Q4 Cat Claims Rise 113% in 2024

Total claims volume rose 36% year-over-year, driven by a 113% increase in catastrophe (Cat) claims due to a dramatic shift in loss patterns, according to Verisk’s "Q4 2024 Property Report."

“The quarter departed significantly from the 2023 pattern, with late-season hurricanes, rather than winter storms, driving claim volumes,” states the report. “This shift particularly affected our Southeastern partners with substantial operational challenges in Florida and Georgia.” Meanwhile, “Texas maintained significant claim volumes through a mix of wind, water, and hail events, while California saw notable non-catastrophic flooding claims in the Bay Area.”

Year-over-year comparison, according to the report, shows significant shifts in catastrophe claim patterns. “While hurricane activity explains increased claims in Florida, Georgia, and South Carolina, we also observed unexpected surges in the Great Plains and Pacific Northwest, primarily from water, hail, and wind events.” Meanwhile, the Northeast experienced a significant decrease in wind-related claims compared to 2023.

“This quarter’s data reveals dramatic shifts in loss patterns, with hurricane-related claims comprising 9% of total volume—a substantial 1,100% increase from Q4 2023,” the report observes. “Both flood and wind claims saw 200% increases, reflecting the quarter’s severe weather patterns.”

Severity

“Initial Q4 2024 data shows a 7% decrease in average severity compared with 2023, but this figure requires careful interpretation,” the report explains. “Looking back at Q3 2024, we’ve observed how initial severity figures evolved—the average replacement cost value (RCV) rose from $15,300 to $16,800 as complex claims reached completion, representing a 10% increase. Q3 claims completed in Q4 averaged $27,600, demonstrating the significant impact of these larger, more complex claims. Based on these maturation patterns, we project Q4’s average RCV could reach approximately $18.6k as claims develop, aligning more closely with historical trends.”

Hurricane Milton

Hurricane Milton’s impact continues to shape claim patterns across the Southeast, with Verisk’s analysis revealing both immediate and long-term effects for operations. The storm generated nearly 187,000 claims totaling $2.68 billion in RCV, with 8% still outstanding as of the report’s publication. The average RCV stands at $19,100 per claim. Additionally, researchers are “noting extended cycle times—averaging 112 days from receipt to return, 1.5 days longer than the Q4 average. Our data reveals important patterns in claim reporting and estimation that can help optimize your response strategies. Within the first month of the event, 88% of claims were reported, establishing a strong initial response. However, the steady flow of 600-1,000 new claims per week through December aligns with patterns we’ve observed in similar events. This extended reporting window coincides with RCV patterns, as 80% of total estimated RCV was written within the first month,” the report states.

“Supplement activity deserves particular attention in…planning, signaling potential opportunities for proactive estimation and resource allocation. [Twenty percent] of Milton claims required supplements affecting RCV. Of those, 75% involved adjustments of less than $10,000.”

While the geographic and temporal analysis confirms that the claims stem from Hurricane Milton, only 31% were specifically coded as ‘Hurricane’ losses. “Most (50%) were designated as wind claims, while water/flood designations accounted for 10.8% of the total.”

Pricing Data Services

Labor and Materials

“Q4 2024 revealed distinct cost patterns, with a notable slowdown from October to November followed by acceleration through year end,” the report notes. While U.S. total costs increased 0.93% for the quarter—moderating from Q3’s 1.00% rise—Canadian costs showed more pronounced movement, climbing 1.12% compared with Q3’s 0.76% increase. The divergence became particularly apparent in December and January, when Canadian costs surged at more than double the U.S. rate (0.64% vs. 0.31%), driven largely by lumber material cost fluctuations.”

Labor Costs in the U.S.

In the U.S., costs rose 1.42% (down from Q3’s 1.64%). The 12-month view reveals more substantial growth, with combined hourly billable rates climbing 5.26% in the U.S. since January 2024.

Concrete masons continue to lead labor cost increases, with a 2.74% rise in the U.S. in Q4, representing a moderating trend in the U.S. compared with Q3’s 8.49% increase. “Over the past 12 months, concrete masons’ labor costs have surged by 26.31% in the U.S…signaling potential challenges for construction and restoration projects moving forward.”

Materials in the U.S.

Material costs demonstrated notable growth, with U.S. costs rising 2.63% year over year. Paint material led U.S. categories with a 2.89% annual increase. The largest monthly gains occurred between December and January, reaching 0.42% in the U.S., driven primarily by paint material’s 1.11% increase. While most materials showed growth trends, carpet material remained stable, with no quarterly change in either market. Notably, roofing material experienced a slight quarterly decline (-0.05%) in the U.S.

Construction and Reconstruction Trends

Residential Reconstruction Costs

“Our latest analysis reveals continued upward momentum in residential reconstruction costs, with total costs rising 4.5% from January 2024 to January 2025,” states the report. “While the pace moderated to 0.9% in the most recent quarter, every state experienced increases. Kansas topped the list with a 6.91% increase; Washington followed at 6.35%; and Nebraska maintained strong growth at 6.31%.

Commercial Reconstruction Costs

“The commercial sector saw even more pronounced growth, with total reconstruction costs climbing 5.5% year over year and 1.0% in the latest quarter,” according to the report. Rhode Island led all states with a 10.14% increase; Kansas showed remarkable momentum at 8.37%; and Washington rounded out the top three at 8.35%.

Economic Indicators

The report’s analysis of key economic indicators reveals challenges and opportunities for the construction and insurance industries entering 2025. “Builder confidence shows some encouraging signs of recovery, with the NAHB/Wells Fargo Housing Market Index rising one point from December to January and increasing four points over the last quarter,” states the report. “Two of three key components of the Housing Market Index demonstrated improvement: Current sales conditions rose three points to 51; traffic of prospective buyers posted a two-point gain to 33; and sales expectations in the next six months fell six points to 60 in part due to the elevated interest rate environment.”

Notably, the report continues, “builders have begun implementing price reductions—the first such movement since April— signaling potential shifts in market dynamics that warrant close monitoring…The U.S. Bureau of Labor Statistics reports that job openings decreased 13.55% from October to November, following a 9.6% increase the prior month. While the construction industry’s unemployment rate has seen increases since August 2024, reaching 5.20%, this aligns with typical seasonal patterns as building activity naturally slows during winter months, although the levels seen this winter are even lower than prior winter seasons.”

Building permit activity provides additional insights into construction sector dynamics, the report states. According to data from Verisk’s Property Intelligence Solutions, “permits decreased 19.98% from this quarter—a steeper decline compared with the prior quarter’s drop of 12.22%.” Some of the report’s key findings include: Non-residential new construction saw the largest quarterly decrease at 19.98%; new residential construction experienced the smallest decrease at 18.81%; and overall permits are down 6.35% from a year ago, largely due to new residential and commercial construction.