Claims News
In addition to the news about specific regions and technological advancements, several broader trends are shaping the property claims landscape. These trends are interconnected, with climate change, economic factors, and technology all playing a significant role.
1. The "New Normal" of Catastrophe Claims
Catastrophe claims are no longer statistical anomalies but a regular and significant part of the claims process.
• Frequency of "Secondary Perils": While major events like hurricanes and earthquakes still cause massive losses, a new and concerning trend is the rise of so-called "secondary perils." These are frequent, smaller-scale events like severe thunderstorms, hailstorms, and localized floods. A recent report from Verisk indicates these events are now driving twice as much financial impact as major disasters, accounting for two-thirds of global insured property losses.
• Record-Setting Losses: The first half of 2025 has seen global insured losses from natural catastrophes reach record levels, nearly double the 10-year average. This trend is driven by unseasonal and frequent events, such as wildfires in unexpected locations and severe convective storms across the United States.
• Climate Change as a Core Driver: Insurers are increasingly acknowledging that climate change is a key factor in the rising frequency and severity of claims. This is leading to a fundamental shift in risk assessment, with insurers having to adapt their models and strategies to account for an escalating number of climate-related events.
2. Economic Pressures and Inflation
The cost of settling claims is rising, putting pressure on insurers and, by extension, consumers.
• High Repair and Rebuilding Costs: Inflation, ongoing supply chain issues, and labor shortages are directly increasing the cost of materials and services needed to repair or rebuild properties. This "demand surge" after a major event means that the cost of a single claim can be significantly higher than in previous years, even for the same level of damage.
• Underinsured Properties: Rising costs are exacerbating the problem of underinsured properties. The value of homes and buildings has often outpaced the amount of insurance coverage, leaving policyholders vulnerable and creating a "protection gap." Insurers are trying to address this by increasing dwelling coverage limits, which in turn contributes to higher premiums.
3. The Digital Transformation of the Claims Journey
Technology is no longer just a support tool; it's fundamentally changing how claims are handled.
• AI and Automation: The use of AI is expanding beyond simple chatbots. Insurers are leveraging AI and machine learning for more sophisticated tasks like:
• Fraud Detection: AI algorithms can analyze vast amounts of data from various sources to identify suspicious claim patterns more effectively than traditional methods.
• Automated Claims Processing: For low-risk or simple claims, AI can automate the entire process from data entry to settlement, leading to faster payouts and a better customer experience.
• Enhanced Data and Analytics: The proliferation of data from sources like drones, satellites, and IoT devices allows for more accurate and efficient claims assessment. Insurers can use these tools to assess damage remotely, speeding up the process and reducing the need for in-person inspections.
• Customer-Centric Digital Tools: Consumers now expect a seamless digital experience. Insurers are responding by offering web-based portals and mobile apps that allow policyholders to file claims, upload documents, and track their claim status in real time.
4. Shifting Liability and Legal Challenges
The legal and regulatory environment for claims is also evolving.
• Litigation and Disputes: In some regions, particularly those with a history of severe weather like Florida, there's an ongoing struggle to balance insurer profitability with consumer protection. This leads to a high number of claim denials and subsequent litigation, even with legislative changes aimed at curbing lawsuits.
• Cybersecurity Claims: As the economy becomes more digital, cyber claims are emerging as a major area of concern. While the frequency of these claims may be decreasing in some areas, the severity and cost of ransomware and data breach incidents are on the rise, creating a new and costly category of claims for insurers.
