Overview
Dynamic trends are influencing the size and complexity of claims around the world. Proactive claims management can help organizations recover swiftly after a loss event and manage potential claims exposures.
According to Aon’s report, climate volatility, cyber threats and supply chain disruptions, among other risks, are leaving organizations grappling with increasingly complex, large claims.
The challenges of managing increasing claims volumes and complex claims in a dynamic environment underscore the need for subject matter claims expertise and a proactive, data-driven approach.
By understanding and addressing the multi-faceted nature of risks and associated claims, businesses can build greater resilience and ensure a faster, more effective response in the face of adversity, Beinsure noted.
Key highlights
- Global insurers face mounting pressure from severe weather, cyber threats, and supply chain disruption—driving larger, more complex claims and underscoring the need for faster, data-driven claims management strategies.
- U.S. and Canada insurers grapple with nuclear verdicts, litigation abuse, and inflated awards—especially in liability, auto, and workers’ compensation—prompting higher premiums and stricter defense oversight.
- Historic heatwaves, floods, and advanced cyberattacks are reshaping the EMEA claims landscape, pushing insurers to adopt parametric coverage and reassess capacity in high-risk and politically unstable regions.
- Insurers in Asia struggle with long claim cycles due to catastrophic events, regulation, and workforce gaps, accelerating adoption of tech solutions to improve efficiency and streamline complex claims.
- Severe natural disasters, rising cyber claims, and a surge in third-party litigation funding increase pressure on Latin American insurers to update valuations, bolster continuity plans, and strengthen cyber readiness.
Insurers must embrace Artificial Intelligence technology to successfully navigate today’s emerging transformative trends that are shaping the insurance landscape. An aging population, reliance on AI, and new technological, environmental, financial and social risks, are top of mind issues for many claims leaders (see How Can AI Technology Change Insurance Claims Management?)
Insurance Claims Trends in North America
Climate-related losses continue to escalate across the Americas. In the U.S., insured losses reached $113bn in 2024, nearly doubling the 21st-century annual average of $58bn.
Canada experienced four major natural catastrophe events in the same year, generating approximately $5.6bn in insured losses.
Cyber risk remains a top concern as the volume and sophistication of attacks grow. Insurers also face challenges in managing complex business interruption claims.
Despite a rise in claim frequency during 2024 and unfavorable loss development on prior-year incidents, the cyber liability market maintained a buyer-friendly position.
Strong capitalization and competitive dynamics supported stable conditions for policyholders throughout the year.
Social inflation continues to dominate claims in the United States and Canada
Nuclear verdicts, litigation funding and aggressive plaintiff bar tactics are driving adverse loss trends for risks with U.S. exposure.
There are a number of jurisdictions in the U.S. that are appealing to plaintiff firms due to the favorable awards emanating from them, including the Pennsylvania Supreme Court, Philadelphia Court of Common Pleas and Michigan Supreme Court, among others cited by the American Tort Reform Association.
Social inflation is significantly impacting general liability, product liability and auto, with claims escalating and jury awards reaching unprecedented levels.
Tariffs imposed by the Trump administration could increase claims costs for property and casualty insurance by $10 bn to $36 bn. 60% of replacement parts used in U.S. repair shops come from Mexico, Canada, and China, Beinsure noted.
Tariffs could disrupt the supply chain, increasing repair times and adding costs for storage fees and rental cars.
Higher import costs could add $3,000 to the price of a new car due to increased production costs in the U.S., the APCIA said.
Cars cross borders multiple times during manufacturing, meaning one vehicle could be hit with multiple tariffs before final assembly. Commercial auto insurance would also be affected.
While litigation system abuse, nuclear verdicts and settlement inflation continue to be of significant concern in the U.S., the increased proactive and collaborative mitigation efforts of insurers, policyholders, brokers and defense counsel are a positive and encouraging development
Mike Merlo, Aon’s chief claims officer for Commercial Risk Solutions in the United States and Bermuda
Canada faces growing pressure from inflation, mirroring broader global trends. Despite structural differences that reduce exposure to U.S.-style litigation, Canadian insurers are tightening oversight of defense counsel appointments and increasing early involvement of external legal teams.
North American employers face rising workers’ compensation costs
North American employers face rising workers’ compensation costs as they struggle to adapt to an aging workforce.
Health issues and care gaps significantly affect both employees and claims budgets. Aon data shows that workers over 45 generate 73% higher average claims costs and miss 13 more days per lost-time claim than younger employees.
In response, some companies have started using health data to shape targeted wellness programs, update workplace design, and improve insurance claims management platforms, Beinsure noted.
These adjustments aim to reduce the long-term financial strain on employers and insurers.
