Expected Loss Adjustment Expenses from Hurricane Milton Could Reach $7 Billion
As insurers work to respond to the devastation left by Hurricane Milton, early estimates indicate that loss adjustment expenses (LAE) could total between $3 billion and $7 billion. This significant figure comes on the heels of Hurricane Helene, which recently battered the same region, adding further pressure to insurers already stretched by the ongoing recovery efforts. With both events occurring within a short time frame, the challenges facing insurers are mounting as they seek to contain costs while responding to a surge of claims.
Hurricane Milton’s Private Market Insured Losses
Recent reports from Moody’s RMS estimate that the total private market insured losses from Hurricane Milton could range between $22 billion and $36 billion. For insurers, the real strain comes not just from the payout of claims but from the associated LAE, which includes the costs of adjusting, investigating, and processing those claims. Milton’s impact will be felt across multiple sectors, from property damage to business interruption, leading to a significant increase in claims volume.
With two major hurricanes hitting the same region consecutively, insurers are being forced to quickly ramp up their resources. This includes hiring additional independent adjusters, engineers, and catastrophe response teams, all of which contribute to rising LAE. In such scenarios, insurers need efficient tools to keep these costs under control.
Reducing Loss Adjustment Expenses During Hurricane Milton
For insurers facing high LAE, solutions like VIP Software’s Bill Audit Pro and Invision offer much-needed support. Our products are designed to automate and streamline the billing and auditing process for adjusting firms, ensuring insurers can accurately track and manage their expenses even during catastrophes. Bill Audit Pro helps insurers gain transparency into vendor costs and ensures consistency by auditing 100% of invoices, so they can stay on top of their budget even as claims flood in.
With hurricanes like Milton and Helene striking in close succession, accurate billing becomes essential. Invision further supports insurers by automating claims payments and performance management, allowing them to quickly adjust their approach to changing circumstances and contain LAE in real time.
The Pressure on Insurers After Hurricane Milton and Helene
The consecutive nature of Hurricanes Milton and Helene is a wake-up call for the insurance industry. When faced with multiple large-scale catastrophes in the same region, the capacity to manage claims efficiently is put to the test. The key to minimizing loss adjustment expenses lies in the ability to automate processes, accurately audit invoices, and maintain transparency with vendors and adjusters.
Our previous article on Hurricane Helene projected a loss adjustment expense total exceeding $1 billion. The far larger scale of damage caused by Hurricane Milton presents even greater challenges. However, with the right tools and systems in place, insurers can navigate these events while mitigating financial strain.
Preparing for Future Hurricanes Like Milton
As the insurance industry braces for the long-term recovery from both Hurricane Milton and Hurricane Helene, it’s clear that managing LAE will be critical to financial sustainability. VIP Software’s solutions are built to give insurers the control they need to handle large volumes of claims while keeping costs predictable and manageable. In times like these, having the right technology in place makes all the difference.
