The insurance industry is facing a structural reckoning. Climate change is no longer a future risk to model, it is a present operational reality generating record losses, destabilizing regional markets, and forcing carriers out of entire states. For claims organizations, the question is no longer whether losses will keep rising. It is whether your insurance claims management infrastructure is built to handle what is already here.
The answer, for most carriers, TPAs, and independent adjusters, is: not yet. But it can be.
The Numbers Have Become Impossible to Ignore
The data from the past several years tells a consistent story of accelerating exposure.
In 2023, the National Oceanic and Atmospheric Administration (NOAA) recorded 28 separate weather and climate disasters each causing losses of at least $1 billion, a new U.S. record, surpassing the previous high of 22 set in 2020. Total losses reached at least $92.9 billion. For context, in the 1980s the U.S. averaged just 3.3 billion-dollar events per year. By 2019–2023, that average had climbed to 20.4.
2024 was worse. Globally, insured losses from natural catastrophes reached $140 billion, the third-highest year on record, per Munich Re, against a ten-year average of just $98 billion. In the U.S. alone, insured nat-cat losses hit $117 billion, exceeding the rolling ten-year average by 52%, according to the Yale Law Journal. Swiss Re noted that insured losses have now surpassed $100 billion for five consecutive years.
Then came 2025. The Los Angeles wildfires alone caused an estimated $40 billion in insured losses, the largest wildfire loss event in history. The first half of 2025 produced $100 billion in global insured losses, 40% higher than H1 2024 and more than double the 21st-century average of $41 billion, per Aon. Verisk’s 2025 Global Modeled Catastrophe Loss report pegged the global modeled average annual loss from natural catastrophes at $152 billion and rising.
This is not a cycle. This is the new baseline.
For insurance claims teams, this baseline translates directly into sustained high-volume operations, elevated loss adjustment expenses (LAE), and unrelenting pressure on combined ratios. Carriers that rely on claims infrastructure designed for a calmer era will not survive this environment intact.
Insurers Are Already Exiting Markets They Cannot Afford to Stay In
The financial consequences of climate-driven loss accumulation are already reshaping the competitive landscape not in the future, but right now.
AM Best reported that the U.S. property and casualty market recorded a $24.5 billion net underwriting loss in just the first half of 2023, nearly matching the full-year 2022 underwriting loss of $26.5 billion. The reinsurance market reached a hard market inflection in 2023, with property catastrophe reinsurance pricing rising sharply at the January 1 renewal, per Fitch Ratings, loss-free U.S. accounts were generally up 20% to 50%, the highest risk-adjusted rate increases in 17 years, per Guy Carpenter.
The human consequences are most visible in Florida and California. State Farm and Allstate stopped writing new property policies in California, citing wildfire risk, historic construction cost increases, and a difficult reinsurance market. Farmers exited Florida, affecting some 100,000 policyholders. Six Florida insurers were declared insolvent in 2022 alone. As homeowners are dropped or face premiums up to four times the national average, many are being priced out of coverage entirely or out of the regions they have lived in for decades.
For carriers still writing in high-risk markets, the margin for operational inefficiency has collapsed to near zero. Every claim that is handled slowly, disputed unnecessarily, or closed without accurate documentation increases LAE and worsens the loss ratio. There is no longer a buffer to absorb it.
This is why carrier claims management software has moved from a productivity tool to a financial imperative. Carriers that cannot demonstrate fast, accurate, and compliant claims handling will face the same exit decision that has already pushed their competitors out of the market.
The Loss Ratio Problem Is Solvable on the Claims Side
Underwriting tightening, premium increases, and geographic withdrawal are all valid strategic responses to climate risk. But they are also slow, blunt, and politically contested. Claims handling is where carriers have the most immediate, measurable control over their financial outcomes.
Paid losses combined with investigative and settlement expenses accounted for approximately 76% of U.S. premiums collected in 2022, according to Deloitte. The combined ratio for the U.S. P&C industry climbed from 98.8% in 2000 to 102.6% in early 2023 meaning the industry was paying out more than it took in. Every point of combined ratio improvement has direct, quantifiable value.
