If history is any lesson, anyone relying on Xactimate to claim a fair price for the software should be warned that the price will be pitifully low compared to the actual labor and material costs of Hurricane Ian. Disasters lead to increased demand for construction workers and materials. Disasters impose significant logistical costs on those providing reconstruction services.
For example, after Superstorm Sandy, I wrote a post, Xactimate price trend does not reflect actual costsand notes that the increased costs are not recognized by Xactimate:
Yesterday, our company hosted a training seminar for public adjusters and others who use the insurance claims estimating software, Xactimate. During the seminar, a common theme began to develop in the comments we heard. Almost every Xactimate user we spoke to said the same thing, Xactimate̵7;s pre-installed prices have been steadily dropping over the last few years. This got me thinking, as many of my New Jersey clients are seeing their building material prices increase.
This begs the question, why is the exact opposite trend happening in Xactimate’s price list? I would argue that Xactimate’s biggest consumers are insurance companies, and they simply give their customers what they want. Unfortunately, this troubling trend hurts insureds who may not have professionals representing them. The average homeowner is not aware of material pricing trends and will likely assume that the insurance company always provides them with accurate information. As the graphic above shows, insurance companies can underpay these homeowners by at least 30%.
Hurricane Michael had the same problem, leading to thousands of claims valuation disputes. IN Explain Xactimate accuracy and the need to analyze details before you get the wrong turkey dinner from the insurance companyInsurance estimating expert Jeff Major pointed out that contractors and public adjusters should request the digital version of the insurance company’s Xactimate estimate:
Insurance company appraisers often say they have estimated to build a repair or replacement of something exactly like the policyholder’s estimate and complain about the higher price of the policyholder’s estimate. But when you look at the details – and especially the descriptions – included in Xactimate of what they’ve estimated to do, there’s a lot missing on the insurer’s end. Pay attention to the details of what is being done and the descriptions provided in Xactimate.
A practice pointer for policyholders trying to determine the history and accuracy of the insurance company’s estimate based on Xactimate is to always ask for the ESX file. This file will help an expert like Jeff Major to more fully and accurately analyze who actually makes the estimate, when it was made, and what was done with the estimate during preparation.
A Verisk-certified trainer for Xactimate, Andrew Behrens, explained that Xactimate tries to keep up with pricing changes and sent the following email warning about a lag between estimated and actual pricing:
Hurricane Ians expected impact on construction/renovation pricing
While demand for construction materials and primarily labor is a common post-storm phenomenon, the size, expected strength and location of Hurricane Ian’s pending landfall on Florida’s southwest coast, combined with pre-storm labor shortages, could have a significant impact.
Verisk/Xactware’s pricing data services team is closely monitoring Hurricane Ian. While we don’t yet know the full impact of the damage and thus potential increase in demand, we are here to ensure that the pricing information you have come to rely on will be responsive and reflect the market.
For our upcoming October price list, which will be published at the end of this week or early next, we are currently performing careful and detailed analysis of the latest survey data and will make appropriate adjustments based on the current and expected restoration trajectory and reconstruction prices.
We will stay in close contact with our clients in the field, and we encourage you to contact us directly at firstname.lastname@example.org or by calling 800-932-9228 (option 4) to speak directly with one of our reconstruction analysts to leave information on current observations on price information and needs.
We will continue to monitor and adjust and publish interim updates as often as necessary. Customers will be notified of any updates and program assignments that reference Verisk’s pricing will automatically apply the updates.
We also encourage you to make adjustments as necessary within your estimates to reflect current market prices if they differ from the prices we have acquired for the individual market.
Your Verisk / Xactware pricing team
Verisk has always been mindful that its Xactimate pricing is only a guide. It should be checked against actual local prices. Behrens noted that the current hourly rate in Ft. Myers costs $208.28.
A prominent public adjuster and former FAPIA president from Naples, Florida, George Keys, agrees and suggests “always get local rates from two or three trusted licensed general contractors.” Public adjuster Wes Dillon similarly wrote to me:
The only truly correct way is to work with licensed general contractors who get real bids. But even these prices will only be good for a couple of weeks. Then demand drives up the costs of materials and labor.
The bottom line is this – pricing from Xactimate is only a guide and will be low as it lags behind current local pricing. Unless insurance company claims adjusters take this into account, their estimates will not reflect the actual costs, and we will have a repeat of the inaccurate estimates of Hurricane Michael, with thousands of claims valuation disputes.
Just make a proper assessment of your own strengths and weaknesses, and your opponent’s as well.
— Anatoly Karpov