Rising Severity: How Declining Claims Volume Could Affect the Industry
The average claim severity during the third quarter of 2025 is projected to be one of the highest quarterly amounts in recent history. However, this quarter will also see the lowest claim volume in five years, continuing a trend of decreased catastrophe events that has significantly impacted claims professionals.
A new report from Verisk indicates that over 1 million total claim assignments were recorded for the period, marking a 28.5% decrease compared to the third quarter of 2024.
This reduction in volume is primarily attributed to favorable weather conditions and a decline in catastrophe activity. The trend has persisted for three years, starting in 2023, according to Verisk. A notably tame hurricane season in 2025 has played a significant role in lowering claims volume for the quarter.
Related: Lack of Hurricanes Is Leading to Lack of Experience for Adjusters
“The largest driver is the decrease in storm activity, as highlighted in the report,” stated Susan Fleming, vice president of business intelligence and insights at Verisk Property Estimating Solutions.
In 2025, only 55 designated catastrophe events were recorded, a decrease from 73 in 2024 and 74 in 2003.
“There’s been a 95% decrease in hurricane activity since 2024, resulting in far fewer actual claims and catastrophe claims than the industry has seen in years. It’s fascinating to observe the widespread impact,” Fleming noted.
Related: World’s Top 10 Extreme Weather Events in 2025
She further explained, “The significant drop in hurricane volume is evident, but we are also witnessing a decline in hail and wind events across the United States—these are typically the main sources of claims volume.”
These troubling trends have been a focal point for Gregg Golson, chief strategist for Up2Now LLC, a consulting firm. He has observed many third-party administrators and independent adjuster firms letting go of experienced non-billable staff, including marketing personnel, trainers, and quality control workers.
“I’ve seen firms parting ways with individuals who have 20 years of experience, including their long-time trainers,” Golson remarked.
Related: What’s Happening in The Claims Profession? Read This, Then Tell Us
In an effort to adapt, some firms are reallocating resources to marketing in areas more affected by storms, targeting companies and property owners for services like post-hurricane inspections, especially where Federal Emergency Management Agency funding may be involved. However, they continue to struggle to compensate for the lack of work in an industry increasingly influenced by artificial intelligence and technology.
“We anticipate not only layoffs due to lower frequency and numbers but also the impact of AI, as firms explore how to utilize chatbots for smaller, less complex claims,” Golson explained. “This shift has moved many simple claims from desk adjusters to virtual chatbots, leaving less work for newcomers who are not yet equipped to handle complex claims.”
The Verisk report presents a mixed outlook. It projects that mature claims severity will range from $17,258 to $18,431, indicating that individual claims are becoming significantly more expensive to resolve. Reconstruction costs have risen by 3.75% year-over-year, which offsets some operational relief from lower claim volumes.
According to Verisk, historical patterns suggest that the final mature claim severity average could make this quarter one of the highest severity quarters in recent history.
“We are closely monitoring how Q3 will mature,” Fleming said. “There is typically a two- to three-month lag in determining where claim severity will ultimately land, but anecdotally, we are observing a shift in the value of losses being filed, with claims being larger than in previous years.”
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The average claim severity during the third quarter of 2025 is projected to be one of the highest quarterly amounts in recent history. However, this quarter will also see the lowest claim volume in five years, continuing a trend of decreased catastrophe events that has significantly impacted claims professionals.
A new report from Verisk indicates that over 1 million total claim assignments were recorded for the period, marking a 28.5% decrease compared to the third quarter of 2024.
This reduction in volume is primarily attributed to favorable weather conditions and a decline in catastrophe activity. The trend has persisted for three years, starting in 2023, according to Verisk. A notably tame hurricane season in 2025 has played a significant role in lowering claims volume for the quarter.
Related: Lack of Hurricanes Is Leading to Lack of Experience for Adjusters
“The largest driver is the decrease in storm activity, as highlighted in the report,” stated Susan Fleming, vice president of business intelligence and insights at Verisk Property Estimating Solutions.
In 2025, only 55 designated catastrophe events were recorded, a decrease from 73 in 2024 and 74 in 2003.
“There’s been a 95% decrease in hurricane activity since 2024, resulting in far fewer actual claims and catastrophe claims than the industry has seen in years. It’s fascinating to observe the widespread impact,” Fleming noted.
Related: World’s Top 10 Extreme Weather Events in 2025
She further explained, “The significant drop in hurricane volume is evident, but we are also witnessing a decline in hail and wind events across the United States—these are typically the main sources of claims volume.”
These troubling trends have been a focal point for Gregg Golson, chief strategist for Up2Now LLC, a consulting firm. He has observed many third-party administrators and independent adjuster firms letting go of experienced non-billable staff, including marketing personnel, trainers, and quality control workers.
“I’ve seen firms parting ways with individuals who have 20 years of experience, including their long-time trainers,” Golson remarked.
Related: What’s Happening in The Claims Profession? Read This, Then Tell Us
In an effort to adapt, some firms are reallocating resources to marketing in areas more affected by storms, targeting companies and property owners for services like post-hurricane inspections, especially where Federal Emergency Management Agency funding may be involved. However, they continue to struggle to compensate for the lack of work in an industry increasingly influenced by artificial intelligence and technology.
“We anticipate not only layoffs due to lower frequency and numbers but also the impact of AI, as firms explore how to utilize chatbots for smaller, less complex claims,” Golson explained. “This shift has moved many simple claims from desk adjusters to virtual chatbots, leaving less work for newcomers who are not yet equipped to handle complex claims.”
The Verisk report presents a mixed outlook. It projects that mature claims severity will range from $17,258 to $18,431, indicating that individual claims are becoming significantly more expensive to resolve. Reconstruction costs have risen by 3.75% year-over-year, which offsets some operational relief from lower claim volumes.
According to Verisk, historical patterns suggest that the final mature claim severity average could make this quarter one of the highest severity quarters in recent history.
“We are closely monitoring how Q3 will mature,” Fleming said. “There is typically a two- to three-month lag in determining where claim severity will ultimately land, but anecdotally, we are observing a shift in the value of losses being filed, with claims being larger than in previous years.”
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