Modern claims management software drives that improvement through several interconnected mechanisms:
Faster cycle times reduce the window during which open claims accumulate reserve, litigation risk, and policyholder frustration. A claim closed in five days rather than forty is a fundamentally different financial and reputational event.
Automated workflows free experienced file handlers from administrative work: data entry, document routing, status updates, so they can focus on claims that require judgment: complex losses, coverage disputes, and large-loss negotiations.
Structured FNOL intake via purpose-built FNOL software ensures that first-notice data is complete, accurate, and properly routed from the first moment of contact eliminating the rework and delays that stem from incomplete intake at the back end.
Mobile field documentation through mobile claims management tools enables adjusters to capture structured photo evidence, damage notes, and coverage flags directly from the field, in real time, even in low-connectivity post-disaster environments.
Real-time visibility via centralized claim tracking software gives supervisors and leadership a live view of the entire book: open claims, adjuster workloads, settlement velocity, and reserve adequacy, so decisions are made on current data rather than stale reports.
Each of these capabilities individually reduces cost. Together, as an integrated claims management system, they compound producing the kind of loss ratio improvements that show up materially in quarterly financials.
For a detailed analysis of the financial levers, see VCA’s white paper on managing claims to achieve profitability.
The CAT Surge Problem Requires a Specific Solution
The broader climate loss trend is accompanied by a surge problem that standard claims operations cannot handle. When a major hurricane, wildfire complex, or severe convective storm event strikes, insurers receive thousands, sometimes tens of thousands of claims within 48 to 72 hours. The operational profile of a CAT event is categorically different from steady-state claims handling.
The 2024 hurricane season saw tropical cyclones alone contribute $52 billion in insured losses globally, with U.S. hurricanes accounting for the majority. The 2025 wildfires produced $40 billion in insured losses from a single event. These are not anomalies, they are the new shape of the loss distribution.
CAT claims software built for surge environments provides capabilities that standard platforms do not:
- Auto-scaling FNOL intake that handles 10,000+ submissions per day without manual triage bottlenecks
- Rapid adjuster onboarding for temporary CAT deployment staff, with role-based access controls that expire automatically when the deployment ends
- Bulk claim routing and triage by peril type, severity, and geography, so the right adjuster is assigned to the right claim without supervisor intervention
- Broadcast policyholder communication that sends status updates to thousands of claimants simultaneously, reducing inbound call volume and complaint rates
- Audit-ready documentation that protects carriers and adjusters against the post-event regulatory scrutiny that has followed every major CAT event in recent years
The difference between managing a CAT surge and being overwhelmed by one is almost entirely a function of whether the right claims management software is in place before the event not after.
Thunderstorms, Hail, and the “Secondary Peril” Problem
A common misconception is that climate-driven claims inflation is primarily a CAT event problem. The data increasingly contradicts this. Swiss Re reported that insured losses from severe thunderstorms alone reached a record $60 billion in 2023. In 2024, severe convective storms in the U.S. caused $41 billion in insured losses, the second-costliest year on record for that peril type.
These are not major named storms. They are the thousands of localized hail, wind, and thunderstorm events that occur across the continental U.S. every year, events that each generate modest individual losses but collectively overwhelm claims operations through sheer frequency.
Verisk’s 2025 report found that severe thunderstorms and other frequency perils now account for two-thirds of total modeled global insured property losses. This means that for most carriers, the bigger operational challenge is not one $40 billion event per year it is 200 $200 million events per year, occurring continuously, with no defined start and end date.
Managing this environment requires property insurance claims management systems that are optimized for throughput, not just crisis response. Workflow automation, adjuster assignment efficiency, and fast digital settlement via digital claims payments are what determine profitability across the aggregate book not just performance in the peak CAT season.
TPAs and IA Firms: Elevated Exposure, Elevated Opportunity
The climate claims crisis is not only a carrier problem. TPAs and independent adjuster firms are experiencing the same volume pressures, with the added complexity of multi-client operations and the reputational risk of being associated with slow or disputed claims outcomes.
For TPAs managing programs across multiple carriers, the ability to deploy TPA claims management software that scales across clients with separate reporting, access controls, and SLA tracking per account is the difference between a profitable CAT season and an operational crisis.
