Rising Replacement Costs Demand Strategic Adjustments from Insurers

Replacement costs have surged due to inflation, supply chain disruptions, global conflicts, and natural catastrophes. Construction material prices increased by 12.5% from 2021 to 2023, and vehicle repair costs rose by 23% in 2022 alone. Brokers and underwriters must understand these economic trends and communicate them to clients, ensuring transparent pricing and adequate coverage.

Accurate property valuations and risk mitigation strategies, such as safety training and protective technologies, are essential to prevent underinsurance and manage costs. Effective communication and updated policies help clients prepare for potential losses and economic shifts.