This usually happen when two physics driven entities interpenetrate but are not allowed to move away from each other. For example the collider capsule in the upper arm and the one in the lower arm overlap and they are allowed to collide with each other. The physics engine then tries to apply forces to them to move them apart but the constraint between tries to prevent just that and so chaos ensues.
The first step is to narrow down which component is the culprit: is it the skeletal mesh? Is it the cloth? Is it some kind of attachment like a weapon? Try keep turning stuff off until you see a change in behaviour.
Another place where these sort of bugs can fester is the physics asset for the character:
Make sure that there are no tiny colliders lurking deep inside other colliders. The skeleton tree panel is a great place to check for colliders in unexpected places.
Neighbouring bones should not collide with each other. Depending on your gameplay and animation needs exclude as many nearby bones from collision as possible. (Select a bone to see non-colliding other bones in gray.)
Double check if all constraints are set up properly. A sleep deprived developer’s stray click might turn a ball socket joint into a motor providing a mind-bending puzzle for next day… as it happened to someone I know… 