For IA firms, deploying independent adjuster claims software that generates complete, defensible, tamper-evident inspection records is not just an efficiency play. In a post-Ian environment where carriers have been penalized for alleged adjuster report manipulation, documentation integrity is a competitive and legal differentiator.
For large, multi-entity organizations operating across all three segments, enterprise claims management software with cross-entity analytics and consolidated reporting provides the visibility needed to manage performance at scale.
The Policyholder Experience Cannot Be a Casualty of Volume
One of the subtler risks in high-volume claims environments is that speed and scale come at the expense of the policyholder experience. This is not an acceptable trade-off and not just for ethical reasons. As carriers exit markets and premiums rise, policyholder retention has become a genuine strategic priority. A poor claims experience is the primary driver of churn, and in a market where many policyholders already feel underserved, the bar for retention is higher than it has ever been.
The InsuredConnect app provides policyholders with real-time claim status visibility, two-way communication with their assigned adjuster, and document submission capability from their mobile device reducing inbound call volume, accelerating documentation collection, and materially improving satisfaction scores without adding headcount.
VCA’s white paper on how tech improves claim experience explores this in detail including the quantified relationship between claims technology investment and Net Promoter Score outcomes.
The Urgency Is Real: Why Waiting Is Not an Option
The situation carriers face today is not a slow-moving trend that allows for multi-year technology modernization timelines. Natural disasters are generating losses now. Hard market conditions are pressuring combined ratios now. Regulators are scrutinizing claims handling practices now.
Carriers, TPAs, and IA firms need a modern claims management system that can be deployed alongside existing systems not a rip-and-replace project that takes 18 months and carries execution risk. The operational gap between where most claims organizations are today and where they need to be is real, but it is closeable.
VCA Software’s claims platform is built for exactly this moment: purpose-built for property and casualty claims, deployable in weeks, and designed to scale from routine daily operations to a full CAT deployment without requiring a different system or a separate crisis workflow.
If your organization is evaluating claims technology in the context of rising climate losses, we’d welcome the opportunity to show you how VCA addresses each of the challenges outlined here. Request a Demo →
Frequently Asked Questions: Insurance Claims Management and Climate Change
How is climate change affecting insurance claims management operations? Climate change is increasing the frequency and severity of weather-related loss events, driving sustained high claim volumes that standard manual workflows cannot handle efficiently. Carriers are experiencing elevated combined ratios, higher loss adjustment expenses, and rising litigation rates. Modern claims management software addresses these pressures through workflow automation, mobile field documentation, real-time tracking, and scalable CAT surge capabilities.
What is the connection between claims management and loss ratios?Â
The loss ratio, the percentage of premiums paid out in claims, is directly influenced by how efficiently and accurately claims are handled. Faster cycle times reduce reserve duration and litigation risk. Structured intake reduces rework. Automated workflows lower LAE. Together, purpose-built claims management technology can measurably improve loss ratios across a carrier’s book of business.
Why are insurers leaving Florida and California?Â
Both states have seen sustained underwriting losses driven by climate-related perils, hurricanes and flood surge in Florida, wildfires in California. Combined with elevated litigation costs (particularly in Florida) and reinsurance pricing pressure, carriers have been unable to achieve underwriting profitability in these markets at sustainable premium levels. Several major carriers have stopped writing new policies or exited entirely.
What is a “secondary peril” and why does it matter for claims operations?Â
Secondary perils are high-frequency, moderate-severity events: hail, severe thunderstorms, tornadoes, wildfires as opposed to “primary” perils like major hurricanes. Historically treated as manageable background noise, secondary perils now account for the majority of annual insured losses globally. For claims operations, this means the challenge is not just preparing for one annual CAT event, it is maintaining throughput efficiency across hundreds of smaller events distributed throughout the year.
How quickly can VCA Software be deployed?Â
VCA’s platform is designed for implementation in weeks, not months, and can operate alongside existing core systems. Most file handlers are productive within two hours of training.
VCA Software builds claims management software purpose-built for carriers, TPAs, and IA firms navigating the realities of today’s climate-driven claims environment. Explore our CAT claims software, review the white paper on leveling loss ratios in the age of inflation, or contact us to discuss your specific operational challenges.
