Supply chain disruption stemming from the COVID-19 pandemic continues to have an effect on the movement and availability of goods worldwide. While there are signs of recovery — factories have reopened, transit rates are down — inventory levels remain a concern, especially in remote areas where “last-mile” logistics are less established. For many property claims in the UK and US, this has meant longer repair wait times and harder-to-find supplies.
Rising inflation and an increased demand for skilled workers also have a direct impact on claims resolution. Material costs haven’t changed much from 2021 or 2022 — they remain high — but another adjustment expense, the cost of temporary housing (“alternative accommodations” as it’s referred to in the UK) is also high as supply of short-term housing is dwindling.
A shift in operational strategy is necessary if claims cycle targets are to be met and quality repairs delivered. To reduce turnaround times, Sedgwick’s property team is taking an innovative approach to attracting talent and building independent resource networks.
Here’s how we’ve shifted our thinking around supply chain to answer three major challenges brought on by disruption: materials procurement, a talent pool commensurate with demand, and inflationary impacts on short-term housing supply.
Leveraging local supply chain, improving “first-time fix” rate
Over the last 12 months in the UK, we’ve doubled in size in terms of claims intake. We’ve really had to scale up our supply chain to meet demand, which has meant making a constant effort to recruit new engineers. The emergency repair supply chain is made up of lots of contractors — we’ve increased from 3,000 to 5,000 subcontractors in the last six months alone. After improving our vetting criteria, we’ve begun attracting the most competent contractors throughout the UK, although we still face challenges to increasing the volume of engineers in remote or hard-to-reach areas. Long-distance journeys cost more, naturally.
Workload has doubled, but at the same time insurers are wanting us to increase first-time fix rate — that is, to complete the necessary repairs within a single visit to the property. In the UK, the majority of our emergency property repairs are plumbing leaks and boiler breakdowns. There are 22,000 different parts for a boiler; a supply chain crisis makes it difficult to have every one of those parts in your inventory. To achieve a higher rate of first-time fixes, we’ve sought to identify the local suppliers nearest our customers who have the option of stocking the parts we need on their shelves, and to integrate these suppliers into our repair network. We’ve also encouraged our engineers to take the most commonly failed parts to site with them.
Reducing alternative accommodation costs when supply is limited
The challenges presented by supply chain disruption impact property loss adjustments in the US and US beyond just the cost of materials and labor. The compounding factor of global inflation has also created challenges for temporary stays. Not only has the number of temporary housing stays increased in tandem with the bump in property claims we’ve seen, but the cost of these stays has increased.
Add to this a growing lack of short-term rental properties on both sides of the Atlantic, and it’s clear why our priority remains getting the owner back into their property as soon as possible. It’s a renter’s market as inflation keeps many people from affording a mortgage or even a deposit on a home purchase. Worldwide demand for short-term housing is up, too, as people turn their properties into rentals or units to let to holidaymakers. Prices for these “branded” short-term lets are higher than the typical cost of renting a home for six to 12 months.
Fortunately, Sedgwick is well positioned to service short- and longer-term housing needs. Currently we’re focused on addressing supply challenges by increasing our rosters — so not just contractors, but hotels and specialist loss adjusters — to create a larger network of preferred partners in housing and repair.
Creative solutions can limit disruption for property owners
One of the unique differentiators of Sedgwick in 2023 amid lingering supply chain issues is that we can tie our great network of repair contractors and great network of temporary housing solutions together. By tying period of stay to period of restoration, we can put owners back in their homes sooner and reduce cycle times while ensuring adjustment expenses like cost of stay remain low.
Still, repairs and relocation can take a toll on a property owner. Increasingly, we’re using creative problem solving both to drive customer satisfaction and to stay ahead of the competition. Here’s an example: Let’s say we’re restoring a property that’s been damaged by a kitchen fire, and the owner is adamant they’ll only return to their home when they can cook in their kitchen. We’ve erased all traces of smoke and the new cabinetry is finished, but the high-end stove the owner had been using is on backorder. Sedgwick can offer to put a standard stove in the home immediately and swap in the customer’s preferred model when it’s in stock in a few months’ time. In the US, yet another Sedgwick-powered solution exists, which is to install a fully accessible kitchen unit within an enclosed pod that sits on the owner’s driveway for use until repairs are completed inside.
These are some of the ways Sedgwick is providing high-quality property repairs while reducing cycle times and reducing the amount of indemnity that carriers have to spend on these losses. By understanding potential “downfall areas” created by supply chain impacts, we can evolve to deliver more accurate repair estimates and faster response and completion times — all while building up our partner networks and maintaining Sedgwick’s reputation as a global leader in integrated solutions.
Learn more > read about our home emergency service in the UK or explore our property solutions in the U.S.