Changes in Policy Language, Provisions Suppressing Claim Volume, Report Shows

U.S. claim volume fell 8.9% from last year, with total claims dipping 13.1% below the five-year average, despite several large catastrophe events, a new report shows.

What’s driving the trends isn’t the weather. Changes in policy language and policy provisions are a big factor in suppressing the volume, authors of Verisk’s property report on the first quarter say.

“We’re really starting to see increased usage across the board of those ACV-only loss provisions and loss settlements and endorsements than we have in the past,” said Susan Fleming, vice president of business intelligence and insights at Verisk.

Verisk is seeing more carriers using the percentage deductible than before, requiring policyholders, for example, to pay 2% of the overall value of the home to repair for a $3,000 water loss.

“That wind and hail deductible is consistently, almost always utilized, or a lot more frequently than we saw in the past, and as insureds have to take a portion of that loss and are responsible for it, we start to see fewer and fewer claims being filed,” she said.

Water accounted for 31.1% of U.S. property claims in the first quarter, increasing 6% over last year. That was followed by wind (20.4%) and then hail claims. Hail claims, which have received a lot of attention lately due to their increasing volatility, actually fell 23.6%.

That trend of falling hail claims appears to back up when Fleming is seeing in the data. Average U.S. residential roof replacement costs jumped 33% and repair costs rose 25% in 2025 compared to the prior four-year average despite a sharp decline in claims volume, a report out from Verisk in June shows.

The claims report also examines losses from winter storms Fern and Hernando, which produced more than 46,000 ice, snow and collapse claims with a $478 million in estimated replacement costs. Fern, which hit from January 23 to 29, affected a large portion of the East. Hernando hit the Northeast from February 21 to 23 and produced blizzard conditions.

Despite the national decline in volume, a handful of Western states saw big claims increases, including Alaska (121%), Arizona (78%), Montana (49%), the Verisk Q1 2026 Property Report shows.

The report shows total reconstruction costs are still on the rise.

U.S. total reconstruction costs rose 3.4% from March 2025 to March 2026, down from the 5.3% pace last year. Quarter-to-quarter, costs rose 0.7% in Q1 2026 compared with 1.0% in Q4 2025, showing cost inflation is moderating even as prices continue to rise, the report shows.

Verisk attributes much of the increase to fuel shipping backlogs and disruptions in the Strait of Hormuz, as fuel inflation flows into labor, transportation and construction costs.

“Rising fuel costs can be a primary driver of construction cost increases,” the report states. “Higher fuel prices directly impact crew transportation, equipment mobilization, and daily operating expenses, which are often incorporated into billable labor rates.”

Average claim severity for the first quarter was $16,079. After adjustments, the quarter was 12.11% below 2025, but only 3.42% below the five-year historical average.

The figure could rise and claims continue to mature, the report shows.

“This figure is expected to rise as complex claims close,” the report states. “Q4 2025, previously reported at $17,167, has since matured 10.15% to $18,910—the second highest quarterly average in recent record, behind only 2022 and just slightly above 2024’s $18,758. Using a 10% maturation estimate, Q1 2026 could mature to roughly $17,687, which would make 2026 the second-highest year for average severity after 2025.”