How Contractor Networks Help to Reduce Repair Costs, Improve Timeliness

The commercial property insurance market is navigating a constantly evolving landscape in 2025, in which rising costs, labor shortages, and the ever-present threat of business interruption are reshaping how claims are managed.

In response, many insurers and risk managers are moving away from ad hoc contractor relationships and toward managed repair models that emphasize trusted networks, transparent pricing, and proactive project oversight.

Commercial claims are an intricate puzzle, and the pressures of today’s market only magnify their complexity.

According to Verisk, U.S. commercial reconstruction costs climbed 5.7% year over year through Q2 2025, driven by material spikes–with concrete alone rising 9.3%–and compounded by persistent labor shortages, with nearly 900,000 skilled trade jobs still unfilled. Turner Construction’s cost index shows a similar 3.8% increase in non-residential building expenses, underscoring how inflationary pressures continue to ripple through the sector.

Against this backdrop, insurers and policyholders alike face a critical question: How can they adapt now to avoid being overwhelmed by the compounding costs and delays that threaten every claim?

Commercial property claims present a vastly different set of challenges than residential ones. While homeowners insurance claims often involve standardized materials and straightforward repairs, commercial losses need to consider specialized systems, strict regulatory requirements, and the very real risk of business interruption. A hospital may need temporary power solutions and phased repairs to keep critical areas operational; a restaurant may require specialized equipment replacement; a hotel faces immense financial strain if rooms are unavailable for extended periods; a manufacturing facility may be unable to fulfill contracts until production lines are restored.

And this doesn’t even include how large-scale events continue to test the resilience of claims operations and cost models. For an idea, Lloyd’s estimates it incurred $2.3 billion in losses from the January 2025 wildfires in Los Angeles alone, highlighting how quickly risks can escalate.

These challenges are compounded by the fact that commercial facilities typically already have pre-existing ties with local contractors, often built through routine maintenance or renovations. These relationships can become liabilities in both the renovations and claims process as local contractors may lack the labor capacity, supply chain access, or restoration expertise to handle large-scale damage. This can result in delays, higher costs, and substandard workmanship that requires rework and extends the claims process.

However, commercial property owners, insurers, and claims professionals do have routes to faster repairs and expedited claims processes. Step one is to have a broader, and thoroughly vetted, contractor network. This allows all parties involved to leverage a wide pool of pre-qualified contractors, ensuring capacity is available when it’s needed most. This broader pool would also allow relevant parties to identify contractors that are the best fit for the job, rather than defaulting to whoever is closest.

Step two is approaching the job with a smarter pricing model. Traditional unit pricing often fails to scale for large commercial losses, leading to significant overpayment. Meanwhile, time-and-material models offer a more accurate reflection of actual labor and material costs while simultaneously capturing economies of scale. For example, Verisk data shows that smarter review models can reduce inflated bills by 20% to 27% on commercial claims, an amount of savings that can make a measurable difference across a portfolio of losses.

Next comes proactive project management and pre-loss agreements. It’s pertinent to remember that managing a commercial repair effectively requires both strong project oversight during the claim and smart planning before a loss ever occurs. Having established pre-loss agreements lays down clear expectations from the very beginning for pricing, emergency protocols, and response times so when a catastrophe happens, everyone is aligned and mobilization is immediate.

Then once the work begins, proactive project management ensures contractors are held accountable to those agreements. Dedicated repair specialists or virtual project managers can then monitor timelines, coordinate resources strategically, and keep all stakeholders informed as the projects progress.

In tandem with each other, these ideas and practices will provide both insurers and policyholders with a clearer path forward. As U.S. commercial insurance rates increased 2.8% in the second quarter, according to Novatae Risk Group’s quarterly Market Barometer, organizations can take control of outcomes by adopting solutions that emphasize consistency, transparency, and speed, rather than being overwhelmed by the mounting costs and delays that too often define commercial property claims.

The reality is that the challenges of rising costs, labor shortages, and business interruption aren’t going anywhere any time soon. However, that doesn’t mean these trends have to dictate the trajectory of every claims process. For those who embrace structured repair models and invest in proactive planning as the commercial property insurance space continues to evolve, they will be the ones better positioned to contain expenses, reduce downtime, and deliver better results for clients.

The message is simple: Prepare now. Build the right relationships, put the right oversight in place, and invest where you can make the loss response as seamless as possible and everybody wins.

Reis is president of managed repair networks at Sedgwick.

Morris is an estimate review consultant at Sedgwick.

Topics Contractors