Historically, insurance companies and roofing contractors have had a fraught relationship, with contractors feeling like some insurance companies are here to deny claims, and insurance companies thinking that some contractors are complicit in fraud. 

But these presuppositions can get in the way of fulfilling our collective mission as members of the property ecosystem: making people whole. In fact, the roofing contractor industry has a wealth of insights that insurance companies stand to gain. At the 2024 International Roofing Expo in Las Vegas, which is the largest roofing and exteriors event in North America, these insights were on display. 

These industrious professionals offer more than just shelter; they provide valuable lessons that the insurance industry can't afford to overlook. Here are five things the insurance industry should learn from roofing contractors: 

1. Roofing contractors believe that sales volume will increase. 

Roofing contractors anticipate a surge in the volume of roofing sales in the next three years, particularly in residential roof replacements. Notably, residential roof replacements make up nearly one-third of revenue on average for roofing contractors, across both residential and commercial contractors. 

Roofing contractors aren’t the only ones anticipating growth, either. We Market Research estimated that the total worldwide market size in 2023 was $197.6 billion, and it forecasted this would increase to $342.8 billion by 2033. 

So why is volume going up? Partly, classic examples like growth in new builds and aging infrastructure play a role, but growing in significance is the role of climate change. As the severity and volatility of weather increases, we have been experiencing more extremes: hotter highs and lower lows, with exceptionally rainy and water-forward storms. These phenomena naturally take their toll on roofs, especially the ubiquitous asphalt shingle variety, which constitutes over 73% of U.S. single-family residential roofs, according to Arturo. 

Heat, cold, and rain all conspire to wear down these roofs, necessitating replacements and repairs. 

2. Metal roofing is on the rise. 

It stands to reason, then, that metal roofing is expected to increase in popularity. According to research from Roofing Contractor Magazine and Clear Seas Research, 63% of roofers expect growth in the sales of metal roofing systems among residential properties. 

Still, many homeowners associations, or HOAs, have rules around how homes in a neighborhood should look, and this typically does not include metal roofing, which can be thought of as industrial. But the good news is newer variants of metal roofing boast improved aesthetic appeal, potentially swaying even the most skeptical.

While it may come with a higher price tag, the durability of metal roofs far surpasses traditional options. Insurance companies should consider incentivizing the adoption of metal roofs, especially given their ability to withstand hail up to 2.5 inches in diameter — a common culprit behind roof damage. 

Additionally, metal roofs typically carry a Class A fire-resistant rating. The durability is so good that the Federal Emergency Management Agency (FEMA) recommends that homeowners in fire-prone areas consider replacing their wood or asphalt shingles with metal. And to boot, they can withstand up to 140 mph gusts. 

3. Roof maintenance contracts are expanding into the residential market. 

The concept of roof maintenance contracts isn't foreign to the commercial sector, but its expansion into residential markets is gaining momentum. These contracts are the “subscription service” of the roofing world, where contractors negotiate a fee in exchange for regular inspections and repairs of a roof. 

By proactively addressing minor issues before they escalate, these contracts not only extend the life of the roof but also prevent claims from occurring in the first place. Today, insurers are pursuing this same thought process. More and more, insurance companies are interested in fostering a jointly collaborative relationship between carrier and customer, where carriers can educate homeowners on how best to protect their most valuable asset — and lower their premium in exchange. 

To that end, encouraging homeowners to prioritize roof upkeep through a trusted network of roofing contractors can further mitigate risks, increase customer satisfaction, and prevent damage down the line. 

4. Roofers are navigating significant labor challenges. 

The roofing industry is grappling with a shortage of workers, driving up labor costs and, consequently, prices for consumers. A survey conducted nationwide found that 86% of all types of contractors have difficulty finding qualified workers. And in a survey of roofing contractors specifically, 70% found that labor costs increased in 2023 — by a whopping 17%. 

And while materials like metal roofs offer a way to find higher margins for contractors, these new materials also often require specialized installation expertise, reducing the labor pool even further.

These costs work their way through all parts of the housing ecosystem. When natural disasters occur, these pricing pressures are exacerbated due to widespread damage, and a lack of qualified workers in a high-demand environment can drive prices up even further. 

All told, this means the cost of a residential roof replacement has nowhere to go but up, a factor that is critical to assessing and pricing risk correctly on the insurance side. In this way, understanding these limitations and working with policyholders to extend the lifespan of roofs and incentivize good behavior is better for everyone. Insurers must navigate these challenges to ensure fair pricing and quality service for policyholders. 

5. Private equity firms are snapping up roofing contractor companies.

Private equity firms are increasingly eyeing roofing contractor companies, signaling potential shifts in the industry landscape. These firms are well aware of the high growth potential of the industry and its incredibly fragmented landscape, where the 15 largest roofing companies represent less than 5% of industry sales. This offers plenty of opportunity to consolidate and even reinvent the way the industry looks. 

Digitization was a key topic of interest at 2024’s International Roofing Expo, but customer-first storefronts are uncommon. 66% of homeowners are more likely to call when pricing is available on the company website, but 72% of roofing contractors don’t feature their pricing online. And as far as cutting-edge technologies like AI are concerned, contractors, by and large, have yet to cross “the chasm” of technology adoption. 

As PE firms snap up more and more roofing contractors, the shift towards seamless online shopping types of experiences will likely accelerate, and this could lead to a more consistent quality of service for homeowners, as streamlined processes and increased competition drive innovation and efficiency. 

Today, many insurance companies have a network of preferred vendors they work with and trust for repairs. This trend prompts insurers to reevaluate their preferred vendor networks and explore opportunities for enhanced digitization in roof repair experiences. It’s critical to think of repair and restoration as an interrelated part of the life cycle of a property and policyholder, even if you’re not the one doing it. 

From the perspective of the homeowner, it’s all the same: it’s about making them safe. 

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In conclusion, the insurance industry stands to gain invaluable insights by heeding the lessons of roofing contractors. From anticipating market trends to embracing new technologies, there's much to learn from these unsung heroes of home maintenance. By embracing innovation and collaboration, insurers can better serve their policyholders and navigate the ever-changing landscape of risk management.

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