The final quarter of 2024 brought significant shifts in property insurance trends, highlighting the evolving nature of catastrophic risks, rising reconstruction costs, and labor-market challenges. The Verisk Property Estimating Solutions Quarterly Property Report (October – December 2024) sheds light on these changes, helping insurers and contractors navigate an increasingly complex landscape.
Surge in Catastrophe Claims Due to Late-Season Hurricanes
Traditionally, winter storms dominate claims during the fourth quarter, but late-season hurricanes dramatically altered this trend in 2024. Catastrophe (CAT) claims surged by 113% year over year, while overall claims volume increased 36% compared to Q4 2023.
- The Southeast region, particularly Florida, Georgia, and South Carolina, bore the brunt of the storm activity.
- Texas continued to see significant claims from a combination of wind, water, and hail events.
- Unexpected increases in flood and wind-related claims were reported in the Great Plains and Pacific Northwest.
This shift in catastrophic risk patterns underscores the need for insurers to adjust their underwriting strategies and catastrophe response planning.
Hurricane Milton: A Defining Event for Q4 2024
Hurricane Milton was a major driver of increased claims in Q4 2024, generating nearly 187,000 claims with a total Replacement Cost Value (RCV) of $2.68 billion.
- Wind-related claims accounted for 50% of the total, while only 31% were specifically coded as hurricane claims.
- The average RCV for Milton-related claims stood at $19,100 per claim.
- Cycle times for claims processing increased to 11.2 days, up from the Q4 average of 9.7 days.
- 20% of claims required supplements, primarily for adjustments under $10,000.
This data highlights the importance of accurate loss tracking and reporting variations in future catastrophe planning.
Reconstruction Costs Continue to Climb
Both residential and commercial reconstruction costs rose in Q4 2024, maintaining an upward trajectory from previous quarters.
- Residential reconstruction costs increased by 4.5% year over year.
- Commercial reconstruction costs rose even more sharply at 5.5%.
- Regional variances were significant:
- Kansas led residential cost increases at 6.91%.
- Rhode Island saw the largest commercial cost growth at 10.14%.
These escalating costs reinforce the need for precise budget forecasting and risk mitigation strategies in construction planning.
Labor and Material Costs: A Shift in Market Dynamics
In Q4 2024, labor costs outpaced material costs, a reversal from previous quarters.
- Labor costs rose 1.42% in the U.S. and 1.39% in Canada.
- Concrete masons saw the highest labor cost increase (2.74% in the U.S., 7.79% in Canada).
- Material costs rose 2.63% in the U.S. and 2.47% in Canada.
- Paint and lumber were the most volatile materials, with lumber costs surging by 4.03% in Canada in Q4 alone.
Fuel Costs Show Mixed Trends
Fuel costs provided some relief in the U.S. but continued to rise in Canada.
- U.S. fuel costs decreased by 8.62%.
- Canada saw a 9.77% increase in fuel costs.
These fluctuations impact construction and insurance pricing models, especially in regions heavily reliant on fuel-intensive reconstruction efforts.
Economic Indicators Signal Shifts in Market Confidence
Key economic indicators provide insight into the property and construction markets:
- Builder confidence rose, with the NAHB/Wells Fargo Housing Market Index increasing by one point in January 2025.
- Sales expectations for the next six months fell by six points, reflecting ongoing economic uncertainty.
- Construction job openings declined by 13.55% from October to November, aligning with seasonal slowdowns.
- Building permits dropped by 19.98% in Q4, with non-residential construction experiencing the steepest decline.
These indicators suggest a potential cooling in new construction activity, which could impact insurance demand and underwriting approaches in 2025.
What to Expect in 2025
Based on Q4 trends, Verisk projects continued increases in reconstruction costs for the first half of 2025:
- Residential reconstruction costs are expected to rise by 1.98%.
- Commercial reconstruction costs are projected to increase by 2.22%.
The combination of climate-driven claim shifts, rising labor costs, and regional variances in reconstruction expenses highlights the need for data-driven decision-making and proactive risk management. As we move into 2025, insurers and contractors must stay ahead of these evolving patterns to enhance resilience and improve claims handling efficiency.