How insurers can combat the labour and materials crisis
This pressure has flowed on to insurers seeking to finalise repairs after surge events, who are experiencing a shortage of trades and delays in materials, compounded by COVID restrictions and border closures.
What are the contributing factors influencing this crisis?
The record low interest rates and government incentives for renovators and new homeowners has seen many Australians leap at the opportunity to improve or build their dream, post-pandemic home. While we expect these interest rates to remain low for several more years, insurers can expect to be facing these challenges for quite some time. Delays on material production and shipping, as well as major public infrastructure investments by governments of varying levels across the country, has also factored into this issue.
Why are builders in such demand?
While COVID-19 stopped many things, it certainly didn’t stop the need for property claims and usual maintenance, which has meant builders are in high demand. With ample choice between residential and commercial clients, there is minimal incentive for builders to complete insurer-requested jobs which are often at a lower price point. Builders are also facing increased pressure from the price of suppliers, with jobs signed and quoted last year now less profitable for builders to complete.
What can insurers do to overcome this?
Delays in settling claims caused by labour and material shortages are often compounded by an increased volume of calls and enquiries from insureds seeking an update on their repair. The flow on impacts or “waves” from a catastrophic event can last for months or even a year after the initial claims are received.
Customers today expect an immediate response and the ability to track progress of their claim and receive regular updates on their repair. Insurers need to maintain a focus on both satisfying customer expectations and at the same time ensure trades providers are engaged sufficiently with regular work and competitive rates. The shortage of trades providers and delays in materials is creating ongoing waves of activity for insurers.
An experienced claims management TPA such as Gallagher Bassett can also help insurers manage through the waves being experienced today or by being prepared for the next catastrophic event. At Gallagher Bassett we have over 20 years experience managing catastrophic claim events on behalf of insurers across Australia and New Zealand.
To find out how Gallagher Bassett can help you manage the labour and materials crisis, connect with our team of experts today.
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