Most restoration contractors are absorbing rising labor costs rather than passing them on to insurers and policyholders. However, labor shortages are slowing repairs, according to a new survey from Crawford & Company.
The first installment of the 2026 Managed Repair Market report, from Crawford’s Contractor Connection network, found that 58% of restoration contractors are absorbing higher labor costs to keep their pricing consistent. Some 86% said the labor market was affecting their business, and 73% reported an operational impact, most often longer job cycle times.
Rising material costs, economic uncertainty and labor shortages were among contractors’ biggest concerns.
“Contractors are managing significant cost and workforce pressures, yet many are choosing to protect strategic business relationships while continuing to provide the same level of exceptional service to policyholders,” said Lance Malcolm (pictured), president of Crawford Network Solutions.
Malcolm said the findings would help carriers understand contractor economics and find practical ways to support a healthy repair network.
The survey findings are consistent with wider cost data. Verisk’s latest reconstruction cost analysis found that combined hourly billable labor costs rose 4.69% between July 2025 and July 2026, more than double the 2.05% rise in material costs over the same period. Total residential reconstruction costs rose 3.8%, and increased in every state.
The report also found near-universal use of technology. Some 98% of contractors use it in their businesses, including for estimating and scoping, communications and documentation, project management, and field work such as moisture detection and damage assessment.
Crawford did not disclose how many contractors responded. The survey covers contractors within its own network. Two further installments are due -- one on how managed repair programs create value, on October 21, and one on collaboration between contractors and carriers, on November 11.
Contractors’ willingness to absorb costs may not last. If 58% are holding prices by taking on higher labor costs, that pressure has to go somewhere eventually. When contractors start passing costs on, claims severity for property repairs is likely to rise, adding to the reconstruction inflation insurers are already seeing.
Longer job cycle times matter now. Slower repairs mean longer periods of additional living expense for homeowners and longer business interruption for commercial clients. Brokers should check that ALE limits and business income periods of restoration reflect how long repairs are actually taking, not the timelines assumed when the policy was written.
The findings also highlight the value of property valuations. With labor driving reconstruction costs up faster than materials, insured values that were last reviewed before 2025 may already fall short. Underinsurance often only becomes apparent once a claim is made.
