The Integrity Deficit: The Promise and The Erosion

Editor’s note: This is the first installment in a four-part series on the erosion of integrity in property claims. Part I measures the decline. Part II will document the misconduct driving it. Part III will trace the causes to a broader collapse of institutional trust. Part IV sets out five initiatives to restore honesty to the claims settlement process.

“Our Constitution was made only for a moral and religious People. It is wholly inadequate to the government of any other.”
— John Adams

John Adams reminded us that even the strongest systems of governance depend not on structure alone, but on the character of those entrusted to uphold them.

In much the same way, the property insurance industry, built on the promise of safeguarding the collective resources of policyholders, cannot function as intended without integrity at its core.

To believe that professionals can responsibly manage and distribute vast pools of funds meant for the recovery of others, absent personal accountability, ethical discipline, and a willingness to place duty above self-interest, is not merely optimistic. It is fundamentally unsound.

Integrity is not an accessory to this profession; it is the very condition that makes its purpose possible. This industry devotes enormous energy to learning how to do what it does better. That is not really the point.

The Promise at the Center

An insurance policy is a promise. Stripped of its endorsements and its exclusions, it says: if something terrible happens to you, we will make you whole, fairly and without games. That promise is the entire reason the product exists. A policyholder cannot inspect it the way a buyer inspects a car on the lot. Premiums are paid for years on faith, and whether the promise was real is discovered only on the worst day of a family’s life. Everything good about this industry, and everything fragile about it, flows from that single fact.

There is a deeper truth in that arrangement, and it is the one John Adams was pointing toward. An insurance pool is collective property. It is money set aside by many people so that the unfortunate few can be restored, and every dollar paid out belongs, in a real sense, to all of the policyholders who funded it. That makes everyone who touches a claim a steward of other people’s resources, and stewardship is a moral category before it is a technical one. When that trust is honored, the system is a quiet miracle. When it is abused, the abuse is not victimless, because the victim is every honest policyholder in the pool.

What the Industry Has Lost

For most of this industry’s history, that promise was carried mostly by people. A staff adjuster owned a file from first notice to final payment. Many of them understood construction because they had built things. They had the authority to make a decision and the experience to make it well. The relationship was imperfect, but it was human, and a human being could be held accountable for a number on a page. Integrity, in that world, had a name and a face.

Two forces have hollowed out that model. The first is the loss of experienced judgment. Roughly one in four claims adjusters is expected to retire within five years, and turnover among newer adjusters runs high. The people leaving spent decades learning to read a loss, to spot an inflated estimate, and to push back, politely but firmly, on an aggressive contractor or attorney. Those arriving are often handed heavier and more complex caseloads with a fraction of that seasoning. Deloitte research reports that carriers relying on underprepared talent see materially higher indemnity payouts, on the order of 20%, because inexperienced adjusters cannot always tell a fair number from an unfair one. When judgment leaves the building, the file does not get more honest. It gets more arbitrary.

The second force is the quiet replacement of judgment with throughput. The pressure to close files quickly, measured in cycle time and cost per claim, now drives much of how claims are handled, and automation has accelerated it. Technology genuinely helps with speed, and it is not the enemy. But speed measured without accuracy is not efficiency. It is just faster error. In 2025, NPR documented homeowners losing or being denied coverage based on aerial image analysis they never saw, in at least one case based on a picture of the wrong house entirely. A number produced by a system no one in the room can explain is not more objective than a human estimate. It is less accountable, because there is no longer a person who can be asked to justify it.

The Measured Scale of Erosion

It would be easy to treat this as impression and nostalgia. The numbers do not allow that comfort. In 2022, the Coalition Against Insurance Fraud published its first comprehensive update in nearly three decades, putting the total cost of insurance fraud in the U.S. at $308 billion per year, roughly 1.5% of gross domestic product, and up from an estimate of $80 billion in 1995. Property/casualty fraud, the relevant slice, runs about $45 billion annually. The National Insurance Crime Bureau has long circulated an estimate, cited by the Federal Bureau of Investigation, that the average American family pays between $400 and $700 more in premiums every year because of fraud. That is the tax the dishonest impose on the honest.

The cleanest property specific case study is Florida’s assignment of benefits (AOB) crisis, because the state measured it directly. The Insurance Information Institute and Florida regulators documented that assignment of benefits abuse cost Floridians at least $2.5 billion in excess legal costs, while property lawsuits involving those assignments grew from about 1,300 statewide in 2000 to roughly 135,000 by late 2018. A claim carrying an assignment of benefits cost an average of $32,000 to settle, about three times the cost of a comparable claim without one, a multiple that is inflation expressed in a single figure. Most striking, Florida accounted for only about 9% of the nation’s homeowners claims in one widely cited measure, yet 79% of the nation’s homeowners insurance lawsuits.

The broader litigation economy tells the same story. In 2024, by Marathon Strategies‘ count, there were 135 nuclear verdicts (awards exceeding $10 million), totaling 31.3 billion, a 52% jump in number and a 116% jump in dollars from the prior year. Social inflation reached 7% in 2023, a 20 high by Swiss Re Institute’s measure, and casualty insurers added billions in reserve strengthening to catch up with losses they had underestimated. These are not abstractions. They are the measured footprint of a culture that has learned to treat a claim as an opening bid rather than an honest account of a loss.

How that culture took hold, and who has had a hand in it, is the subject of the next installment in this series. Before integrity can be reclaimed, the erosion must be named honestly, on every side of the table.

Johnson is the founder of Johnson Dispute Resolution, a carrier-side appraisal and dispute resolution firm based in Texas.