Zurich is committed to providing experience and insights to help customers and producers better understand and prepare for the evolving risks they face over time. This issue of Zurich's replacement value cost trends provides the results of the most recent real and personal property inflation survey conducted by Zurich. The cost trends are published to assist in maintaining proper levels of insurable replacement costs for commercial and industrial properties. The cost trends are issued bi-annually in January and July.
January 2012 cost trends analysis
The current building construction cost trends reflect continued modest labor cost increases and a significant uptick in some key material prices. Although competition for construction projects is still fierce, rising material prices continue to put inflationary pressure on overall costs. Costs for steel and piping increased about 7% over the last twelve months. Overall, material costs is the major driver in the current inflation rate. Even though construction unemployment remains in double digits, there is increasing pressure for wage increases although actual increases vary significantly throughout the country.
The personal property cost trends indicate overall percentage increases in machinery and equipment costs for the listed plant occupancies. The most recent survey of machinery and equipment costs showed costs increased slightly for the last six-month period. It is anticipated that the rate of increase will be about the same over the next six-month period.
Real property
Inflation multipliers are provided for all 50 states, Puerto Rico and eight Canadian provinces. In all, cost trends are included for 184 cities. Prior to 2007, the cost trends are available on a regional basis.
To determine the current replacement cost of a building, select the closest city from Zurich's replacement value cost trends. Find the date across the top of the page that corresponds to the date of construction or the last time the existing values were updated. Scroll down the page to the closest city and note the multiplier. Multiply the factor provided by the existing estimated replacement cost to arrive at the current estimated replacement cost.
Click HERE for the January 2012 real property cost trends.
Personal property
The personal property cost trends are calculated by use of a weighted index and include an installation factor.
For personal property, choose the occupancy and scroll down the page to the date closest to when the existing values were updated or established and note the multiplier. Then apply the appropriate multiplier to the existing personal property values to approximate the current replacement cost.
Click HERE for the January 2012 personal property cost trends.
Zurich's property valuation experience
It's more than insurance appraisals It's about helping you stay protected
Zurich's property valuation services are about making sure your insurable property values are reported accurately. With up-to-date valuation data and consulting tools, our seasoned valuation team is helping to create insurance programs that more accurately reflect the true value and exposure for property insurance, while at the same time simplifying the ITV (insurance to value) process.
Specialized experience
- Certified valuation professionals dedicated solely to property valuation
- Qualified staff with a 30-year record of providing effective ITV solutions
- Confidentiality and accountability in all business dealings
Customized services that address your needs
- Detailed on-site appraisals for real and personal property
- Thorough business interruption value analysis
- Comprehensive reports that confirm values
- Responsive consulting services
- Customized valuation analysis using modeling approaches for large property schedules
- Effective assistance in analyzing and managing property exposures
- A holistic approach to solving valuation problems
Up-to-date cost trending
- Publishing real and personal property cost trends that are updated bi-annually
Questions and comments
Richard Lunt, Property Valuation Manager
Risk Engineering
847-330-4398, richard.lunt@zurichna.com