The Integrity Deficit: Not a One-Sided Story

Editor’s note: This is the second installment in a four-part series on the erosion of integrity in property claims. Part I measures the decline. Part II documents 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.

The first part of this series argued that the property claims industry rests on a promise, that the promise depends on the integrity of everyone who handles other people’s money, and that the erosion of that integrity is now measurable in the hundreds of billions of dollars. This installment asks the harder question. Who is doing the eroding?

The honest answer is everyone, in different ways, and that honesty matters. The great majority of public adjusters, attorneys, contractors and carrier personnel are decent professionals doing difficult work. But the documented misconduct is real, recurring and worth naming plainly, precisely because pretending otherwise is its own form of dishonesty. No single group holds a monopoly on the decline.

The Claimant Side: Inflation as a Business Model

Public adjusters exist for a legitimate reason, because policyholders genuinely are sometimes underpaid. Yet because a public adjuster is typically paid a percentage of the settlement, there is a structural temptation to inflate, and the records show it has been acted upon. As the Property Insurance Coverage Law Blog reported, an Orlando public adjuster was arrested after overestimating a claim by more than $500,000 specifically to enlarge the fee he would collect.

In Florida, a state investigation reported by Insurance Journal produced multiple arrests in a scheme to deliberately damage roofs so they would qualify for claims, with a public claims adjuster accused of colluding with a roofing company to inflate replacement costs. Others simply steal: one public adjuster, NBC10 Philadelphia reported, is accused of misappropriating more than $82,000 from elderly homeowners, with forged signatures on settlement checks, and in another matter an adjuster and his firm were ordered by the Iowa Insurance Division to pay more than $1.3 million in restitution and penalties and lost the license.

Across 2024 and 2025, regulators in California, Illinois, Colorado, Iowa and Kentucky brought a wave of revocations, several for letting unlicensed people adjust under a license and for forging claim proceeds checks.

The same pattern, scaled up, appears among a minority of attorneys. The landmark case, reported by Carrier Management, is a Florida plaintiffs’ lawyer disbarred by that state’s highest court in 2022. Between January 2015 and June 2020, he personally filed 7,649 lawsuits against Florida property insurers, and with his network the figure approached 10,000.

The operation worked by recruiting public adjusters, contractors and other feeders to generate claims, and the tactics included filing multiple lawsuits on the same claim, some without the insured’s knowledge or approval. A state-backed insurer sued the firm for fraud and racketeering, alleging false invoices and inflated costs, and the firm settled for $1 million, Insurance Journal reported. That single case shows every element of the problem at once: manipulating facts, expanding damage and maximizing settlements as a deliberate business model, all confirmed by a disbarment rather than mere accusation.

What makes that case instructive is not the villainy of one lawyer but the architecture around him. The adjuster, the contractor and the attorney were not independent actors who happened to cross paths. They were links in a single pipeline, each feeding the next, each taking a share, with the inflated claim as the raw material that fed the entire enterprise. This is the mechanism by which individual dishonesty becomes industrialized, and it is why isolated enforcement against one bad actor rarely cures the problem. The incentive that built the pipeline outlives the person who is caught.

The Incentives Behind the Behavior

This is where the structural driver becomes visible, and where blame becomes more complicated than individual bad character. For years, statutes in some states awarded one-way attorney fees and permitted broad assignment of benefits, which together made litigation more profitable than settlement. The behavior was a rational response to a broken incentive.

The deeper cost shows up in the figures for legal system abuse. Investment in litigation funding, money placed specifically to prolong and enlarge claims, reached $15.2 billion in 2023, the same year plaintiff firms spent $2.4 billion on roughly 26 million legal services advertisements. The tort system’s hidden cost has been estimated at about $3,600 per household by the Institute for Legal Reform and as high as roughly $6,600 for a family of four by another. Exaggeration has become an industry with its own capital markets.

Courts have begun responding to the underlying behavior even outside criminal cases. As Colodny Fass has documented, insurers have won summary judgment where an insured’s damage estimate was inflated and conclusory, unsupported by any factual reasoning, and an inflated estimate can trigger the policy’s own concealment and fraud condition, voiding coverage entirely. The law, in other words, has started to treat exaggeration not as aggressive advocacy but as a breach of the contract’s good-faith foundation. That is a signal worth heeding, because it means the drift toward treating the first number as a negotiating fiction now carries real legal risk for the party who indulges it.

The Carrier Side: The Unjustified Denial

None of this lets the carrier side claim innocence. The mirror image of the inflated demand is the unjustified denial.

After Superstorm Sandy, an engineering firm and one of its employees were charged with 25 counts of forgery by the New York attorney general for altering field engineering reports, changing damage findings written by engineers who had actually visited the homes so that claims would be underpaid or denied. A federal judge called it reprehensible gamesmanship. The subsequent claims review, Frontline reported, paid out more than $258 million in additional money to over 15,000 policyholders who had been shorted. The pressure of throughput and savings metrics can corrupt judgment just as surely as a contingency fee can.

When one side learns to exaggerate and the other learns to discount in self-defense, the honest policyholder in the middle pays for a war they did not start. That is the heart of the decline. The profession has drifted from a culture of valuation, in which the estimate is an honest attempt to state what a loss actually costs, into a culture of negotiation, in which everyone assumes the first number is a lie. Once that assumption takes hold, integrity stops looking like an asset and starts looking like a tactical weakness.

Why a whole profession would drift in that direction, and whether the drift mirrors something larger happening across society and even inside government, is the question taken up in the third part of this series.