The number: 58% of restoration contractors are absorbing higher labor costs rather than passing them on, according to the first installment of Crawford & Company’s 2026 Managed Repair Market report, released this week.
That’s not a forecast. That’s contractors describing what they’re already doing.
What Crawford found
The report comes from Crawford’s Contractor Connection network — its managed repair contractor base. Key findings from installment one:
- 58% are absorbing higher labor costs to keep pricing consistent
- 86% say the labor market is affecting their business
- 73% report an operational impact — most often longer job cycle times
- Top concerns: rising material costs, economic uncertainty, and labor shortages
Crawford did not disclose how many contractors responded to the survey, so read the percentages as a signal from inside one large network, not a census of the whole industry.
“Contractors are managing significant cost and workforce pressures, yet many are choosing to protect strategic business relationships while continuing to provide the same level of exceptional service to policyholders,” said Lance Malcolm, president of Crawford Network Solutions. He said the findings would help carriers understand contractor economics and find practical ways to support a healthy repair network.
Labor is outpacing materials — by a lot
The survey lines up with Verisk’s reconstruction cost data: combined hourly billable labor costs rose 4.69% between July 2025 and July 2026 — more than double the 2.05% rise in material costs over the same period. Total residential reconstruction costs rose 3.8%, increasing in every state.
That’s the squeeze in one comparison. The thing getting more expensive isn’t the drywall. It’s the people.
What this means on a real job
The absorption can’t last forever. If 58% of contractors are holding prices by eating higher labor costs, that pressure goes somewhere eventually. When contractors start passing costs through, property repair claim severity rises — on top of the reconstruction inflation insurers are already seeing.
Cycle times are the quiet cost. Longer job cycle times don’t just annoy adjusters. Slower repairs mean longer additional living expense periods for homeowners and longer business interruption for commercial clients. If your estimates and schedules still assume pre-2025 timelines, they’re wrong.
Insured values are drifting. With labor driving reconstruction costs up faster than materials, property valuations last reviewed before 2025 may already fall short. Underinsurance usually only shows up once the claim is filed — which is the worst possible time to discover it.
Technology is table stakes now. The report found near-universal tech adoption — 98% of contractors use technology somewhere in the business: estimating and scoping, communications and documentation, project management, and field work like moisture detection and damage assessment. If you’re still estimating on paper, you’re not competing with the 98%.
What’s coming next
This was installment one of three. Two more are scheduled:
- October 21 — how managed repair programs create value
- November 11 — collaboration between contractors and carriers
Both are worth watching. The October installment will show how Crawford frames the value story for managed repair — which matters if you work in or around those programs. The November installment gets at the contractor-carrier relationship directly, which is where the cost-absorption tension either resolves or breaks.
We’ll update this page as the next installments land.
The bottom line
Most contractors are choosing to protect relationships over protecting margins right now. That’s a defensible call — until it isn’t. The operators who come through this stretch best will be the ones who know their true labor cost per job, price cycle times honestly, and don’t let underinsurance become their customer’s surprise.
Sources: Crawford & Company 2026 Managed Repair Market report, installment 1 (via Insurance Business); Verisk reconstruction cost analysis (hourly billable labor vs. material cost data, July 2025–July 2026).
Restoration Intel is an independent operator’s publication. We translate industry data into plain English for restoration contractors. Crawford’s findings are Crawford’s — we’ve summarized them here and linked the original reporting.