[QUOTE=brazil84]
I think part of the problem is that when consumers purchase homeowners insurance, they are usually distracted and strapped for cash and they tend to take the cheapest policy their broker offers them that will satisfy their mortgage company. It’s not until many years of premiums later that they learn they were paying for lousy service. So the free market doesn’t incentivize insurance companies in the same way that, say, a restaurant might be forced by the market to provide good service.
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“incentivize”? 
Well, yes & no. There is most certainly a degree of inertia when it comes to people and their insurance. Let’s face it, almost nobody gets passionate about it until the policy (which almost nobody reads) fails to give them what they think it should, and by that time it’s too late–their expectations ain’t gonna get met. As an insider I have to say that insurance policy language is weird. The only reason I understand it is because, frankly, I’m weird too. But the real problem is that people are people and not all of us belong in a customer-facing position. Many that work in claims are probably better suited for driving a tank through the Waco Davidian Compound for all the empathy they can muster, and it’s their profound ability to piss people off that ends up reflecting poorly on their employers and the insurance biz in general.
[QUOTE=brazil84]
As far as conspiracies go, I think that’s a bit of a straw man argument. There’s no need for the CEO of an insurance company to explicitly tell the adjusters to deny valid claims. You just review the division head’s performance and say something like this…
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No. In my experience it just doesn’t work that way. Even when my performance review doesn’t go just the way I’d like it to, I can assure you that what I pay in claims doesn’t come in to the conversation–it’s NEVER, “Gee Inigo, why’d you pay for that” or “You seem to be paying claims based on advertised asking prices, but we all know that nobody ever has to pay the asking price for a car…” If your “nudge nudge, wink wink” CEO scenario were credible I, as the guy who pays the claims, would certainly feel more pressure to tighten my checkbook. Instead the pressure I get is to satisfy customers who have recently had something dropped in their lap that they don’t want in their lap, and make my company look like a good place to go for insurance. In fact, rather than hearing “don’t start paying those kinds of claims” I’ve heard, “You know, you can give the customer the benefit of the doubt now, or you can give it to them later along with the bad faith /punitive damages settlement.”
But it is true enough that upper management looks at the bottom line, but if they’ve got half a brain they know to stay away from the payout book when looking for some fat to cut. They look to operations expenses–which job market do they move to, do they lease or buy the company’s buildings and motor pool? Do they replace employees or do they spread the workload among those remaining, or maybe even restructure all or part of the organization?
As for the OP? The rep simply didn’t handle the situation well. Not all claims qualify for coverage and hail isn’t the kiss of death for a roof every time. But if you’re going to deny a claim, you’d best not leave the customer holding the bag until you’re sure they know why the claim doesn’t qualify. State Farm is a huge insurance company with reasonably good customer satisfaction reviews. You don’t get there by screwing your customers. It’s more likely, as all 3 houses were denied by the same rep while State Farm undoubtedly paid for others, that one need look no further than the rep. If the problem were higher up the food chain then you’d see a consistent pattern of denial of legitemate claims, and subsequently, people getting passionate about their insurance.
