Rising concrete costs, tradie shortages and other problems plaguing the construction industry are driving claims inflation, Crawford & Company says in a new report.

Ceramic, concrete, barrier and miscellaneous materials, finishes, metal and roofing prices have all climbed by 20%-30% over the past three years.

Concrete is now 1.3 times more expensive than in late 2021, making it the “most inflationary material” over the period.

“The overall picture remains one of elevated input costs, which continue to impact claims valuations and repair timelines,” the claims management group says.

“The cumulative impact of labour shortages, material inflation and rising contractor insolvencies is reshaping Australia’s claims environment.

“For insurers, claimants and stakeholders across the built environment, this means navigating a more complex and risk-sensitive landscape.

“The cost of claims is rising, timelines are stretching, and the need for robust validation and risk management has never been greater.”

The twice-yearly Claims Inflation Update is based on publicly available data and insights from Crawford’s specialty team and contractor network.

Australia’s long-running skilled tradie shortage, if unresolved, will continue to drive claims costs and delay recovery times, the report says.

Rising builder insolvencies reflect the fragility of the construction sector, with consequences for the insurance industry.

“In this environment, greater scrutiny in builder selection and cost validation is essential to avoid inflated quotes and scope creep. The result is a more complex, costly and risk-laden claims landscape – one that demands proactive risk management and robust repair validation frameworks.”

Natural disasters are another significant driver of claims inflation.

“As climate volatility intensifies, the frequency and severity of insured events continue to rise, placing sustained upward pressure on premiums and reinsurance costs,” the report says.

External factors including conflict in key shipping routes and tariff policies threaten to add to the pressure on claims cost.

The report says trade wars are forcing companies to consider “nearshoring”, which reduces geopolitical exposure but increases infrastructure and production costs.

See the report here.