What is the difference between a spiral and pirouette? They are both a spin, but one is controlled and the other is not.
A current industry report indicates that there are fewer homeowners claims than in the past but the costs per claim are significantly higher.
LexisNexis, which is a funny name but a serious source, reports a genuine paradox:
A Bite-Size Summary of the LexisNexis Report
📊 All Peril Trends
- Severity Reached an All-Time High: Claim severity jumped 25.9% from 2024 and 93.2% compared to 2019.
- Frequency and Loss Cost Dropped: Claims frequency decreased by 23.8% and overall loss cost fell by 4.4% year-over-year.
- Long-Term Costs Remain Elevated: Despite the minor annual drop, 2025 was still the third most expensive year for loss costs in seven years, tracking 50.0% higher than in 2019.
🔥 Fire and Lightning (The Defining Perils)
- Cost Surge: Driven primarily by the January 2025 Los Angeles wildfires, Fire and Lightning loss costs spiked 76.8% and severity rose 67.3%.
- Historical Wildfire Damage: The Los Angeles wildfires cost an estimated $61.2 billion, making it the costliest recorded wildfire in U.S. history and accounting for more than half of the country’s total $115 billion climate disaster damages in 2025.
🌪️ Wind and Hail Perils
- Overall Decrease: Wind loss costs dropped 50.4% and severity fell 12.0% due to fewer catastrophic wind events compared to 2024.
- Significant Local Outbreaks: Despite the broader decline, a major central U.S. tornado outbreak in mid-March cost $11 billion, ranking as the second costliest weather event of the year.
- Hail Flattening: Hail loss costs fell 38.4% from a seven-year peak in 2023, while severity remained flat compared to 2024.
🏠 Non-Weather-Related Perils
- Water Damage: Non-weather water loss costs dropped 6.4%, but severity rose 2.5%. Severity has climbed 63.16% since 2019 due to inflation and rising labor/material costs.
- Liability and “Social Inflation”: Liability loss costs dipped 4.0%, but severity increased by 12.8%. This rise points to social inflation, where increasing litigation costs push up liability claims above standard economic inflation.
Does anyone besides me find it sobering that 2025 was top-three in loss costs over a seven-year span? The quiet hurricane year was top three? California wildfires accounted for more than half of the 2025 climate disaster costs.
It’s not always the frequency of claims these days; it’s the severity.
The Questions Raised by the Cost Per Claim Surge
#1 — Will lower frequency create false confidence?
Chicken Little is a nuisance with his drama. But he isn’t wrong to squawk.
It is human to adapt to new realities and grow comfortable in them. My generation grew up dialing rotary phones and watching fuzzy TV picked up by temperamental antennae. We had kinfolk we only saw once in a blue moon and never talked to, unless Mom called us to the phone to say hi to Aunt Bessie.
Look at us now.
The sky is not falling, but the costs are rising anyhow.
#2 — Should adjuster claim loads be measured by claim count or complexity?
Note: Severity is the monetary size of the loss. Complexity is the amount and difficulty of the work required.
The trend toward smaller claim loads has been in place for some time. Insurers frequently pressure their partners to deploy more adjusters to create better cycle times. The pressure from DOIs, the press, elected officials, and claimants demands it.
Gone are the days of 100 pending files for the field adjuster.
One of the first “axioms” I heard upon entering this business was, “The only good claim is a closed claim.”
There is some logic in that, for sure. The longer a claim lingers or languishes, the greater the tension, the unhappier the customer, and the higher the cost.
But cycle times are only one reason to lessen an adjuster workload.
Another reason is complexity. More complex losses require more time. There are multiple moving parts, such as engineer reports, attorney and public adjuster involvement, general contractors, etc.
Five complex losses may far exceed 50 minor wind, water backup, or simple hail losses in terms of expertise, documentation, or workload.
#3 — How do higher-severity and more complex claims raise the bar for adjuster expertise?
Claims adjusting is a high-turnover business. Adjusters come and go. Many do not make it through their first storm, while others work one or two storms before moving on. I have addressed the adjuster turnover problem (especially on the independent adjuster side) previously.
The issue here is that there is no teacher so reliable as experience. We must, as an industry, work to recruit, train, and retain top talent. Today’s promising prospect is tomorrow’s seasoned veteran.
What does this look like in real terms?
- Focus on getting the industry and its opportunities in front of a younger audience, in venues such as high schools, college campuses, and job fairs.
- Provide world-class education in a real-world context. This is the reason Adjust U exists.
- Launch new careers by giving them a chance. The balance between loyalty to your established workforce and developing new talent is delicate, but if we fail in it, we age out.
The world of claims keeps on spinning. Through proper preparation, focused education, and agile operations, we can manage the pirouette and avoid the spiral.
Thousands of claims jobs open annually, yet the workforce is shrinking? Why is this? What can we do about it? We will dive a little deeper into these questions next week.
This article, written by Gene, originally appeared on the LinkedIn newsletter, Axiom.