Q3 Property Claim Severity Among Highest on Record as Volume Drops

• By: Olivia Overman
• December 11, 2025

The third quarter of 2025 presented the lowest property claim volume in five years, but had one of the highest claim severity quarters on record, according to Verisk’s quarterly report.

In the third quarter of 2025, the insurance industry recorded just over 1 million claims, almost 30% below the third quarter of 2024, driven mainly by reduced catastrophe activity, with CAT claims dropping 32.7% and non-CAT claims decreasing 26.1% compared to the previous year.

However, the claims severity average could make the third quarter of 2025 one of the highest severity quarters in recent history, the report said. Projected average severity ranges from $17,258 to $18,431, signaling that individual claims are becoming significantly more costly to resolve.

Wind and hail perils dominated the third quarter, comprising 51% of all claims, with one particular state, Wyoming, experiencing a 6,479% increase in CAT claims due to a major hail event near Cheyenne on August 1.

However, the mild 2025 hurricane season contributed to a 95% decrease in third-quarter hurricane claims compared to the third quarter of 2024. This contributed significantly to the overall decline in catastrophe activity and stands in contrast to the more active hurricane seasons of recent years, the report said.

Further, the cost of labor and materials in October was up 3.8%, marking a deceleration from the 4.8% growth recorded in the previous year. However, these costs are an acceleration from the second quarter of 2025, the report said.

Total reconstruction costs in the U.S., including materials and retail labor, rose 3.75% from October 2024 to October 2025. This marks a deceleration from the 4.83% growth recorded in the previous year. The third quarter of 2025 showed some acceleration, with costs climbing 0.95% compared to the 0.65% increase in the second quarter.

Builder confidence declined with the NAHB/Wells Fargo Housing Market Index dropping 15 points—from 47 to 32—representing a notable downward trend with values consistently below historical norms.

2025 is on track to be the lowest claim volume year in recent history, yet cost management remains critical as severity trends continue to increase, the report said.

Olivia Overman is IA content editor.