Severity Was Up, But Will Falling Claims Volume Impact the Profession?

The average claim severity during the third quarter 2025 could turn out to be one of the highest quarterly amounts in recent history, however the quarter will produce the lowest claim volume in five years—continuing a trend of decreased catastrophe events that has had a downstream impact on claims professionals.

A new report from Verisk shows more than 1 million total claim assignments recorded for the period, 28.5% below the third quarter of 2024.

The reduced volume was mostly driven by favorable weather and reduced catastrophe activity. The decline extended across catastrophe and non-catastrophe claims, continuing the three-year downward trend since 2023, according to Verisk. The tame 2025 hurricane season had a big hand in producing a lower claims volume for the quarter.

“I think the largest driver is the decrease in storm activity, as pointed out in the report,” said Susan Fleming, vice president of business intelligence and insights at Verisk Property Estimating Solutions.

There were only 55 designated catastrophe events in 2025. In 2024, there were 73 catastrophe events. In 2003, the number was 74.

“I think it’s a 95% decrease in hurricane activity since 2024, so the amount of actual claims and catastrophe claims coming in is far less than the industry has seen in years. It is interesting to see the impact it has across the board,” Fleming said.

She added: “I think the biggest thing is the decrease in hurricane volume, but you also see a decrease in the hail and wind events across the United States—those are the bread and butter of the claims industry; that’s where we see a lot of volume always coming from.”

These concerning trends are what Gregg Golson, chief strategist for Up2Now LLC, a consulting firm, has been talking about lot lately. He has seen a lot of the third-party administrators and independent adjuster firms letting go of experienced non-billable people, marketing staff, training and quality control workers.

“I’ve seen firms letting go of people with 20 years’ experience, who were their trainers for 20 years,” Golson said.

To try and compensate, he has also seen firms attempt to put more resources into marketing where storms have impacted more, targeting companies and property owners for services like post-hurricane inspections where, for example, funding from the Federal Emergency Management Agency may be in play. But they still struggle to make up for the lack of work in an industry that is also being impacted by the increasing use of artificial intelligence and technology.

“We’re expecting not just layoffs where people are being let go at both carriers and at firms due to lower frequency and lower numbers, but with AI in general, people are looking at what can they do more with chatbots on smaller losses, that are much more non-empathetic but communicate better than some of them did before,” Golson said.

That has put a lot of the simple claims that were taken care of by desk adjusters into the virtual hands of chatbots, leaving less work for those new to the industry who cannot yet handle complex claims.

The Verisk report is a mix of news. It also shows the projected mature claims severity ranges from $17,258 to $18,431, in which individual claims are becoming significantly more costly to resolve. Reconstruction costs rose 3.75% year-over-year, offsetting operational relief from lower claim volumes.

According to Verisk, historical patterns suggest the final mature claim severity average could make the quarter one of the highest severity quarters in recent history.

“We are continuing to look at where Q3 will mature,” Fleming said. “There is that two- to three-month lag, where claim severity will actually end up, but anecdotally we are starting to see the shift overall of the value of the losses being filed for higher than years past, so claims that are actually being filed are larger claims than they normally have been.”

Topics Trends Claims

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