The rising cost of repair
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Even where claims volumes are manageable, repair inflation, labour intensity and material supply volatility can turn a routine reinstatement into a materially more expensive event.
4.1 Where inflation stands
Sedgwick Repair Solutions tracks the cost of materials, labour, plant and waste removal through our Insurance Repair Specific Index (IRSI). This graph shows how these costs have escalated since 2017:
Sedgwick's Repair Solutions Q2 2026 Building Cost Review reports that:
Building contractor costs rose 0.56% in Q2 2026, contributing to a 1.48% rise in H1 2026
Sedgwick’s base-case forecast for full-year 2026 is 4.18%
Inflation has slowed compared with earlier periods, but costs are still rising due to labour, material, and operating pressures
4.2 Building materials
Material prices remained volatile through the first half of 2026. Sedgwick Repair Solutions’ Q2 Building Cost Review found that most categories increased year to date, although movements varied sharply between products.
Flood repairs remain materials-heavy, representing 52.21% of Q2 costs, compared with 41.52% for labour, increasing exposure to product-price rises and outdated reinstatement values.
Further pressure is emerging from higher fuel surcharges and notified Q3 increases of up to 9.3% on insulation and up to 10% on wallboard and thermal board, with disruption potentially pushing costs higher in 2027.
The largest year-to-date material price increases recorded in the review were:
Insulation
Electrical
Plumbing
Heating
Roofing
Kitchens
Gypsum / plaster
4.3 Labour costs
Labour accounts for around 60% of insurance repair costs, on average across all property types, while recruitment difficulties persist across multi-trade operatives, joiners and carpenters, plasterers and plumbers.
64% of contractors reported labour-cost increases above 3%, with recruitment constrained by candidate shortages and training and supervision costs. (Sedgwick Repair Solutions contractor survey 2026)
4.4 Peril-level cost structure
The relevance of wage pressure within contracting companies varies by peril. Sedgwick Repair Solutions’ IRSI model shows that the mix of labour, materials, plant and waste differs materially by claim type. This means a single headline inflation rate can mask very different cost pressures across a property portfolio.
4.5 Commercial vs domestic
Domestic and commercial repairs run on different cost structures.
Domestic repairs
are generally labour-dominated – small jobs, occupied properties, drying and strip-out time, and a heavy reliance on the same scarce trades. Wage inflation therefore passes into a domestic claim almost undiluted.
Commercial repairs
carry a higher proportion of materials and specialist plant, have more standardised structures and better site efficiency, so they absorb wage pressure more slowly – but they are far more exposed to the sharp, material-specific spikes now running through structural steel and aggregates.
Domestic vs commercial repair – cost structure comparison
For portfolio owners, applying a single inflation assumption across mixed assets risks understating costs for either residential or commercial assets.
Residential and mixed-tenure stock needs to be indexed against labour and reinstatement measures and revalued, for insurance purposes, on a three-year cycle at minimum.
Commercial assets need reinstatement values tested against material-specific movement and specialist plant, not a blended national average. The underinsurance evidence suggests neither is currently being done at scale.
4.6 Future cost inflation
Sedgwick Repair Solutions models three cost-forecast scenarios – base, pessimistic and optimistic.
projected cost increase for 2027, which is likely to be a base year.
projected worst-case cost increase for 2027 if geopolitical conflict escalates and it becomes a pessimistic year.
optimistic forecast for cost inflation to 2030.
pessimistic forecast for cost inflation to 2030.
BCIS forecast rise in general building costs over the next five years to Q3 2031, with contractor tender prices increasing by 14.1%.
ACT NOW Have reinstatement values been checked against current labour and materials indices?
The test is whether repair networks can sustain their response when surge demand hits a scaled-back contractor base. By understanding those pressures now, and working closely with contractors, we can protect capacity, control claim costs and deliver better outcomes.”
Peter Wassell Technical Director, Sedgwick Repair Solutions