The broader claims environment continues to shift
Social inflation is pushing up claims values, with near-term consequences for reporting timelines and recovery durations.
At the same time, geopolitical tensions and shifting trade rules complicate supply chains, increasing the risk of business interruption.
Aon warns that companies often lack insight into their second-tier suppliers. This blind spot limits their ability to assess risk exposure and understand how policies respond when disruptions occur.
Employers and insurers must adapt quickly to maintain cost control and ensure adequate coverage amid these evolving risks.
Insurance Claims Trends in Europe, the Middle East and Africa
Extreme weather across Europe, the Middle East, and Africa (EMEA) significantly affected both businesses and communities in 2024.
The region recorded its hottest summer to date, triggering widespread wildfires and severe flooding across Spain, Germany, Central Europe, and South Africa.
These events drove insured losses to $19 bn and signaled a broader trend of escalating climate-related risks.
As a result, companies operating in EMEA are paying closer attention to how their policies respond to natural catastrophes. Traditional coverage is no longer sufficient.
Firms are now evaluating additional protection for specific weather risks such as floods and windstorms, and reassessing their financial exposure limits.
We’ve seen some organizations come close to hitting their limits after certain weather events more recently
Michael Sgarlata, Aon’s practice leader for claims preparation and valuation in EMEA
Global supply chain networks are compounding the challenge. Extreme weather and shifting climate patterns are disrupting trade routes, undermining delivery timelines, and leading to financial losses, Beinsure noted.
Because supply chains are now deeply interconnected, a weather event in one region can disrupt operations across multiple markets. To manage this risk, companies are mapping their full supply chains and diversifying sourcing strategies to improve resilience and minimize disruption.
Ransomware is another key issue in the EMEA claims landscape
The number of cyber events reported in the European Union (EU) jumped significantly, in part due to the increase in geopolitical tensions.
Nation-state actors continue to use proxy groups for plausible deniability while cyber warfare tactics, which can be a means of pressuring governments that have publicly voiced criticism, contributing to the evolving cyber threat.
The Russia-Ukraine war continues to bring additional risk factors, including espionage activities or business continuity issues from attacks on critical infrastructure and utilities.
Law enforcement crackdowns and the potential criminalization of ransom payments
Law enforcement crackdowns and the potential criminalization of ransom payments have seen bad actors turn to other targeting methods including business email compromise attacks and website spoofing.
These actors are further empowered by artificial intelligence (AI) to write and execute increasingly sophisticated phishing emails and scams.
Early in 2024, a UK employee made a transfer of $25 mn following a video call with senior management. However, the employee had not been talking to his managers, but to deepfakes created by AI.
The increase in complex claims is prompting enhanced claims management strategies
In the near term, organizations in EMEA should focus on boosting their resilience to protect against flooding and other natural disasters, as traditional coverages may become inadequate.
Parametric is one solution coming to the forefront in this landscape. Unlike traditional insurance, which indemnifies the actual loss incurred, parametric insurance is structured and priced on the probability of a predefined event occurring.
With climate volatility increasingly affecting claims, underwriters are becoming more cautious, with caps on policy limits and a reduction in capacity for high-risk areas.
This shift has led to increased interest in the London insurance market for capacity among clients traditionally covered in the general commercial market.
Insurance Claims Trends in Asia Pacific
The rising number of large and complex claims is putting pressure on claims resources for insurers in Asia, increasing the likelihood of a prolonged claims life cycle for large and complex claims.
To add fuel to the fire, a scarcity of experienced claims professionals is contributing to coverage and quantum issues, while softening market conditions put pressure on claims costs, exacerbating challenges with large claims.
Insurers are proactively addressing this by using new tools in their arsenal to manage claims, increasingly turning to technology to drive efficiencies and reduce turn-around times, particularly for low value and simple claims.
This then helps to deliver an improved claims experience for organizations.
A growing focus on claims performance is leading to deeper pre-loss discussions between insurers and clients in the region on the value of claims, enabling insurers to differentiate themselves through their claims value proposition.
In Australia, an increase in building regulation is impacting insurance following high-profile losses
In Australia, an increase in building regulation is impacting insurance following high-profile losses, such as Mascot Towers — the high-rise residential building deemed uninhabitable in 2019 after structural defects were discovered.
The cladding crisis continues to create challenges, with a notable increase in liability and professional indemnity claims related to combustible cladding materials used in the construction of high-rise buildings.
The number of class actions in Australia has also increased substantially. There are now around 1,000 class action claims in the Australian courts, with a rate of around one new case filed per week on average.
Exposures to climate volatility and extreme weather vary between Asia and the Pacific
While the former is known for its vulnerability to natural disasters and has experienced a rise in the number and cost of catastrophic events, the latter has seen a relatively benign streak of catastrophe claims, with few large weather events in the region in 2024.
An uptick in catastrophic events in Asia coincides with greater asset damage, in part due to rapid urbanization, the construction of buildings in flood prone areas and higher population densities.
Insurance Claims Trends in Latin America
Organizations in the region are becoming increasingly aware of the impact of natural catastrophe perils. Following Hurricane Otis in 2023, three major natural catastrophe events impacted Latin America over the course of 18 months, with the 2024 floods in Porto Alegre, Brazil, standing out as the most severe flooding in the region in the last 100 years.
Natural catastrophes are driving insurers to reassess risk
These events also emphasize the importance of cementing business continuity plans and accurately assessing asset valuations to manage potential future claims effectively.
In Latin America, an increase in litigation funding is impacting the claims environment.
As insureds become more aware of the potential for large court awards, litigation funders are increasingly investing in both litigation and arbitration cases, adding pressure on insurers.
Enrique Morata, Aon’s head of claims for Latin America
Key economies like Brazil, Mexico and Colombia are embracing arbitration due to its efficiency and enforceability under the New York Convention, particularly impacting industries like motor insurance.
Here, claims complexity is heightened by inflation and supply chain issues. Third-party funding arrangements, such as enforcement funding and award monetization, empower claimants to pursue complex cases against larger entities.
The cyber threat landscape in Latin America is increasingly complex and sophisticated
Cyber attacks are becoming more frequent and targeting many industries, with claims ranging into millions of dollars. The threat mirrors global trends, with increasing interconnectedness making systems more vulnerable.
Natural catastrophe claims are expected to increase in frequency and severity due to climate volatility, which in turn could affect coverage limits and pricing.
Moving forward, organizations are becoming more aware of cyber risks as increasingly sophisticated attack methods emerge.
The key cyber developments down the road will likely include increased penetration of cyber insurance, more specialized response teams and a growing need for comprehensive risk management strategies.
The cyber insurance market is already maturing and learning to better address the evolving threat landscape in Latin America. Organizations increasingly understand and appreciate the value of cyber insurance.
The trend of class action lawsuits is likely to continue, particularly where events impact larger groups. Looking ahead, the region may also see increased regulatory scrutiny and the development of standardized legal frameworks to manage the growth of litigation funding.
FAQ
Rising climate volatility, cyber incidents, and global supply chain disruptions have increased both the size and complexity of claims. Social inflation, aging workforces, and litigation funding also contribute to upward pressure on claim values and legal costs.
Insurers are tightening capacity in high-risk areas and revising underwriting strategies. In regions like EMEA and Latin America, extreme weather events have pushed companies to explore additional protections, such as parametric insurance and expanded catastrophe coverage.
Key factors include nuclear verdicts, third-party litigation funding, and aggressive plaintiff strategies. These trends are increasing loss severity in general liability, auto, and product liability claims. Jurisdictions like Pennsylvania and Michigan are seen as favorable venues for high-award litigation.
The volume and sophistication of cyber threats have grown significantly. Insurers are dealing with complex business interruption claims, high legal costs, and new risks like deepfakes and AI-generated phishing. Ransomware remains a top concern in EMEA and Latin America.
An aging workforce in North America is driving higher workers’ compensation costs. Employers are responding with targeted wellness programs, ergonomic workplace updates, and early legal involvement to manage claim frequency and duration more effectively.
Insurers are adopting tech-driven solutions to streamline low-value claims and improve turnaround times. However, a shortage of experienced claims professionals is impacting the resolution of large, complex claims—particularly in construction, liability, and class action cases.
Climate events like the Porto Alegre floods and Hurricane Otis are driving catastrophe claims. Simultaneously, increased litigation funding and arbitration use—especially in Brazil, Mexico, and Colombia—are reshaping the claims landscape, particularly in motor and cyber insurance sectors.
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AUTHORS: Mona Barnes – Aon’s Global Chief Claims Officer, Mike Merlo – Aon’s chief claims officer for Commercial Risk Solutions in the United States and Bermuda, Brian Rosenbaum – chief claims officer for Commercial Risk Solutions in Canada, Joe Galusha – Aon’s North America leader of Risk Consulting, Rob Cusack – Aon’s global lead for claims preparation and valuation, Michael Sgarlata – Aon’s practice leader for claims preparation and valuation in EMEA, Jamie Sparkes – Aon’s Chief Claims Officer, Commercial Risk Solutions, Asia, Enrique Morata – Aon’s head of claims for Latin America
