Claims Inflation: What Is The Cause?

Claims inflation might sound like a dry industry term, but its effects are anything but abstract. It shows up in real ways for clients waiting on repairs, for builders trying to finish jobs, and for insurers managing costs that keep climbing. At its heart, claims inflation is about the increasing expense of settling claims, and the issues causing it are on the rise.


Construction is at the root

When it comes to what’s pushing claims costs up, construction remains front and centre. Crawford’s (2025) Claims Inflation Update unpacks the specific materials and factors at play. Their report discloses a slight shift this year, with building material prices for house construction recording their first quarterly drop since 2012. That dip is largely thanks to timber and steel being discounted as demand has softened in New South Wales and Victoria (Crawford, 2025).

That relief doesn’t stretch very far though. Concrete prices have kept climbing, now sitting at 1.3 times what they were at the end of 2021, making it the single biggest price pressure in the past three years (Crawford, 2025). Other materials like ceramics, roofing, finishes and barrier products aren’t far behind, with many of those categories increasing by 20 to 30 per cent overall (Crawford, 2025).

Despite these increases, cost is only half of the challenge. Builders are still facing ongoing struggles to get hold of the materials they need. A survey of Contractor Connection’s Managed Repair Panel members revealed that supply shortages are still widespread, leading to long project delays and keeping pressure on claims costs (Crawford, 2025).


The impacts of a labour shortage

Beyond the cost, supply, and demand factors we see, labour shortages also contribute to the problem at large. Right now, Australia is short about 90,000 skilled tradespeople, and there is no quick fix in sight (Crawford, 2025). Fewer young people are choosing trade careers, and migration settings have been slow to respond. As a result, there simply aren’t enough hands on deck to deliver the housing and infrastructure the country needs.

Additionally, Australia’s labour costs are expected to rise by another 6 per cent in 2025, and over the next five years, the sector will need an extra half a million workers just to keep up with national housing targets (Crawford, 2025). Without meaningful change, that shortage will keep pushing up the price of claims and dragging out the time it takes to get clients back on their feet.


Natural disasters are amplifying claims inflation

The pressures of labour shortages and material constraints are significant on their own, but the growing toll of natural disasters has compounded these challenges in ways the industry can no longer overlook. Since 2010, natural catastrophes have generated more than AUD 34 billion in insured losses, with almost three-quarters of that figure attributed to floods and storms (ICA, 2024). Today, six million Australian homes are situated in bushfire-prone areas, while one in twelve properties carries measurable flood exposure (ICA, 2024).

The consequences extend well beyond a simple rise in claims volume. Each severe event exerts enormous stress on an already fragile ecosystem of builders, suppliers and insurers. Demand for trades and materials surges overnight, outpacing capacity and stretching already thin resources. The result is a cascade of delays, escalating costs and protracted recovery timelines, turning what should be straightforward rebuilds into complex, drawn-out undertakings that challenge both insurers and the communities they serve (Crawford, 2025).


What does this mean for the insurance landscape?

The forces behind claims inflation don’t exist in isolation. Instead, they feed into each other, creating a loop of rising costs, project delays and client frustration. Understanding these pressures helps everyone involved have clearer, more realistic conversations about timelines and what’s driving the numbers.

There’s no easy solution, but recognising the problem is the first step; the industry will need long-term strategies and honest conversations. For now, that means brokers, insurers and clients need to work together, stay informed and brace for the fact that claims costs won’t be easing any time soon.




Claims inflation might sound like a dry industry term, but its effects are anything but abstract. It shows up in real ways for clients waiting on repairs, for builders trying to finish jobs, and for insurers managing costs that keep climbing. At its heart, claims inflation is about the increasing expense of settling claims, and the issues causing it are on the rise.


Construction is at the root

When it comes to what’s pushing claims costs up, construction remains front and centre. Crawford’s (2025) Claims Inflation Update unpacks the specific materials and factors at play. Their report discloses a slight shift this year, with building material prices for house construction recording their first quarterly drop since 2012. That dip is largely thanks to timber and steel being discounted as demand has softened in New South Wales and Victoria (Crawford, 2025).

That relief doesn’t stretch very far though. Concrete prices have kept climbing, now sitting at 1.3 times what they were at the end of 2021, making it the single biggest price pressure in the past three years (Crawford, 2025). Other materials like ceramics, roofing, finishes and barrier products aren’t far behind, with many of those categories increasing by 20 to 30 per cent overall (Crawford, 2025).

Despite these increases, cost is only half of the challenge. Builders are still facing ongoing struggles to get hold of the materials they need. A survey of Contractor Connection’s Managed Repair Panel members revealed that supply shortages are still widespread, leading to long project delays and keeping pressure on claims costs (Crawford, 2025).


The impacts of a labour shortage

Beyond the cost, supply, and demand factors we see, labour shortages also contribute to the problem at large. Right now, Australia is short about 90,000 skilled tradespeople, and there is no quick fix in sight (Crawford, 2025). Fewer young people are choosing trade careers, and migration settings have been slow to respond. As a result, there simply aren’t enough hands on deck to deliver the housing and infrastructure the country needs.

Additionally, Australia’s labour costs are expected to rise by another 6 per cent in 2025, and over the next five years, the sector will need an extra half a million workers just to keep up with national housing targets (Crawford, 2025). Without meaningful change, that shortage will keep pushing up the price of claims and dragging out the time it takes to get clients back on their feet.


