Property Claims Management Disruptions in 2025

Insurers are facing converging challenges, from climate change and rising construction costs to the rapid adoption of AI in claims processing. These changes are also going to cause massive changes in property claims management in 2025. As per Sedgwick’s latest analysis, these factors are reshaping how insurers assess risk, manage losses, and support policyholders across both residential and commercial markets.  

Extreme Weather Events Reshaping Property Claims Management 

Climate change in 2025 has been nothing short of catastrophic and has created unprecedented challenges for property claims management. Sedgwick’s 2025 report revealed that global weather events with losses above $1 billion rose to 54 in 2024, which was up 44 from the prior year.  

• $368 billion in weather-related damages occurred in 2024, with only 40% covered by insurance. 
• Hurricane Helene caused $80 billion in damages, while Hurricane Milton resulted in $34 billion in insured losses. 
• Los Angeles wildfires in January 2025 are estimated to exceed $250 billion in total losses. 

These catastrophic events highlight how insurers must adapt property claims management strategies to respond faster, improve risk modeling, and address financial strain on state-run insurance programs. 

Tariffs Driving Up Costs

The U.S. construction material costs are increasing by billions of dollars due to the tariffs on Canadian and Mexican goods. Sedgwick’s report, citing the National Association of Home Builders, noted tariffs could add $7,500 – $10,000 to the cost of a single-family home rebuild. 

Since property insurance claims are calculated on accurate replacement cost calculations, fluctuating material prices are making claim settlements more complex. Various imported components such as lumber, drywall, and steel are central to U.S. construction. This means that property claims management must now account for unpredictable pricing and supply chain volatility.  

AI Revolutionizing

Another major disruptor of the system is technology. The global AI insurance claims processing market was valued at $514 million in 2024, and according to Sedgwick, it is further projected to grow to $2.7 billion by 2034. 

AI is changing every stage of property claims management: 

• Remote loss adjusting: Policyholders can capture photos and details using AI-enabled self-service tools. 
• Generative AI analysis: Claims professionals can review vast amounts of data more efficiently. 
• Faster claims resolution: Reduced need for on-site adjusters helps insurers lower operational costs while improving speed. 

By integrating AI, insurers are transforming how property claims management balances accuracy, efficiency, and customer experience. 

The Future of Property Claims Management 

With the convergence of climate risk, global trade disruptions, and technological innovation, managing property claims has become more complex than ever. Insurers must balance escalating costs, increasingly severe losses, and rising customer expectations, all while adapting to rapid advances in AI.  

For brokers, insurers, and policyholders alike, staying ahead of these changes will be essential to navigating the evolving property insurance landscape.