Crawford’s managed repair service, Contractor Connection, is protecting insurers from rapidly rising rates and costly delays in the UK construction market.
The UK construction industry is facing a shortage of skilled trade workers and supplies in the wake of Brexit and the pandemic, sending the cost of building materials rocketing and causing lengthy delays.
The sector has come under intense pressure due to the combined impacts of EU migrants leaving the UK, international port closures and increased import costs, as well as an upturn in house-buying and home improvements as surplus incomes have accumulated during lockdown.
Stocks are very low, and builders are in some cases waiting several months for basic materials such as roof tiles and cement, leaving homeowners frustrated by delays. Meanwhile, the price of labour and materials is rising rapidly, driving up claim bills for insurers.
In this environment, insurers are also finding it harder to cash settle – often a route used for low-value claims – as homeowners struggle to find builders at affordable rates.
“It’s a perfect storm,” says Lee Sadowski, managing director of Contractor Connection, UK & Ireland. “Given the backdrop of shortages, delays and rising rates in the construction market, the managed repair service we provide the insurance industry has arguably never been more important.”
Contractor Connection is the largest independently managed network of repair professionals in the UK, with around 80% of its 100+ contractors dedicated entirely to servicing insurance claims. “This provides a level of immunity against what is happening in the external construction market and helps us keep claims costs and life cycles under control,” Sadowski says.
Domestic property claims have been relatively benign during the pandemic as people have been spending more time in their homes, and there is currently ample capacity in the Contractor Connection network to meet rising demand, he notes. Meanwhile, cost scheduling and long-term agreements insulate the network from the significant rate increases seen in the external market.
“Some contractors may of course be tempted to take advantage of rising rates outside of the repair network, but the majority are committed to the insurance industry,” Sadowski says. “They value knowing they have a steady stream of future work rather than taking the risk of riding the boom-and-bust market cycle.”
Most importantly, the dedicated managed repair service ensures insurers can continue to serve policyholders without delay in their time of need.
“Not only has the network withstood the challenges of operating through the pandemic,” Sadowski says, “but service levels are actually better now than 18 months ago, with customer satisfaction at an all-time high.”