By: 9 November 2023
Verisk Q3 2023 property pricing trends reveals mixed news for insurers’ claims costs 

In its latest property pricing trends report, Verisk’s analysis has identified a mixed bag of news for insurers. There is an ongoing fight in the industry to manage increasing property claims costs. This suggests that the effect of inflation on rising premiums is not going away anytime soon. 

Verisk’s analysis reveals shifts in the prices of materials commonly used in property repairs, including roofing products, wall tiles, and carpets. Additionally, the report also provides fluctuations in labour wages across various trades used in the repair of damaged property. This data offers valuable insights for the insurance sector. 

 

Price Movements in Materials: 

The research indicates that prices for essential materials have shown mixed changes over the past quarter. Overall, the cost of materials fell by 1.4%. This is a welcome easing of inflationary pressure on property insurers. Some materials experienced an increase in cost such as paint, wall tiles and carpets. However, the price of other materials went in the opposite direction, with the price of floor tiles, roofing, electrical and masonry products all falling. 

Regional Variations: 

The fluctuations in material prices were not uniform across the United Kingdom. In Wales, the Midlands, Northeast and Southwest regions, prices fell in line with the national average. In the Southwest, London and Northern Ireland, prices remained broadly the same as Q2. 

Labour Wage Movements: 

The rate of inflation as well as the availability and demand for the skilled workers needed by insurers to repair damaged homes and businesses plays a significant part in wage fluctuations. This in turn impacts the cost of claims as well as the time taken to repair damaged properties. Verisk research across advertised wages in the last quarter found that wages increased by 3.6%. Most in demand were jobs such as renderers and roofers. There was less demand for plasterers, bricklayers and scaffolders. 

 

As we enter the severe weather season, Ben Blain, head of property at Verisk, has the following message for insurers: 

“Last winter was a challenging time for insurers and contractors. Our research showed that the rapid thaw led to a 560% increase in escape of water claims, resulting in a 35% increase in escape of water claim spend. As a result, work-in-progress repairs rose by 10% compared to the previous year, with contractor labour shortages adding to the delays. 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. 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.” 

 

Image: Canva
Emma Cockings
Emma is a content editor for Claims Media.