Inflation in Building Costs

Inflation in building costs are affecting home and business property rates. A perfect storm of market forces has driven up the cost of building properties, which in turn has increased the cost of insuring them for repair and replacement. Here are some of the key drivers.

A shortage of skilled labor

The home-building industry is currently facing a shortfall of at least 200,000 skilled trade workers. About 60% of surveyed builders reported a skilled labor shortage.

Source: Home Builders Institute

Skyrocketing material costs

Between 2020 and 2021, the cost of construction materials rose 11.9%. Lumber played an outsized role in that increase, rising a staggering 42% over the past year.

Source: CoreLogic Quarterly Construction Insights (Q2 2021)

We will continue to work hard to find competitive solutions for protecting your home and business, but with historic labor shortages and material costs increasing, this puts pressure on higher claim payments which results in long term premium changes.

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