The Associated General Contractors of America (AGC) released its April Producer Price Index analysis on May 13, 2026, documenting the sharpest month-over-month increase in nonresidential construction inputs since March 2022. Input prices rose 1.7% in a single month and 6.6% year over year, driven by tariff-exposed metals and surging energy costs.
The numbers behind that 6.6% headline are concentrated in materials that show up in every remediation estimate and replacement cost appraisal. Aluminum mill shapes climbed 37.3% year over year. Copper and brass mill shapes rose 20.9%. Steel mill products gained 13.3%, and fabricated structural metal and rebar added 13.6%. On the energy side, diesel fuel jumped 73.8% year over year, pushing truck freight transportation costs up 15.2%. Asphalt surged 18.0%.
These increases reflect the 50% tariff on steel, aluminum, and copper items that took effect earlier this year, now fully embedded in producer pricing.
Who it affects
Any organization retaining construction-related liability exposure should pay attention: self-insured general contractors carrying GL construction defect risk, public entities with open property damage or infrastructure claims, municipalities and school districts running capital projects through self-insured programs, and employers in construction classes carrying WC retained layers.
The AGC flagged a critical secondary effect. Nonresidential building construction bid prices rose only 3.6% year over year, less than half the rate of input cost growth. “Construction input costs continue to rise much faster than contractors’ bid prices, particularly for energy-intensive and metals-related materials,” said AGC Director of Market Insights Macrina Wilkins. That margin compression creates its own reserve risk: contractors absorbing cost overruns may cut corners on jobsite safety, a leading indicator of WC frequency.
Where this shows up in your reserves
The primary mechanism is severity. GL construction defect and property damage claims are valued at current replacement and remediation costs. When aluminum is up 37% and steel is up 13%, every open claim with a structural repair component costs more to resolve than it did when the case reserve was set. For public entities carrying infrastructure damage claims, the gap between original reserve and current repair cost may be substantial.
For WC construction classes, rising construction wages (reflected in elevated average weekly wages) push indemnity severity higher. Medical severity compounds on top of that when treatment facilities pass through their own tariff-driven equipment cost increases.
Development patterns may also extend. Contractors and public works departments facing cost uncertainty may delay repairs, stretching claim tails beyond the periods assumed in current loss development factors.
What this means for your next review
If your next reserve study is scheduled for Q3 or Q4 2026, ask your actuary to benchmark open GL and property damage case reserves against current material costs, not the pricing embedded when claims were originally reserved. For WC construction classes, confirm that severity trend selections reflect the 6.6% input cost environment rather than the sub-3% trends that prevailed two years ago. The June PPI release (mid-July 2026) will reveal whether April’s surge was a one-time tariff catch-up or the start of a sustained trend.