Climate and inflation pressures drive record losses, according to LexisNexis Risk Solutions

LexisNexis Risk Solutions, a provider of data and analytics for the insurance and financial industries, has released its 10th annual US Home Trends Report.

The study offers a detailed look at how claims trends across different perils are shaping the US home insurance market, helping carriers make more informed decisions in an increasingly challenging environment.

Drawing from extensive data on loss cost, claims frequency, and severity, the report highlights how inflation and the growing intensity of climate-related events continue to influence the home insurance landscape.

It also analyses regional differences, catastrophic event impacts, and shifts in seasonal loss patterns across US states.

According to LexisNexis Risk Solutions, All Peril severity rose 9% between 2023 and 2024, the largest increase in seven years.

The United States experienced 27 climate disasters causing $1 billion or more in damages during that period, a figure 21% above the long-term average. Overall, All Peril loss costs in 2024 were 49.7% higher than in 2019. Catastrophe claims made up 42% of total claims in 2024, while catastrophic losses surged to 64%, also the highest in seven years.

Wind-related claims saw some of the most dramatic increases, with severity up 23.5% and loss costs climbing 30.7%, driven largely by Hurricanes Helene and Milton, two of the costliest weather events of the year. Losses peaked in September, the height of hurricane season.

Hail losses also remained a major contributor, with costs 19% above the seven-year average and nearly two-thirds classified as catastrophic. Other weather-related perils varied: Fire and Lightning loss costs declined 3%, Non-Weather-Related Water fell 4.3%, while Weather-Related Water increased 25.4%.

“US home insurers are facing two converging challenges: climate-driven catastrophes intensifying and inflation continuing to drive up repair and replacement costs,” said George Hosfield, vice president, home insurance, LexisNexis Risk Solutions.

“These pressures are helping to contribute to higher premiums for US consumers as carriers work to manage rising loss costs. The data shows just how critical it is for the insurance industry to leverage more advanced analytics to help anticipate risk and maintain resilience. Last year, catastrophe claims accounted for nearly two-thirds of all losses, which was the highest level we’ve seen in the seven years included in this year’s study.”

LexisNexis Risk Solutions found that, across all perils, the home insurance industry continues to experience an upward trajectory in loss costs. Severity reached its highest level in seven years, standing 21% above the long-term average, while claims frequency declined 11.6% year over year.

The company reported that Nebraska recorded the highest All Peril loss cost in 2024, largely due to hail damage, while Colorado led in catastrophic loss costs. Other states with elevated loss costs included Minnesota, Louisiana, and South Dakota, whereas Nevada, New Hampshire, West Virginia, Vermont, and Maine had the lowest.

Hail activity remained a key driver of claims nationwide. LexisNexis Risk Solutions documented 5,373 hail events in 2024, a slight decrease from 2023, but the resulting loss costs continued to climb.

The US recorded 11 major hail or severe weather events last year, each causing more than $3 billion in damage, a sharp contrast to previous decades, when such losses rarely exceeded $500 million annually. The states most affected included Colorado, Nebraska, and Kansas, while Texas saw hail surpass other weather events as its costliest peril. The period between April and June continued to mark the most active hail season.

Wind, water, fire, and lightning perils also revealed notable trends. Wind frequency rose 5.8% between 2023 and 2024, with loss cost up 30.7% and severity up 23.5%. Fire and Lightning perils, meanwhile, saw overall decreases in loss cost (-3%) and frequency (-13.5%), but severity climbed 12.2%, influenced by major fires in New York, Connecticut, and New Mexico. Catastrophic claims accounted for about 10% of all Fire and Lightning claims in 2024.

Weather-Related Water losses grew significantly, with loss cost increasing 25.4% and severity rising 29.6%, despite a 3.2% decline in frequency.

LexisNexis attributed the spike to widespread flash floods and extreme winter weather, noting that 2024 saw 91 flash flood emergencies, the most since 2003. Oregon recorded the highest Weather-Related Water loss cost due to a severe winter storm with high winds and freezing temperatures that led to widespread burst pipes. Across the country, 64% of water-related claims were deemed catastrophic.

Non-weather-related claims, including those tied to plumbing leaks and appliance malfunctions, showed moderate improvements.

LexisNexis reported that Non-Weather-Related Water loss cost fell 4.3% and frequency dropped 9.9%, although severity increased 6.2%. Theft claims also declined sharply, with both loss cost and frequency down about 20%, though severity edged up slightly (1.1%), reflecting higher replacement costs for luxury consumer goods.

Liability-related losses increased 5.5% in 2024, with severity up 18.8% and frequency down 11.2%. Other miscellaneous perils — such as property damage not classified elsewhere, showed a decline in loss cost (-24.6%) and frequency (-17.3%) but a modest 2.4% increase in severity.

“The sharp rise in severity across multiple perils highlights the need for carriers to think beyond short-term rate actions,” added Hosfield.

“Carriers that leverage more advanced property data insights–from roof condition to water damage risk–can make more informed underwriting decisions and stand a better chance of weathering the storm even as climate volatility and inflation continue to pressure the market.”