AI and Analytics Drive Evolution in Claims Management
Building Costs and Coverage Gaps Widen Amid Growing Global Catastrophe Losses
Insurance claims are facing significant challenges as extreme weather events become more frequent and severe. Crawford & Company’s latest report highlights how climate change is increasing volatility in the insurance sector, pushing it into what the company describes as a “new normal.” This shift demands fresh strategies for managing large-loss events that are growing in scale and complexity.
Rising inflation is a key factor driving up claims costs. Prices for building materials and labor are elevated due to ongoing supply chain disruptions and international tariffs. On top of that, stricter rebuilding standards imposed by regulations in some regions are prolonging claim timelines and increasing expenses.
Business Interruption Claims on the Rise
Business interruption claims are becoming more frequent and impactful. In 2025, nearly one-third of companies identified business interruption as a major risk. This is largely due to the increasing number of natural catastrophes and ongoing disruptions in global supply chains, which have caused longer and more financially damaging operational stoppages.
Crawford recommends several proactive approaches, including the use of catastrophe modeling, satellite imagery, and other technologies to evaluate property conditions before and after weather events. Multiple events occurring in quick succession complicate damage assessments, making it harder to separate initial damage from subsequent impacts.
Technology investments are central to addressing these issues. Crawford continues to integrate AI-powered tools to assist adjusters throughout the claims process. These tools are expected to handle over half of claims processing by 2025, speeding up turnaround times, improving decision-making, and allowing adjusters to focus on more complex cases.
Rohit Verma, president and CEO of Crawford & Company, emphasized that the industry must move beyond traditional methods. He stated, “It is imperative that as an industry we are thinking far beyond traditional approaches and developing pioneering initiatives built upon an expanding base of expertise to ensure we can continue to deliver for clients now and into the future against such an uncertain and rapidly changing loss backdrop.”
Claims Trends and Industry Concerns
Global claims trends reinforce the report's findings. In 2024, natural disasters caused approximately $320 billion in economic losses worldwide. However, only $140 billion of these losses were insured, the highest insured total since 2017. This exposes the financial risks tied to urban development in high-risk areas and the growing impact of climate-driven events.
The gap between insured and uninsured losses remains a pressing issue. With just 40% of total catastrophe losses covered by insurance, there is increasing focus on closing this protection gap, especially in developing markets where insurance penetration is low.
- Increased inflation and supply chain disruptions are raising claim costs.
- Business interruption risks are intensifying due to natural disasters and supply chain issues.
- Advanced technologies like AI and satellite data are helping adjusters manage complex claims.
- More than half of claims processing is expected to be automated or AI-assisted by 2025.
- Insurance penetration gaps highlight the need for expanded coverage and innovative solutions.
For insurance professionals looking to enhance their understanding of AI applications and automation in claims management, resources such as Complete AI Training's latest AI courses provide practical insights and skill development opportunities.
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