As 2022 wraps up, it’s time to take stock of recent moving claim trends. Jeff Harrison, the claims manager at Relocation Insurance Group, has shared his insights into how inflation is impacting repairs and costs.
How High Can Inflation Go?
High inflation has been impacting prices across the board, and the moving industry is seeing this in claims costs.
Year-of-year inflation reached 9.1% in June 2022, according to the Consumer Price Index for All Urban Consumers (CPI-U) from the U.S. Bureau of Labor Statistics (BLS). This was the largest 12-month inflation increase since November 1981. Since June, the inflation surge appears to have moderated somewhat, but prices are still increasing. BLS says that prices rose 0.4% in October 2022 and 7.7% in the 12-month period ending in October.
High inflation hasn’t just been a U.S. phenomenon. According to the Guardian, the International Monetary Fund has predicted that global inflation would peak at 9.5% in 2022 and fall to around 4.1% by 2024. In the U.S., Markets Insider warns that rising wages could keep inflation high.
Labor and Fuels Price Hikes Add to the Problems
It’s not just items that are more expensive. Labor and fuel costs have also surged.
BLS says that motor fuel costs increased by 60.2% in the 12-month period ending in June 2022. Since so many industries rely on fuel, this price hike can have a ripple effect through the supply chain.
Meanwhile, BLS says that compensation costs for civilian workers increased by 5.0% in the 12-month period ending in September 2022. This also has a wide-ranging impact on many industries, including repair firms.
As operating costs rise, repair firms have to adjust their prices to stay profitable. This makes repairs – and moving claims – more expensive.
What Inflation Means for Moving Companies and Claims
Even when movers are careful, some items may be damaged during the moving process. Moving insurance provides important coverage so that these items can be repaired or replaced. However, due to inflation, the costs are increasing.
For example, imagine a sofa is damaged in a move. It can’t be repaired, so it needs to be replaced. According to CNBC, data from the U.S. government shows that living room furniture prices have increased by 19.9% year over year. That means the claim is going to be almost 20% more expensive than it would have been just a year ago.
It’s not just living room furniture, either. CNBC says that bedroom furniture costs are up by 13.7%, appliances cost 8.5% more, and clocks, lamps and decorator items cost 6.3% more.
Even when items can be repaired, doing so may be cost prohibitive. Jeff says he’s noticed more upholstery damage in 2022, and the cost of reupholstering an item may be more than the cost of a new item.
Controlling Costs and Reducing Claims
According to Money, experts generally agree that inflation will probably drop in 2023. Analysts from Goldman Sachs, for example, expect the price consumption expenditures index to drop from 5.1% to 2.9% by the end of 2023.
Although this is promising, the current reality is that prices are much higher than they use to be, and both individuals and businesses need to adapt.
Claims are more expensive, but moving companies can lower total claims costs by reducing claims frequency. Jeff recommends finding out where claims are coming from. For example, are most of your claims stemming from packers or warehouses? Is there a specific crew or employee with a high rate of claims? Are certain items, such as sofas or televisions, experiencing damage frequently?
Once you identify the source of your claims, you can focus on how to prevent those claims.
Are Your Moving Customers Covered?
Moving customers are never happy to learn that their belongings have been damaged. Now that costs are higher, damaged items are an even bigger problem. These moving claim trends make having the right moving insurance more important than ever. Relocation Insurance Group offers third-party moving insurance to make sure your customers have the coverage they need. Learn about becoming an affiliate.