Property insures facing ‘mixed bag’ of news over claims costs

Insurers in the property sector are currently facing a “mixed bag” of news when it comes to claims costs, new research from Verisk has revealed.

In a statement released yesterday (9 November 2023), the insurtech said there had been shifts in the prices of materials commonly used in property repairs, while there had also been fluctuations in labour wages.

For example, it found wages in the last quarter increased by 3.6%, with the most in demand jobs being for renderers and roofers.

According to Verisk, this also had an impact on time taken to repair damaged properties.

However, its figures also showed that overall material costs dropped 1.4% during the last quarter, with the price of floor tiles, roofing, electrical and masonry products all falling.

“As we reported in the last quarter, the worst inflationary pressures on the cost of materials used in property repairs would appear to be behind us,” Ben Blain, head of property at Verisk, said.

”In a dynamic landscape, insurers need to consider fluctuations in the cost of materials, running plant equipment and labour so they have the flexibility to react and optimise their cost management capability as part of their ongoing duty to customers.”

Weather

Blain also urged insurers to agree a fair schedule of pricing with contractors as the UK heads into winter.

He made the claim after the Met Office put in place amber and yellow weather warnings as Storm Ciarán crossed the southern half of the UK last week.

And Storm Babet struck parts of eastern Scotland earlier in the year (19 and 20 October 2023), with a red weather warning issued due to heavy rain and strong winds.

“The Construction Leadership Council has said that the availability of most repair materials is back at pre-Covid levels, which is helpful in getting on and finishing repair work,” Blain said.

“Unfortunately, the recent storms means the likelihood is that work-in-progress times will stretch even further, which will present a customer expectation management issue for insurers and contractors.

“If insurers and contractors want to up their game in the way both sectors respond to severe weather events going forward and in ways they can control, agreeing a fair schedule of pricing with contractors is an excellent place to start.”