' of policies, or do we regulate 'delivery' of the product? There's a compelling reason to focus on sales. A regulator's prime concern is solvency. Premiums support solvency while indemnity and service costs erode the company's financial condition.”

— Anonymous claims practice expert (propertyinsurancecoveragelaw.com)

“These are not abstract compliance problems. They are family and community problems. They are the difference between returning home and living in limbo. Insurance has a big impact on communities trying to rebuild after a large scale disaster.”

— Anonymous claims practice expert (propertyinsurancecoveragelaw.com)

What’s next

Experts suggest that regulators need to place greater emphasis on claims handling performance, including implementing more stringent licensing and education requirements for claims professionals, as well as stronger oversight and enforcement mechanisms to hold insurers accountable for systemic issues in claims delivery.

The takeaway

This case highlights the need for insurance regulators to strike a better balance between ensuring insurance affordability and solvency, versus prioritizing robust oversight and accountability for how insurers actually fulfill their promises to policyholders, especially in the aftermath of major disasters when claims service is most critical.