Claims Decline as Replacement Costs Skyrocket in Q1 2025

The first quarter of 2025 saw total property claims fall by 7 percent compared to Q1 2024, marking the lowest non-catastrophe claim count in five years despite several significant weather events . Catastrophe assignments remained steady, contributing to the second-lowest CAT volume since before the pandemic .

However, while fewer claims were filed, severity spiked dramatically: the national average replacement cost value jumped 46 percent year-over-year, driven almost entirely by the California wildfires. The Palisades and Eaton fires alone generated nearly 48,000 claims totaling approximately $10 billion, with an average RCV of $337,000 per claim .

Cost pressures extended beyond fire events. Nationwide reconstruction costs rose 5.2 percent year-over-year, with California up 1.67 percent on average and the Pacific Palisades region experiencing a 4.24 percent increase in Q1 2025 . Labor costs continued to outpace materials, led by concrete masons, while fuel prices provided modest relief, rising just 3.63 percent in the U.S. this quarter .

Looking ahead, industry stakeholders face additional headwinds from new U.S. import tariffs on key construction materials and evolving immigration policies affecting a workforce that’s 26 percent immigrant. These factors, combined with ongoing reconstruction demands, signal sustained cost inflation through 2025.