Property Replacement Costs on the Rise: Xactware

Replacement costs increased by more than five percent between April 2014 and 2015, said Greg Pyne, assistant vice president of Pricing Data Services at Xactware, a Verisk Insurance Solutions company.

Pyne outlined the factors that influence reconstruction costs during a webinar this week: Recent Trends in Replacement Cost Estimation. These include:

The Xactware executive said that the company uses three methods to research and update reconstruction pricing:

Carriers can expect to see higher replacement cost estimates in the second quarter of 2015, said Pyne. Replacement costs increased by more than five percent in 44 states between April 2014 and April 2015. This much growth hasn’t been seen since 2006, he said.

Nationally, reconstruction costs increased by 5.3 percent.

The reconstruction economy is showing strong signs of growth, with increases in both labor and material, he said.

The top three areas that experienced rising costs to key construction materials occurred in the drywall, lumber and roofing trades. Overall, material costs increased 2.8 percent.

Changes in costs to key labor trades was also noted, the top three trades that showed the most dramatic increases were carpenter/framer, roofer and electrician. Overall labor costs increased 1.8 percent.

Between April 2013 and April 2015, market value has declined as replacement costs have trended up.

Pyne outlined the states with the biggest increases in reconstruction costs during the past three years: