Paint brands have already highlighted standout shades—Behr’s Hidden Gem (smoky jade), Valspar’s Warm Eucalyptus (muted green), and Benjamin Moore’s Silhouette (deep espresso with charcoal undertones). But designers reveal that homeowners are asking for even more adventurous palettes: walnut instead of white oak, merlot over greige, and color pairings that might seem unusual but create a striking, harmonious effect in practice.

Here’s what’s trending in 2026.

Warmer, Deeper Neutrals

Neutrals remain popular, but they are now warmer and richer. Stephanie Hunt, founder of The Flairhunter, notes, “Clients are moving away from ‘millennial grey’ and gravitating toward wood finishes and colors that feel inviting rather than cold or minimal.”

Emily Lindemann of Ruggles Lindemann Bell adds that browns, rusts, and greens are in high demand.

Jen Baxter of Baxter Hill Interiors predicts earthy, organic mid-tones like chalky rose, smoky blue, tobacco brown, dusty olive, sunbaked terracotta, and soft charcoal—colors that feel naturally worn and timeless. Matthias Silverton of The Snug Co. highlights rich, sun-soaked combinations such as olive green, mustard yellow, and burnt orange. Essentially, colors inspired by nature and sunlight are leading the way.

Dusty Jewel Tones

Jewel tones are returning, but with a muted, vintage feel. Hunt explains, “Think of an emerald ring rediscovered after decades in a jewelry box.”

Emily LaMarque of Emily LaMarque Design Studio sees clients drawn to deep, saturated colors: Prussian blue, deep sapphire, muted emeralds, earthy greens, and soft cranberry reds. Manuella Moreira adds that these hues add depth and sophistication, grounding rooms while layering in personality through complementary tones like amethyst.

Unexpected Color Combinations

The boldest trend of 2026 is unexpected, high-contrast color pairings. Sarah and Rebecca Goesling of Goesling Group say, “Colors are less about being classic and more about evoking emotion, mood, and memory.”

They highlight energetic shades—teal, cobalt, periwinkle, chartreuse—balanced with grounded, neutral colors. Favorite combinations include:

• Satin periwinkle with velvet chocolate

• High-gloss chartreuse with matte baby blue

• Matte tangerine with metallic moss

Hunt also points out “color capping,” where a single color is used in multiple shades throughout a space—for example, the ceiling and upholstered headboard in one tone (light and dark variations) while chairs, bedding, and accessories complement with similar shades.

In 2026, interior color trends focus on warmth, richness, and creativity, blending earthy neutrals with jewel tones and bold contrasts for interiors that feel inviting, dynamic, and expressive.

These medications, known as GLP-1 receptor agonists, are designed to suppress appetite and reduce food intake. While they tend to help those who overeat due to environmental cues—such as how food looks or smells—they appear to be significantly less effective for people who eat in response to emotions like stress, anxiety, or depression.

Published on September 16 in Frontiers in Clinical Diabetes and Healthcare, the research urges healthcare professionals to carefully evaluate a patient’s eating patterns before prescribing GLP-1 drugs or recommending bariatric surgery.

“These drugs are most effective for individuals whose overeating is triggered by external stimuli,” said Dr. Daisuke Yabe, the study’s senior author and a professor of medicine at Kyoto University. “But when emotional eating is the primary driver, the benefits may be limited.”

Medical experts not involved in the study echoed the findings, emphasizing that addressing psychological factors is key to successful, lasting weight loss.

“It’s not just about reducing calories,” said Dr. Mir Ali, bariatric surgeon and medical director at MemorialCare Surgical Weight Loss Center in California. “We need to understand the reasons behind a person’s eating habits.”

Dr. Zhaoping Li, professor of clinical medicine at UCLA, added, “There’s no one-size-fits-all approach. Each patient brings their own history and emotional relationship with food.”

Registered dietitian Kristin Kirkpatrick of the Cleveland Clinic said the research reinforces what many clinicians already observe in practice.

“Though the study sample was small, the message is important,” she said. “Medication should be paired with education and support to help build healthier, long-term habits—especially once treatment ends.”

Study Summary: How Eating Behaviors Impact Weight Loss Outcomes

The study followed 92 adults in Japan diagnosed with type 2 diabetes as they began treatment with GLP-1 medications. Researchers assessed participants at the start of the study, after three months, and again at one year, collecting data on weight, diet, body composition, and various health markers like cholesterol and blood glucose.

Participants were divided into three groups based on their eating behavior:

• Emotional Eating – consuming food in response to negative emotions

• External Eating – eating triggered by visual or sensory food cues

• Restrained Eating – intentionally limiting food intake to lose weight

While participants across all groups lost weight and body fat and experienced improved cholesterol levels, those in the external eating group saw the most notable and sustained improvements. Conversely, individuals in the emotional and restrained eating categories were more likely to revert to prior habits by the end of the study.

“Eating is often driven by more than just hunger,” Dr. Li explained. “For many people, it’s a coping mechanism for emotional discomfort.”

Dr. Ali noted that emotional eating can be subtle and difficult to diagnose, which is why involving mental health professionals in the treatment process can be essential.

“If the underlying problem isn’t hunger, then simply suppressing appetite may not be effective,” he said.

Managing Emotional Eating

Kirkpatrick emphasizes that emotional eating must be addressed by helping individuals build a healthier relationship with food.

“People often turn to food for emotional comfort, but the relief is temporary—especially when the choices are highly processed and low in nutrition,” she said. “That creates a cycle of emotional highs followed by crashes, which can lead to repeated overeating.”

For those affected by external cues, the focus becomes recognizing and managing those triggers.

“Some people go out of their way to get fast food simply because they’re thinking about it,” Kirkpatrick explained. “Others are swayed by just seeing or smelling food. Understanding these patterns is essential for making lasting changes.”

In the case of restrained eating, Kirkpatrick recommends an intuitive eating approach that avoids labeling food as “good” or “bad.”

“Strictly avoiding certain foods can backfire, leading to bingeing and guilt,” she said. “Instead, we aim to find balance—where 80% of the time, the focus is on nutrient-rich foods, and 20% allows for flexibility and enjoyment.”

Obesity in the U.S.: A Growing Concern

According to the Centers for Disease Control and Prevention (CDC), approximately 40% of U.S. adults are classified as obese. Prevalence is highest among those aged 40 to 59 and remains consistent between men and women.

Obesity is generally defined by a body mass index (BMI) of 30 or higher or a waist circumference above 40 inches for men and 35 inches for women. It significantly increases the risk of various chronic health conditions, including:

• Heart disease

• Type 2 diabetes

• High blood pressure

• Fatty liver disease

• Gallbladder problems

• Sleep apnea

To help manage obesity and type 2 diabetes, doctors often prescribe GLP-1-based medications like Ozempic and Wegovy (semaglutide), as well as Mounjaro and Zepbound (tirzepatide). These drugs are typically used alongside lifestyle interventions such as diet changes, increased physical activity, and better sleep habits.

Kirkpatrick noted that many patients report a welcome break from constant food-related thoughts while taking these medications.

“Some people say they finally feel free from the mental noise around eating,” she said. “But they worry about what will happen when the medication stops—will their old habits return?”

The Bottom Line

While Ozempic, Wegovy, and similar weight loss drugs can be highly effective tools, they aren’t a one-size-fits-all solution—particularly for individuals whose eating is emotionally driven. Experts agree that understanding and addressing the root causes of eating behaviors is essential for long-term success.

The most effective approach combines medication with mental health support, behavior modification, and sustainable lifestyle changes. Helping people build a healthier, more intuitive relationship with food can make a significant difference—during treatment and beyond.

In a recent statement, Ann Modica, Director of Credit Rating Criteria at AM Best, emphasized that this looming fiscal standoff arrives at a time when the broader U.S. economy is already showing signs of strain.

“The potential government shutdown coincides with increasing evidence of a slowing U.S. economy,” said Modica.
“Annual real GDP growth is projected to decline further in 2025, inflation remains stubbornly above the Federal Reserve’s 2.0% target, and the labor market is beginning to show signs of weakening.”

Modica also noted that although tensions around global trade have eased slightly in recent months, ongoing uncertainty continues to weigh heavily on corporate sentiment, potentially holding back future investment and hiring.

Insurers Face Potential Ripple Effects

AM Best cautioned that the extent to which insurers will be affected depends heavily on the duration of the shutdown. While previous shutdowns have generally been brief, the possibility of a more prolonged government freeze could present both direct and indirect challenges to the insurance industry.

The last major shutdown, which began in December 2018, stretched over 34 days, making it the longest in modern U.S. history. Even that relatively short disruption had widespread consequences, including delayed government services and an overall dip in economic activity.

In a longer shutdown, insurers could feel pressure as consumer confidence weakens, business investment stalls, and financial markets react negatively to political instability. With federal spending halted or significantly reduced during such a period, sectors tied to government contracts or regulatory services may experience operational delays or financial strain.

AM Best emphasized that, beyond the short-term effects, the longer-term implications for the U.S. economy could be more damaging, particularly in terms of global investor confidence and credit ratings.

“The most persistent effect on the U.S. economy is likely to be a loss of trust in the functionality of American political institutions,” AM Best said in its commentary.
“This erosion of confidence could place downward pressure on the nation’s sovereign credit ratings and deepen the sense of uncertainty around U.S. fiscal and economic policy.”

Flood Insurance Program Also at Risk

In addition to broader economic concerns, the insurance sector may face a more immediate issue. The National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA), is set to expire on September 30—the same day government funding runs out.

Unless Congress reauthorizes the NFIP, FEMA will be forced to halt the issuance of new flood insurance policies, which could leave homeowners and real estate markets in flood-prone areas in a difficult position.

A Climate of Uncertainty

The overarching message from AM Best is clear: the insurance industry, while resilient, is not immune to the cascading effects of political dysfunction. As the economy slows and uncertainty grows, both consumers and businesses may pull back on spending and delay long-term decisions, ultimately affecting the demand for insurance products and services.

With heightened political polarization continuing to complicate effective governance, the agency warns that even the perception of dysfunction can carry serious consequences for markets, credit ratings, and economic stability.

For now, the focus remains on Capitol Hill. The decisions made—or not made—in the hours ahead will determine whether a shutdown begins and how deeply its effects might ripple through the U.S. economy and its financial institutions.

The complaint, filed in U.S. District Court for New Jersey, accuses both vendors of negligence and breach of contract.

Background on the Breach

CoWorx, a staffing company based in New Jersey with nationwide operations, suffered a ransomware attack in 2024. At the time, it held a cyber insurance policy with ACE covering damages related to network and data breaches.

To manage its IT infrastructure, CoWorx had contracted with Congruity, a Massachusetts-based cloud services firm. Congruity was tasked with providing and managing Microsoft Windows virtual machines for CoWorx’s applications. Their responsibilities included maintaining the security of host servers and implementing proper safeguards — including multi-factor authentication (MFA) for remote access. However, according to ACE, Congruity failed to implement MFA, leaving the system open to attack.

CoWorx also hired Trustwave, a cybersecurity firm based in Illinois, to monitor its systems for threats. Trustwave installed detection and response tools on CoWorx servers and analyzed the data through its own security center, providing around-the-clock network monitoring.

How the Attack Unfolded

According to the lawsuit, on April 18, 2024, hackers gained access to a CoWorx virtual machine hosted by Congruity by using stolen login credentials. Because MFA had not been enabled, the attackers were able to log in without any additional authentication.

Although the compromised account lacked administrative privileges, the attackers were able to escalate access, extract credentials, and penetrate the host network — something ACE alleges was only possible due to flaws in how Congruity configured the virtual environment. ACE contends that the architecture should have prevented such lateral movement between guest and host systems.

Four days after the intrusion, Trustwave’s monitoring software detected suspicious activity but rated the alert as “moderate” in severity. As a result, CoWorx was not notified. ACE claims this delay prevented CoWorx from backing up its data in time. Five days later, the attackers deployed ransomware, encrypting files across the system. Without backups, CoWorx had no choice but to pay for a decryption tool.

Legal Claims Against Vendors

ACE, having paid the $500,000 claim under its cyber insurance policy, is now pursuing damages from Congruity and Trustwave. The insurer is alleging:

• Negligence and gross negligence

• Breach of contract

• Breach of implied warranty

Congruity is being blamed for failing to enforce MFA and for improperly setting up a network structure that allowed attackers to gain elevated access and reach the host environment.

Trustwave is accused of mishandling the breach by underestimating its severity and failing to alert CoWorx promptly, thus preventing any chance to mitigate the damage.

ACE is requesting reimbursement of the full $500,000 payout, in addition to interest, legal expenses, and court costs.

In its latest 10-Q filing with the U.S. Securities and Exchange Commission (SEC), Progressive disclosed that it may breach Florida’s statutory profit limit for personal auto insurance over the three-year period from 2023 to 2025. Under Florida Statutes 627.066 and 627.915, insurers must report any excess profits, and the Florida Office of Insurance Regulation (OIR) may require them to refund customers or apply premium credits — a process sometimes referred to as “regurgitation” within the insurance industry.

According to the law, profits are considered excessive when an insurer’s underwriting gains over three calendar-accident years exceed the anticipated profit by more than 5% of earned premiums.

