Wildfires and Storms Drive Record Claim Severity in Early 2025 as Volume Hits Five-Year Low

In the first quarter of 2025, the U.S. property insurance market saw an unusual combination of severe weather and declining claims volume. Verisk’s latest Quarterly Property Report highlights this paradox: devastating California wildfires and a sharp uptick in tornado-related claims in the Midwest led to a 46% spike in average replacement cost values (RCV), yet total claims volume fell to its lowest point in five years.

The standout events of Q1 were the Palisades and Eaton fires in California, responsible for nearly 48,000 claims totaling an estimated $10 billion in RCV. The average wildfire claim estimate came in at $337,000, and California’s RCV increased by a staggering 1,805% over the same period in 2024. These wildfires were largely urban, with 28% of claims tied to smoke damage—highlighting the complex and costly nature of this catastrophe.

Meanwhile, Texas led the nation in claim volume (161,000 claims), driven by wind and hail storms that accounted for 95% of the state’s CAT claims. Kentucky and Nebraska also experienced over 200% year-over-year increases in tornado-related CAT claims. Still, despite these regional surges, 33 states saw a decrease in claim severity, with Maine, Delaware, Montana, and Oregon reporting 80–95% drops.

Labor and material costs continue to climb, though at a slower pace than in previous quarters. Concrete masons again topped the list in labor cost increases. The report also flags potential cost pressures from U.S. immigration and tariff policies, noting the industry’s heavy reliance on immigrant labor and imported building materials.