Global disruption meets local reality for the economics of UK insurance repair work

Geopolitical volatility, economic uncertainty and rapid shifts in global markets are creating persistent instability. Organisations must expect disruption and build agility into every aspect of their operations. Persistent instability driven by geopolitical volatility, economic uncertainty, cyber threats, AI risks and supply chain disruption continue to redefine the global risk landscape in 2026.

Global events have significantly disrupted the delivery of insurance repair work in the UK. Building contractors have faced sustained pressure from rising costs, material shortages, and increasing difficulty in recruiting and retaining skilled tradespeople. These challenges have driven substantial inflation and placed strain on all parties involved in delivering and funding repair work.

At the beginning of this year, we forecast builders’ cost inflation for 2026 to be around 4%, based on the assumption of relative economic stability. Alongside this, we also developed alternative five‑year projections. Our optimistic scenario assumed benefits from AI improvements in supply chains and reduced labour pressure from the house‑building sector. Conversely, our pessimistic scenario assumed further geopolitical instability disrupting UK supply chains, reflecting the reality that global stability can no longer be taken for granted. Based on previous events, increases in contractor costs of up to 19% could be seen by the end of 2027. Further detail on these scenarios can be found in our December 2025 cost report.

The impacts of geopolitical volatility, in our forecast will depend on its duration, intensity, and wider implications. That said, early signs of disruption are already emerging in the UK construction supply chain.

Some suppliers with a high dependence on transport such as waste removal providers have introduced fuel surcharges with immediate effect. In many cases, these costs have been passed on directly, with limited effort to absorb the impact. A common rationale has been that fuel escalators are viewed as the most transparent and fair way of managing volatility. In addition, builders’ merchants have begun issuing advance notice of price increases, explicitly attributing them to the conflict.

This raises an important question: what can we do to support the contractors who carry out insurance repair work and who we depend on to help customers at their time of need?

Our response focuses on three key areas.

Firstly: staying informed.

We are asking contractors to keep us updated on any notifications they receive from their supply chains relating to cost changes or price increases.

Secondly: understanding real cost movements.

We have created a schedule of goods covering standard construction materials, fuel, and oil. Price changes are being tracked and benchmarked from the start of the conflict on 28 February, allowing us to separate genuine cost pressures from broader inflationary trends.

Thirdly: supporting contractors more widely.

We are exploring ways to help in related areas, such as debt management support and faster instruction processes. While indirect, these measures can significantly ease cash‑flow pressure and help contractors respond to changing demands from their suppliers.

These actions provide some support; however, the immediate outlook remains challenging for contractors operating in the insurance repair sector.  At Sedgwick, we believe the future will belong to organisations willing to embrace proactive scenario planning, deploy practical solutions and balance rigorous risk management with relentless innovation. For us, it’s about building true resilience: we empower clients to adapt quickly, seize opportunity in disruption and lead with confidence in a world where change is the only constant.