Claims from hurricanes surged dramatically in the last quarter of 2024, leading to a significant 36% rise in total claims compared to the previous year. A recent report from Verisk Analytics highlights that claims related to natural disasters more than doubled during this period, with hurricane claims accounting for nearly 9% of the total volume. This marks an astonishing increase of over 1,100% from the same quarter in 2023.
The report shows that flood claims rose by 221%, while wind claims increased by 195%. Despite this spike in claims, Verisk noted a 7% decrease in average claims severity compared to the fourth quarter of 2023. However, the replacement cost value (RCV) for claims has seen a notable rise, increasing by 10% in the third quarter of 2024 to reach $16,800. Based on the trends in claims, Verisk projects the average RCV for the fourth quarter to be around $18,600.
One of the challenges highlighted in the report is the availability of skilled labor. Labor costs have been rising faster than material costs, with billable labor rates increasing by about 5.3% over the past year. Additionally, reconstruction costs for residential properties have climbed by 4.5% from January 2024 to January 2025, while commercial reconstruction costs increased by 5.5% year over year.
The report emphasizes that the patterns of risk are shifting, particularly in the Southeast, where costs have surged at six times the national rate following hurricane activity. Hurricane Milton alone has generated approximately 187,000 claims, with an RCV of about $2.7 billion. The average RCV per claim stands at $19,100, with around 85 claims still pending resolution.
States like Florida, Georgia, and South Carolina have experienced a significant number of claims due to hurricane-related damage. Interestingly, unexpected increases in claims have also been observed in the Great Plains and Pacific Northwest, primarily due to water, hail, and wind-related incidents.
As the landscape of natural disaster claims evolves, it is clear that new strategies for risk assessment and resource planning will be essential to address these growing challenges.