Claim inflation: strategies for managing the rising scope and cost of restoration

Insurance claims are becoming more frequent and complex — and with them, restoration expenses continue to climb. This escalation is a major contributor to overall claims inflation across the property sector. Behind the numbers lies a mix of industry-wide challenges: inconsistent standards, variable qualifications, uneven quality control, and growing pressure on both time and resources.

In this environment, insurers and adjusters must look beyond immediate repairs to the broader question: how can restoration be managed efficiently, transparently, and fairly? This article explores practical strategies for controlling restoration costs — from setting clear scopes to validating work quality — in a largely unregulated market.

The unregulated nature of the restoration industry

Unlike the building sector, which is governed by bodies such as the QBCC (Queensland Building and Construction Commission), Australia’s restoration industry remains largely unregulated. This lack of oversight leads to variability in both service quality and cost.

Most restoration work in Australia currently relies on American-based IICRC (Institute of Inspection Cleaning and Restoration Certification) standards. While internationally recognised, these are not fully tailored to Australia’s unique environmental and regulatory conditions.

However, steps are being taken to localise these standards. For example, the IICRC S500 (water restoration) and S520 (mould remediation) have now been adopted into Australian Standards (AS-IICRC S500:2025 and AS-IICRC S520:2025). The S700 (fire and smoke restoration) was recently released in the United States, signalling further progress.

Localising these standards will improve consistency and quality, though it may initially contribute to higher restoration costs as the industry adopts more rigorous practices.

Certification and training: why it matters

Effective cost management begins with understanding the qualifications of those performing restoration work. Not all certifications carry equal weight or practical relevance.

• WRT (Water Restoration Technician) certification can be obtained online and focuses mainly on theory, including calculations, material science, and standards, without practical demonstration.
• ASD (Applied Structural Drying) goes a step further by requiring hands-on training. Technicians work in a flood simulation house to dry out structures, gaining real-world experience.
• AMRT (Applied Microbial Remediation Technician) certification is essential for safe and compliant mould remediation, yet it’s often overlooked during procurement.
• FSRT (Fire and Smoke Restoration Technician) certification is crucial in complex fire restoration scenarios where damage overlaps with water, soot, or odours.

Understanding which certifications each technician allows claims managers to assign work appropriately, reducing rework, inefficiencies, and ultimately, claims inflation.

Equipment efficiency and placement

Even with skilled technicians, restoration outcomes depend heavily on the right equipment — and how it’s used.

For instance, low-profile air movers fit into confined spaces but are typically less powerful than traditional “snail-style” models. Similarly, LGR (Low Grain Refrigerant) dehumidifiers excel in warm, humid climates and are cheaper to operate, while desiccant dehumidifiers perform better in cooler environments or when extremely low humidity is required.

Incorrect equipment selection or poor placement can delay drying, inflate energy consumption, and increase mitigation costs. Ensuring restorers understand these distinctions and deploy tools effectively directly supports cost control and claim efficiency.

Defining scope and focusing on mitigation

Clear instructions and a well-defined scope of work are among the most effective tools for cost management.

Early in the claim process, the focus should be on mitigation: making the property safe, extracting water, and preventing further damage such as mould growth. Mitigation typically doesn’t require high delegated authority, as a few thousand dollars is often sufficient to stabilise a property.

Once the property is stabilised, a detailed restoration proposal, including full scope and methodology, should follow.

This step-by-step approach enables better cost planning, separates urgent actions from longer-term restoration, and provides greater control over expenditure.

Documentation, itemisation and cost verification

Transparency is essential in managing restoration costs. Restorers should be required to provide:

• Moisture readings
• Photos and floor plans
• Methodologies
• Itemised quotes

Itemisation prevents hidden cost inflation that lump-sum quotes can obscure. Each task should be traceable and justifiable against factors like the water category (clean or grey), material salvageability, and necessity of drying at that stage.

Regular documentation not only builds accountability but also supports objective cost validation when claims are reviewed or audited.

Hygiene reports and second opinions

Independent expert reports, such as hygiene assessments, play a crucial role in validating claim-related damage.

However, decision-makers often rely solely on the conclusions of these reports without reviewing the reasoning behind them. Asking clarifying questions, testing assumptions, and engaging with the analysis helps ensure that findings are evidence-based and consistent.

When contradictions arise, or when professional experience indicates otherwise, seeking a second expert opinion can prevent costly misjudgments and help preserve the integrity of the claim.

Achieving a win-win outcome

Managing claim inflation in restoration requires a proactive, structured approach.

By defining clear scopes, separating mitigation from restoration, engaging appropriately certified professionals, and challenging both methodologies and costings, insurers can maintain control without compromising outcomes for policyholders.

Collaboration and open communication among restorers, adjusters, and insurers are essential. When all parties align on expectations, restoration becomes a cooperative effort that delivers fair value rather than friction.

From principles to practice

Sedgwick’s Scope and Cost Validation team applies these principles in real-world settings.

Comprising trade-qualified professionals with extensive experience in building and restoration, the team reviews scopes, methodologies, and costings to ensure they are fit-for-purpose and commercially sound.

By validating quotes, challenging assumptions, and aligning restoration plans with claim objectives, the team helps insurers achieve transparent, efficient, and well-documented outcomes — reducing rework, improving accountability, and strengthening cost assurance in an increasingly complex claims environment.