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What are some of the trends seen in catastrophic losses and how are they being addressed? What is driving the severity trends in the property market? Is there continued impact on property claim from economic forces? How have continued labor shortages impacted timelines and repairs?
Q: Most analyses of property insurance challenges highlight the impact of catastrophic losses in recent years. Can you discuss the loss trends you are seeing in this area and how you are addressing them?
Paul Kottler: Beyond major hurricanes, secondary perils like convective storms, hail, and winter weather are driving record-breaking insured losses topping $60 billion in 2023 in the U.S. alone. We’re also seeing increased frequency in “surprise geographies,” which challenges traditional CAT modeling. Inflation has further amplified loss severity, especially for large or complex risks, and underinsurance remains a critical issue. The E&S market and captives continue to grow offering greater flexibility and innovation in risk transfer.
Q: Apart from catastrophic losses, what claims frequency and severity trends have you seen in the property market, and what is driving them?
Paul Kottler: There appears to be an upward trend in both the frequency and cost of non-catastrophic property losses. Water damage remains one of the most commonly reported issues, especially in high-rise buildings where aging infrastructure and deferred maintenance seem to be contributing factors. Fire-related losses, often tied to electrical systems and the integration of newer building technologies, also continue to drive high-severity claims. Additionally, inflation is likely influencing the rising costs of repairs and rebuilds. We’re also seeing more localized weather events causing notable losses. On the severity side, increased litigation and the involvement of public adjusters may also be playing a role. These trends underscore the importance of accurate property valuations and ongoing maintenance strategies.
Q: Have you seen any continued meaningful impact on property claims from economic forces such as inflation or tariffs?
Paul Kottler: Yes—inflation and tariffs are having a meaningful and ongoing impact. Material and labor costs remain elevated, inflating claims severity and increasing underinsurance risk. Supply chain delays are extending repair timelines and business interruption losses. Tariffs on key imports like steel and lumber have raised reconstruction costs by 5-15%, while also creating coverage gaps due to outdated insured values. These pressures are adding both cost and complexity to claims management across the board.
Q: The construction industry continues to face a skilled labor shortage. How has this impacted timelines and repairs for property claims?
Paul Kottler: The skilled labor shortage is significantly slowing repair timelines and increasing costs. Delays in accessing contractors, especially after large events, are stretching claim closure timelines and driving up indemnities on the business interruption and extra expense portions of the claims process. Labor scarcity is pushing up hourly rates, further fueling claims inflation. For commercial properties, the inability to reopen quickly has material financial consequences. As timelines stretch, insurers are adjusting reserves and working more closely with vendors to mitigate delays and manage expectations.
Paul Kottler is president, U.S. Global Technical Services at Crawford & Company. paul.kottler@us.crawco.com