What's on contractors' minds?
To better facilitate contractor-carrier collaboration, we surveyed our network of insurance restoration professionals about what’s going on in their businesses today.
Nearly 500 senior leaders of construction businesses across the U.S. responded to our inquiry, providing a thoughtful snapshot of their organizations’ challenges and opportunities. Here’s what they told us about what’s keeping them up at night — and what has them excited for the future.
The cost of doing business is a big worry for contractors in 2026
What are contractors’ biggest business concerns?
For contractors in our network, rising material costs, economic uncertainty, and labor shortages represent the biggest sources of concern in their businesses today.
More granularly, pricing & estimation, cash flow & financial management, reputation & sales, and overhead control are among their most significant business challenges. Carriers who can demonstrate their understanding of these challenges will enjoy stronger relationships with their managed repair contractor partners.
While some concerns are universal, others depend on the size or location of the business.
Midsize firms (26-75 employees) are more than twice as likely to name safety / insurance pressure as their top concern (15.1%) compared to the firms with 1-10 employees or 10-25 employees (5.9%).
Labor shortages are the top concern in the Midwest (27%) and Northeast (29%) but barely register in the Southwest (6.7%) and Western U.S. (2.4%).
In contrast, economic uncertainty is the top concern in the West (28%) and Southwest (29%) but the least common concern in the Midwest (4%).
Rising material costs are the one concern that's remarkably flat everywhere, suggesting this is a universal cost pressure.
Finding, retaining, and paying qualified workers is a particular worry.
The labor market is a significant source of concern, impacting a full 86% of respondents’ businesses.
Over half of all respondents also report that they have absorbed higher labor costs to keep pricing consistent; and this seems to be doing the trick, as only a third have raised pricing on their jobs to account for labor expenses. This holds true across every region and every business size band — a consistent signal that contractors are eating cost increases rather than passing them on.
This is a universal finding regardless of contractor size. Whether a carrier is dealing with a two-person outfit or a 100+ person shop, roughly the same 50-62% are eating the cost rather than passing it through, and they want carriers to know how hard this is.
There needs to be a better understanding of rising costs and labor issues.
Network Contractor
Operations are also impacted by labor challenges.
The impact of labor market challenges extends beyond staffing decisions; it is also affecting operations for nearly three quarters of respondents’ businesses. This is felt most acutely in job cycling time, followed by pricing and project scaling capabilities.
There is strong agreement that pressures from rising costs are also the factor that has had the greatest impact on the managed repair industry.
The pressure on the contractor has increased tremendously.
Network Contractor
Technology isn't the answer to every challenge, but it’s a big advantage.
Nearly all contractors are using technology in their businesses today.
Operations are the biggest areas of technology integration: cost estimation & scoping, communications & documentation, and project management are the most cited use cases, and many contractors are even using technology to help them with business development.
They are also increasingly finding ways to leverage technology in the field, including drying & remediation, moisture & environmental detection, and damage assessment.
34% of contractors also cite technology and AI as one of the factors that have had the greatest impact on the managed repair industry in recent years.
Implemented correctly, technology clearly has the potential to alleviate some of the challenges that are plaguing insurance restoration businesses and to provide opportunities for cost savings and streamlined operations. As business leaders become more comfortable with technology, they have also come to expect its use in all aspects of their business. For carriers, this signals a growing imperative to leverage digital tools in partnership with contractors.
I think AI is going to play a major role for both sides, which hopefully enhances the experience for all sides and helps simplify the entire process.
Network Contractor
Find out more
This is the first chapter of a three-part report on the managed repair industry and the trends shaping its future.
Learn more about managed repair at contractorconnection.com