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Property claims databases can be a treasure trove of insights, and can shine a light on valuable opportunities and trends. For instance, I’ve been mining data that indicates an average overpayment of at least 50 percent on several common elements of residential claims, namely damage to cabinets and furniture. Data extrapolated from a report generated by Xactware for 2009 upper and lower cabinet claims shows such claims-paid totals exceeded $1 billion in the review period. That means that the amount of overpayments likely exceeded $500 to $600 million, while customer satisfaction likely suffered.

The totals I cited would be far higher if costs related to replacement—for example, electrical, plumbing, flooring, counter tops, molding—were included. However, for illustrative purposes, I counted only item-specific replacement costs, those being the $650 million for upper and lower cabinets. Our records at National Restorations LLC show that approximately 75 percent of cabinet claims are candidates for restoration at a cost of 50 to 60 percent of full replacement. Additional data from the five-state area surrounding our location in Richmond, Va. shows that furniture replacement estimates over the last four years have been similar to the cabinets in frequency and amount. 

Understanding the Trend

Why have such large overpayments become the rule, and not the exception? I believe the data points to a trend. Experienced adjusters are increasingly likely to choose to replace without effectively considering the repair option, while young adjusters coming into the industry are less likely to even ask the question.

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