Natural disasters are amplifying claims inflation

The pressures of labour shortages and material constraints are significant on their own, but the growing toll of natural disasters has compounded these challenges in ways the industry can no longer overlook. Since 2010, natural catastrophes have generated more than AUD 34 billion in insured losses, with almost three-quarters of that figure attributed to floods and storms (ICA, 2024). Today, six million Australian homes are situated in bushfire-prone areas, while one in twelve properties carries measurable flood exposure (ICA, 2024).

The consequences extend well beyond a simple rise in claims volume. Each severe event exerts enormous stress on an already fragile ecosystem of builders, suppliers and insurers. Demand for trades and materials surges overnight, outpacing capacity and stretching already thin resources. The result is a cascade of delays, escalating costs and protracted recovery timelines, turning what should be straightforward rebuilds into complex, drawn-out undertakings that challenge both insurers and the communities they serve (Crawford, 2025).


What does this mean for the insurance landscape?

The forces behind claims inflation don’t exist in isolation. Instead, they feed into each other, creating a loop of rising costs, project delays and client frustration. Understanding these pressures helps everyone involved have clearer, more realistic conversations about timelines and what’s driving the numbers.

There’s no easy solution, but recognising the problem is the first step; the industry will need long-term strategies and honest conversations. For now, that means brokers, insurers and clients need to work together, stay informed and brace for the fact that claims costs won’t be easing any time soon.




Claims inflation might sound like a dry industry term, but its effects are anything but abstract. It shows up in real ways for clients waiting on repairs, for builders trying to finish jobs, and for insurers managing costs that keep climbing. At its heart, claims inflation is about the increasing expense of settling claims, and the issues causing it are on the rise.


Construction is at the root

When it comes to what’s pushing claims costs up, construction remains front and centre. Crawford’s (2025) Claims Inflation Update unpacks the specific materials and factors at play. Their report discloses a slight shift this year, with building material prices for house construction recording their first quarterly drop since 2012. That dip is largely thanks to timber and steel being discounted as demand has softened in New South Wales and Victoria (Crawford, 2025).

That relief doesn’t stretch very far though. Concrete prices have kept climbing, now sitting at 1.3 times what they were at the end of 2021, making it the single biggest price pressure in the past three years (Crawford, 2025). Other materials like ceramics, roofing, finishes and barrier products aren’t far behind, with many of those categories increasing by 20 to 30 per cent overall (Crawford, 2025).

Despite these increases, cost is only half of the challenge. Builders are still facing ongoing struggles to get hold of the materials they need. A survey of Contractor Connection’s Managed Repair Panel members revealed that supply shortages are still widespread, leading to long project delays and keeping pressure on claims costs (Crawford, 2025).


The impacts of a labour shortage

Beyond the cost, supply, and demand factors we see, labour shortages also contribute to the problem at large. Right now, Australia is short about 90,000 skilled tradespeople, and there is no quick fix in sight (Crawford, 2025). Fewer young people are choosing trade careers, and migration settings have been slow to respond. As a result, there simply aren’t enough hands on deck to deliver the housing and infrastructure the country needs.

Additionally, Australia’s labour costs are expected to rise by another 6 per cent in 2025, and over the next five years, the sector will need an extra half a million workers just to keep up with national housing targets (Crawford, 2025). Without meaningful change, that shortage will keep pushing up the price of claims and dragging out the time it takes to get clients back on their feet.


Natural disasters are amplifying claims inflation

The pressures of labour shortages and material constraints are significant on their own, but the growing toll of natural disasters has compounded these challenges in ways the industry can no longer overlook. Since 2010, natural catastrophes have generated more than AUD 34 billion in insured losses, with almost three-quarters of that figure attributed to floods and storms (ICA, 2024). Today, six million Australian homes are situated in bushfire-prone areas, while one in twelve properties carries measurable flood exposure (ICA, 2024).

The consequences extend well beyond a simple rise in claims volume. Each severe event exerts enormous stress on an already fragile ecosystem of builders, suppliers and insurers. Demand for trades and materials surges overnight, outpacing capacity and stretching already thin resources. The result is a cascade of delays, escalating costs and protracted recovery timelines, turning what should be straightforward rebuilds into complex, drawn-out undertakings that challenge both insurers and the communities they serve (Crawford, 2025).


What does this mean for the insurance landscape?

The forces behind claims inflation don’t exist in isolation. Instead, they feed into each other, creating a loop of rising costs, project delays and client frustration. Understanding these pressures helps everyone involved have clearer, more realistic conversations about timelines and what’s driving the numbers.

There’s no easy solution, but recognising the problem is the first step; the industry will need long-term strategies and honest conversations. For now, that means brokers, insurers and clients need to work together, stay informed and brace for the fact that claims costs won’t be easing any time soon.




Copyright © 2024. Sage Insurance Pty Ltd (ABN 71 114 254 607) is an Authorised Representative (001306582) of
EBN Holdings Pty Ltd ABN 24 635 396 306 AFSL 518220

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Copyright © 2024. Sage Insurance Pty Ltd (ABN 71 114 254 607) is an Authorised Representative (001306582) of EBN Holdings Pty Ltd ABN 24 635 396 306 AFSL 518220

linkedin icon

Copyright © 2024. Sage Insurance Pty Ltd (ABN 71 114 254 607) is an Authorised Representative (001306582) of EBN Holdings Pty Ltd ABN 24 635 396 306 AFSL 518220

linkedin icon