Cost trends

Zurich Replacement Value Cost Trends

Real Property * Personal Property

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 for Zurich. The cost trends are published to assist in maintaining proper levels of insurable replacement costs for commercial and industrial properties. Please consult insurance advisors for specific information regarding your situation. The cost trends will be issued on a regular basis moving forward, however due to internal changes, the next update has been delayed and is scheduled for late Q1 2018.

January 2017 Cost Trends Analysis

The current building construction cost trends show a largely flat to slightly negative construction cost inflation for the six months ending January 2017 and an average increase of .3% for the year. There are pockets of increased costs in the range of 2.5% based on local conditions. Labor is the main driver in inflation although low material costs contributed to the flat results. Increased construction activity may eventually put upward pressure on costs.

The personal property cost trends indicate little change in machinery and equipment costs for the listed plant occupancies. The most recent survey of machinery and equipment costs showed costs remained flat for the previous six-month period. It is anticipated that the costs will be about the same through mid-2017.

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 January 2012, the cost trends are available on a regional basis.

To determine the most 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 last time the existing values were updated. Scroll down the page to the closet city and note the multiplier. Multiply the factor provided by the existing estimated replacement cost to arrive at the most current estimated replacement cost.

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 where last updated or established and note the multiplier. Then apply the appropriate multiplier to the existing personal property values to approximate the most current replacement cost.