The underwriting gain is calculated by subtracting incurred losses, loss adjustment expenses (developed to an ultimate basis), administrative costs, and any policyholder dividends from the earned premium. This formula helps determine whether the company has profited more than allowed.

Progressive has not issued a public comment, but the SEC filing noted that a final determination will depend on factors like the 2025 hurricane season, which could impact loss reserves. More clarity is expected later this year.

Florida property insurers also face similar profit restrictions — typically around 4.5% — but can distribute profits through affiliated entities such as managing general agents or holding companies, a practice some lawmakers and consumer advocates criticize due to Florida’s high insurance rates. Auto insurers, however, often don’t have the same flexibility.

Progressive and other major auto carriers in Florida have recently enjoyed reduced loss adjustment costs, largely thanks to 2023 legislative reforms that ended one-way attorney fees and curbed excessive legal action over claims.

As a result, Florida’s top five auto insurers requested an average rate reduction of about 6% in 2024 — a move praised by Florida’s insurance commissioner in a recent bulletin.

Still, that may not be enough to keep Progressive below the profit cap.

“Despite these actions, it is possible that our profit for personal auto in Florida for the 2023 to 2025 period will exceed the statutory profit limit,” the company wrote in its SEC filing.

The Office of Insurance Regulation rarely enforces the excessive profits statute, but there have been exceptions. In June 2025, California Casualty Insurance Co. agreed to return or credit $341,500 to policyholders. In 2021, Nationwide Mutual Insurance was ordered to issue more than $11 million in refunds or credits due to similar violations.

Progressive did not specify how much it may owe, but the filing noted that the company has experienced “strong profitability” in its Florida personal auto line since the reforms took effect.

Other major insurers with a presence in Florida did not mention exceeding profit thresholds in their regulatory filings.

While Florida enforces profit limits, not all states do. New Jersey, for example, applies a variation of the Clifford Formula, capping profits around 3.5%, according to that state’s Division of Insurance and court rulings.

According to CSU, the injuries sustained during the February 14 incident fall under the policy’s assault and battery exclusion, which removes such claims from coverage under the event’s commercial general liability insurance.

Tragedy at a Celebration

The Super Bowl victory parade, held in downtown Kansas City to celebrate the Kansas City Chiefs’ championship win, turned tragic when gunfire broke out near Union Station, resulting in one fatality and injuries to more than 20 people. The violence sparked widespread concern over event safety and crowd control measures.

In response, multiple victims filed a lawsuit in June 2025 targeting the Kansas City Sports Commission, the City of Kansas City, Union Station, and other affiliated entities. The plaintiffs argue that their injuries were the result of systemic negligence, poor planning, and a failure to implement adequate safety measures, particularly in light of prior major events hosted by the city that saw more robust security arrangements.

Attorneys representing the victims, including the law firm Stueve Siegel Hanson, described the shooting as a “preventable calamity” that could have been avoided through appropriate foresight and diligence on the part of the event organizers.

Insurance Policy Details and Exclusion

In its recent complaint, CSU seeks a declaratory judgment that it is not obligated to provide legal defense or financial coverage in connection with the lawsuit. The insurer issued a special event commercial general liability policy to KCSC, which carried coverage limits of $1 million per occurrence and a $5 million general aggregate limit.

Importantly, the City of Kansas City and Union Station Kansas City were also named as additional insureds under the terms of this policy.

However, CSU points to a specific endorsement in the policy that excludes coverage for any claims related to assault or battery. This includes not only direct actions but also claims alleging failure to prevent such acts or negligent hiring, supervision, or training of security personnel.

CSU argues that the allegations made in the victims’ lawsuit — which center around lapses in event planning, security preparation, and crowd control — clearly fall under the policy’s exclusion clause, and therefore, no coverage or defense obligation applies.

What the Lawsuit Alleges

The underlying lawsuit contends that event organizers and public officials failed to prepare adequately for a crowd of that magnitude and did not implement reasonable safety precautions. It accuses the defendants of failing to ensure sufficient law enforcement presence and crowd monitoring, particularly around high-traffic areas like Union Station.

The lawsuit seeks unspecified damages, including compensation for physical and emotional trauma endured by the victims.

Legal and Financial Ramifications

If the court sides with CSU, the Kansas City Sports Commission and other insured parties may have to fund their own legal defenses and potentially pay out damages, should they be found liable in court.

The legal battle over whether insurers are obligated to cover violent incidents like mass shootings under event liability policies is increasingly coming into focus. This case could serve as a precedent for how future insurance disputes involving public event violence are resolved — particularly concerning exclusionary language in standard liability coverage.

It also raises broader questions about how cities and event organizers can balance celebration with public safety, and what role insurance should play when preventable tragedies occur at large-scale public gatherings.

U.S. District Judge Marc Treadwell ruled this week that the plaintiffs did not successfully show a shared unlawful practice by GEICO, nor did they adequately demonstrate how they were denied overtime pay. The court also noted inconsistencies across various call centers and that some claims were too old to pursue under the three-year statute of limitations.

“For this reason alone, Plaintiffs’ motion should be denied,” Judge Treadwell wrote in his decision.

The lead plaintiff, Chris Rice, and his legal team claimed that over 1,000 sales employees from 12 GEICO call centers—including locations in Macon, Georgia, and Lakeland, Florida—were underpaid due to the insurer’s procedures. According to U.S. 11th Circuit Court of Appeals standards, plaintiffs must prove that others in the proposed group should be notified of the lawsuit to decide whether they want to opt in.

However, the plaintiffs adjusted their legal approach and did not respond directly to several key arguments made by GEICO’s defense team, the judge noted.

Court documents explained that GEICO relied on software platforms such as Cisco Finesse, AWS Anytime Connect, and Workday to monitor employee activity and hours worked.

“Plaintiffs initially alleged GEICO based compensation solely on time logged into Finesse,” the judge explained. If that were true, it would imply that workers weren’t paid for tasks performed outside of the Finesse system—such as powering up their computers, signing into necessary programs, fixing technical issues, or preparing for customer calls.

The Fair Labor Standards Act (FLSA) mandates that most employers must compensate hourly staff for computer boot-up and related time.

But the plaintiffs’ legal team—based in Atlanta, Birmingham, and Nashville—“recently conceded that the data show no relationship between Finesse login time and time tracked in Workday, aligning with GEICO’s evidence,” the judge pointed out.

Later, the plaintiffs asserted that managers had told employees to report a fixed 38.75 hours per week, regardless of their actual work time. That claim, however, lacked supporting evidence, according to the court.

An expert analysis revealed that employees often received pay for more time than they were logged into the Finesse system. Some testimonies suggested supervisors instructed remote workers—those working from home—not to record time spent resolving connectivity or equipment issues, but this directive did not apply to in-office staff.

In the end, Judge Treadwell denied the motion for conditional class certification—but did so without prejudice, meaning the plaintiffs may revise their arguments and refile the motion at a later time.

The deal, which places Ardonagh’s valuation at $14 billion, saw overwhelming interest from co-investors linked to Stone Point, as well as partners from Madison Dearborn Partners (MDP) and HPS Investment Partners (HPS).

Stone Point has emerged as a major shareholder in Ardonagh, joining the ranks of MDP, HPS, and other global institutional investors, including a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA).

With this diversified investor base, Ardonagh is poised to capitalize on a variety of growth opportunities within the global property and casualty (P/C) insurance market through its extensive platform of businesses, each with a robust regional market presence.

Founded in 2017, Ardonagh was created by merging several UK insurance businesses, which gave rise to a diversified group offering wholesale, retail, and specialist insurance solutions. Since its formation, Ardonagh has evolved into a top-20 global broking entity, placing approximately $18 billion in premiums and operating throughout the entire insurance distribution value chain.

The closing of this investment comes on the heels of several key developments in Ardonagh’s growth trajectory, including a number of strategic acquisitions in 2024. The company completed the sale of its personal lines business to Markerstudy in June 2024, followed by the A$2.3 billion take-private of Australia’s PSC Insurance Group in October 2024. These transactions were part of a broader effort to complete 68 acquisitions across multiple regions within that year.

More recently, Ardonagh simplified its capital structure through a successful refinancing in February 2025. In March 2025, the group launched Ardonagh Intelligence, marking a new phase in its strategy to leverage machine learning and data enrichment across its businesses to deliver enhanced value to its vast customer base.

David Ross, CEO of The Ardonagh Group, commented on the deal: “Stone Point’s investment, alongside the success of the co-investment process, is a powerful vote of confidence in Ardonagh. In the face of global economic challenges, our distinctive proposition, proven track record, and global platform attracted world-class investors who share our long-term vision.”

Ross added, “We are thrilled to welcome Stone Point into this next chapter of our growth, along with our long-standing partners whose support has been instrumental in helping us reach a $14 billion valuation. With such robust financial backing, Ardonagh is uniquely positioned to seize future growth opportunities and continue delivering value for our clients, investors, and employees.”

Jim Carey, co-CEO of Stone Point, shared his enthusiasm: “We are excited to partner with Ardonagh, alongside MDP, HPS, and ADIA. Ardonagh has emerged as a prominent platform in the global insurance distribution market, and we are confident in the company’s potential for continued growth.”

Fenchurch Advisory Partners, Goldman Sachs Investment Banking & Co. LLC, and Morgan Stanley & Co. LLC are serving as financial advisors to Ardonagh, while Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as its legal advisor. Debevoise & Plimpton LLP is representing Stone Point in the transaction.

According to the company, the outage, which began on June 7, was initiated as a precautionary measure to contain a potential security threat. Erie Insurance emphasized that “there is no evidence of ransomware” and confirmed that there are no signs of ongoing malicious activity. Despite these assurances, the company has not confirmed whether a data breach occurred, but it is continuing to investigate the situation and is working to determine whether any customer data may have been compromised.

The insurer stated that its efforts to restore full system functionality are being carried out in a phased manner, with a focus on key areas like local agents, claims processing, and customer support. This approach ensures that customer service remains a priority while the systems are carefully restored.

While Erie Insurance is making progress, another insurer, Philadelphia Insurance Companies, is also working to recover from its own network outage, which began on June 9 after suspicious activity was detected. This outage has disrupted phone lines, email communication, and online applications, creating challenges for both customers and employees.

Philadelphia Insurance clarified that, contrary to some media reports, its systems were not encrypted and the incident did not involve ransomware. Most of the company’s core business systems have now been restored, and a number of Philadelphia employees have regained access to key tools, such as email. However, the company noted that a complete return to full operational capacity would take time. It reassured agents and policyholders that it is working tirelessly to restore normal operations as soon as possible.

If it is determined that customer data was accessed during the breach, Philadelphia Insurance has committed to notifying the individuals whose information was potentially compromised.

Neither Erie Insurance nor Philadelphia Insurance has provided specific details regarding the source or scale of the cybersecurity incidents that led to these outages. However, Google’s Threat Intelligence Group has suggested that the hacker group Scattered Spider may be behind these incidents, pointing out that the group seems to have shifted its focus from retail targets to insurance companies. This group is also believed to be involved in a recent potential data breach at insurer Aflac.

As both insurers continue their recovery efforts, their focus remains on restoring systems to ensure that customers and agents can access services and manage their accounts with minimal disruption.

In its “Quarterly Property Report January–March 2025,” Verisk Analytics revealed that the total number of property insurance claims filed during the first three months of the year fell to the lowest quarterly level observed in the past five years. This drop continued a downward trajectory in claims frequency that began in 2023. However, this positive trend in volume was overshadowed by a dramatic spike in claims severity, particularly in states impacted by severe natural disasters.

Wildfires Drive Severity Surge in California

While numerous weather-related events impacted the U.S., it was the devastating wildfires in California — namely the Palisades and Eaton fires — that most significantly impacted claims severity and overall loss costs. Together, these two major fires generated an estimated 48,000 claims, resulting in a staggering $10 billion in total insured losses.

Verisk reported that the average claim estimate for wildfire-related losses in California reached approximately $337,000, a figure that dwarfs typical property loss values. This contributed to a 1,805% year-over-year increase in the replacement cost value (RCV) for California alone when compared to Q1 2024.

Nationwide, the average RCV jumped by 46% compared to the same quarter in the previous year, reflecting the extreme cost of rebuilding and repairing properties, especially in fire-prone regions. This significant uptick in loss costs was a key highlight of the quarter, despite the drop in claim frequency.

Lower Severity in Most States Balances National Trends

While California skewed the national numbers with record-breaking fire losses, the majority of U.S. states actually reported declines in severity. According to Verisk’s data, 33 states experienced reduced average loss costs compared to Q1 2024.

States such as Maine, Delaware, Montana, and Oregon posted particularly steep declines in severity, ranging from 80% to 95%, which helped moderate the national severity average. These reductions were largely attributed to milder weather conditions and fewer catastrophic events in those areas.

Total Claim Volume Down — But CAT Claims Hold Steady

Despite widespread natural disasters, overall claim volume declined by approximately 7% in Q1 2025 compared to the same period in 2024. The drop was largely attributed to a reduction in non-catastrophe (non-CAT) claims, even as catastrophe-related (CAT) claims remained relatively stable.

Among individual states, Texas led the nation in terms of total claims filed, reporting around 161,000 claims. Following Texas were California with 96,600 claims, Florida (48,500), Missouri (48,200), North Carolina (36,000), and Pennsylvania (35,700).

Texas not only topped the chart in total volume but also accounted for a substantial share — 95% of all Q1 CAT events — largely fueled by severe wind and hail storms.

Tornado Alley Sees CAT Claims Surge

Several states in Tornado Alley and beyond experienced sharp increases in catastrophe-related claims during the first quarter, driven largely by tornadoes, hailstorms, and damaging winds. Notable spikes in CAT claims were observed in:

• Kentucky and Nebraska: Both states saw CAT claim increases exceeding 200%

• Oklahoma: Reported a 45% increase in catastrophe claims

These increases were tied to a rise in violent spring storms and tornado outbreaks that swept across the central U.S. during early 2025.

Pacific Northwest Sees Claims Drop

In contrast, many states in the Pacific Northwest experienced a substantial decrease in weather-related claims. Milder winter conditions contributed to sharp reductions in common seasonal hazards. Verisk’s report showed:

• Washington: 99% drop in freeze-related claims

• Oregon: 98% decrease in ice and snow claims

• Maine: 98% decline in wind-related claims

These dramatic reductions were attributed to an unusually warm and calm winter season across much of the northern tier of the country.

Labor Cost Increases Slow Down

In addition to trends in claim frequency and severity, Verisk’s report noted a moderation in billable labor cost growth across the U.S. for Q1 2025. Labor costs rose by 1.06%, down from 1.42% growth reported in the prior quarter (Q4 2024).

This slowdown in labor inflation may offer temporary relief to insurers and policyholders contending with high replacement costs, though it remains uncertain how long this trend will persist.

Trade and Immigration Policies Pose Risks to Construction Costs

The report also cautioned that ongoing U.S. immigration and trade policies could introduce volatility to the construction and rebuilding sectors.

• Around 28% of U.S. lumber, 24% of concrete, and 36% of gypsum used in construction are imported.

• Additionally, 26% of the construction workforce is composed of immigrant labor.

Given this reliance on global supply chains and foreign labor, changes in tariffs or immigration enforcement could significantly impact the cost and pace of reconstruction following major disasters.

Key Takeaways

• Claim Volume: Fell to a five-year low, primarily due to fewer non-CAT claims

• Claim Severity: Surged, especially in California due to wildfire losses

• California Wildfires: Drove a 1,805% increase in RCV; average wildfire claim hit $337,000

• Texas: Led U.S. in both total and catastrophe claims

• Tornado Activity: Boosted CAT claims significantly in Oklahoma, Kentucky, and Nebraska

• Labor Costs: Growth slowed to 1.06%

• Construction Risks: Future costs could be impacted by trade and immigration policies

Conclusion

While 2025 started with relatively low overall claim counts, the rising cost of individual claims — especially from high-severity CAT events like wildfires — continues to pose challenges for the insurance and construction sectors. As climate patterns shift and rebuilding expenses climb, insurers may need to adjust risk models and pricing strategies accordingly.

Verisk’s Q1 2025 data highlights a complex environment where fewer claims do not necessarily equate to reduced costs — particularly as regional catastrophes grow more destructive and expensive to recover from.

During a webinar on June 10, Verisk unveiled the final rankings of this year’s key concerns. Despite stiff competition from issues like climate change, infrastructure, and microplastics, artificial intelligence (AI) and generative AI (Gen AI) once again emerged as the top concern among industry professionals. As advancements in AI continue and new laws begin to take shape, the risks—such as hallucinations and unpredictable behaviors—are becoming more apparent.

Legislative Push Grows with AI Advancements

The rapid evolution of AI technologies has spurred legislative responses across the U.S., as lawmakers scramble to regulate tools and systems that are still largely misunderstood.

Laura Panesso, Associate VP of Government Relations at Verisk, noted during the webinar that the pace of proposed legislation has been “remarkably quick.” Although many states introduced AI-related bills in 2024, only a few have successfully passed them into law.

“This trend shows that regulators are trying to catch up with a technology advancing faster than we can keep pace with,” Panesso explained.

The National Association of Insurance Commissioners (NAIC) has issued guidance to help insurers govern AI use in business decisions, encouraging transparency, oversight, and testing to detect bias and discrimination. So far, 24 jurisdictions have adopted this guidance, while states like California, Colorado, and New York have gone further by enacting their own AI-specific rules.

With no overarching federal regulation for AI, states are forging ahead individually. As of now, 40 states have introduced or enacted AI-related laws, ranging from exploratory studies to detailed governance.

Key concerns include:

• Requirements for AI system deployers

• Rights over training data and outputs

• Algorithmic discrimination and pricing fairness

Generative AI, in particular, has drawn attention for issues such as deepfake content and non-consensual image creation. States are beginning to define how Gen AI tools can legally be used.

For instance, Utah’s Senate Bill 26, passed in the most recent session, regulates the use of generative AI in customer-facing settings. It mandates transparency when Gen AI is used, sets liability standards for deceptive practices, and offers safe harbors for companies that disclose AI use upfront.

Edge Cases & AI Hallucinations Raise Red Flags

AI is powerful and innovative—but it’s far from flawless. Greg Scoblete, a principal on Verisk’s emerging issues team, highlighted two notable vulnerabilities: edge cases and hallucinations in generative AI systems.

Edge cases refer to rare or unusual scenarios that AI models haven’t been trained on thoroughly. These outliers can expose serious weaknesses in AI behavior, especially in life-critical areas like autonomous vehicles.

Scoblete cited real-world examples:

• In the UK, a high-end car with adaptive cruise control accelerated to over 100 mph in a 30-mph zone after misreading a road marking.

• In the U.S., another vehicle with similar tech collided with the top of an overturned truck—a shape its AI wasn’t trained to recognize as an obstacle.

“These edge cases illustrate a major difference between human judgment and AI,” Scoblete said. “Humans instinctively recognize danger, even in unfamiliar situations. AI, on the other hand, can make critical errors because it lacks that intuition.”

Alongside edge cases, generative AI hallucinations—or incorrect outputs—are another concern. Unlike traditional AI models that rely heavily on data, Gen AI systems may generate content based on flawed reasoning or logic.

This has real consequences: Over 120 legal filings have included mistakes caused by generative AI tools. Stanford researchers have confirmed that AI-generated legal content often contains factual or logical inaccuracies.

Scoblete warned, “If lawyers—who must be accurate and precise—are facing these problems, we must assume other industries under pressure to improve efficiency with AI could face similar risks.”

He also noted that at least 11 product liability lawsuits tied to generative AI have been filed, per George Washington University data. A key question now is whether existing product liability frameworks—designed for physical goods—can or should apply to virtual AI products.

“The injury caused by AI is sometimes intangible,” he said. “But as AI becomes embedded in physical products like cars, its ability to cause real harm—both physical and financial—will only grow.”

Looking Ahead

Verisk’s emerging issues bracket made it clear: AI isn’t just a trend—it’s a transformative force that’s raising complex questions for regulators, insurers, and tech developers alike.

With rapid technological advancement outpacing legal and ethical standards, the industry is now grappling with how to responsibly integrate AI while safeguarding against its most unpredictable risks. As the landscape continues to evolve, AI’s place at the top of Verisk’s list seems well-deserved—and far from temporary.

The Dublin-based lessor, which is ranked as the third-largest globally in the aircraft leasing sector, disclosed the latest figures in its full-year financial results for the fiscal year ending March 2025. The new settlements bring the total recovered from insurers to approximately $1.41 billion, stemming from claims related to aircraft stuck in Russia.

The situation dates back to 2022 when SMBC, along with other global lessors, was forced to cancel leasing agreements with Russian airlines after sanctions made it illegal to do business with the country’s aviation sector. As a result, SMBC lost access to 34 aircraft still on lease to Russian operators. To account for the potential financial loss, the company recorded a $1.6 billion impairment that year, reflecting the full expected hit to its balance sheet.

In May 2025, SMBC was among six leasing companies that decided to drop legal action in Ireland against their insurance providers. This came after a series of successful negotiations led to large settlement agreements, resolving a legal impasse that had been ongoing for more than a year.

Despite the challenges posed by the Russian aircraft issue, SMBC reported a strong year financially. Its pre-tax profit surged by 22% year-over-year, reaching a record $563 million—a figure that excludes the benefit from the insurance-related payouts.

The company also highlighted growth in its core leasing business, with lease rental income rising 3% to $2 billion. In addition, SMBC generated $1.9 billion from asset sales, fueled by the sale of 48 aging aircraft as part of its fleet optimization strategy.

SMBC Aviation Capital is majority-owned by a Japanese investor consortium that includes Sumitomo Corporation and Sumitomo Mitsui Financial Group, both major players in global finance and infrastructure.

These latest financial results and settlements not only reflect SMBC’s resilience in navigating geopolitical and operational risks but also reinforce its status as a major player in the aviation leasing market, with a diversified portfolio and a strong recovery strategy.