Claims inflation in property damage claims is an issue which is already affecting the insurance industry and is likely to worsen in the coming years as the recession continues.

A combination of the fallout from Brexit, Covid-19, the cost-of-living crisis, energy crisis and the Ukraine war, are together already causing labour shortages, supply chain disruption, and rising costs of building materials and labour. This will start to see the costs involved in settling a claim rising, leading to a higher overall spend by insurers. The issue is exacerbated in today’s society by a greater focus on more sustainable/greener construction methods, further increasing repair and reinstatement costs.

In addition, globally, the world is facing more catastrophic events as a result of climate change, such as floods and wildfires. These events are increasing the number of insurance claims pursued, which will likely lead to higher premiums, excesses and deductibles faced by policyholders.