The objective of this case study is to analyze how an overpayment discrepancy in an insurance-approved estimate went unnoticed during the supplement review process and to identify improvements that enhance accuracy and prevent similar occurrences. By examining the root cause, we aim to refine our verification procedures, strengthen internal review checkpoints, and establish best practices for supplement accuracy. 

Introduction:

This case study focuses on a real scenario where a measurement discrepancy in an insurance-approved estimate went unnoticed, leading to an overpayment of over $3,000. This led to a reduced approved RCV and required reimbursement to the client. The goal is to analyze how the oversight occurred and establish preventive measures for future supplement reviews.

Claim Background:

• Deal Name: Marissa Wallace - 3611 East Hardy

• Claim Type: Supplement - Roof replacement

• Insurance: Country Financial

• Original RCV: $11,259.55

• Estimate RCV: $16,466.40

• Approved RCV: $11,259.55

• Actual Required Measurement for the Item: 

• Dwelling: Laminated composition shingle - 9.67 SQ

• Ice and water barrier: 462 SF

• Garage: Laminated composition shingle - 4.65 SQ

• Insurance Approved Measurement: 

• Dwelling: Laminated composition shingle -12.67 SQ

• Ice and water barrier: 213.10 SF

• Garage: Laminated composition shingle - 12.67 SQ

• Final Approved RCV After Adjustment: $8,185.14

• Financial Impact:

• Overpayment resulted in a lower final approved RCV by -$3,074.41.

• CSP had to reimburse the client for the decrease from the overpaid amount.
  

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Our Challenge:

• The insurance carrier approved a measurement larger than the actual required quantity.

• We did not identify the discrepancy and it was realized only after supplementing.

• The supplement review process did not have a formal step to cross-check approved quantities with actual measurements.

• The oversight led to adjustments after the claim was settled, requiring client reimbursement and reducing the approved RCV.

The Root Cause

• Over-Reliance on Insurance Estimates and estimators: The deal owner assumed that the insurance approved quantities and measurements on supplement estimate were correct without cross-checking.

• Lack of a Measurement Validation Process: No step required verifying approved quantities against actual measurements before finalizing supplement review.

• Missed Cross-Check Opportunity: The discrepancy could have been flagged by comparing line items with actual measurements.

• Absence of a Final Pre-Submission Review: No structured checklist to validate insurance-approved measurements before submitting our supplement package.

Prevention Strategy

To prevent similar issues, the following steps will be implemented:

✅ Implement a Measurement Validation Process

• Cross-check approved quantities with actual measurements before sending the supplement package.

• Use the measurement report or measurement in SOL.

✅ Strengthen the Supplement Review Process

• Establish a pre-submission checklist that includes:

• Verification of all measurements

• Cross-referencing line items to ensure quantities are accurate.

• Identifying potential overpayments before accepting approvals.

✅ Enhanced Collaboration & Training

• Provide training sessions on identifying discrepancies in insurance estimates.

• Implement periodic audits to reinforce accountability.

• Conduct a refresher training on Reviewing Supplement Package (REVX).

• Implement use of the checklist and create a Knowledge Base document solely for REVX

Expected Results & Impact:

By implementing the proposed solutions, we anticipate the following improvements:

• Increased accuracy in supplement submissions through stronger verification measures, reducing the risk of missed discrepancies.

• Proactive identification of overpayments, preventing situations that could lead to client reimbursements.

• Enhanced team collaboration and accountability, ensuring a more thorough review process before submission.

• A standardized checklist and review process that becomes a core part of best practices, leading to more consistent and reliable supplement handling.

CHECKLIST FOR REVX:

Cover Page of Estimate:

• Client logo, name, address, and opening statement are correct

• Homeowner's name & address are correct

• Deal Owner info (as the Estimator) is correct

• Claim #, Type of Loss, and Price List are correct

Estimate Items/Photos:

• All SOL items are included & correct

• All RF requests for items/quantities (if any) are included

• Notes are present & accurate for all supplemental items

• Photos are present and make sense, based on the items

• Quantities make sense, based on the MR and actual property damage

• Damaged items seen in the RF's photos are included in the estimate (unless the RF isn't repairing it)

Package:

• CTC

• MR (unless including the full MR will hurt your estimate)

• Code docs (as needed)

• Manufacturer docs (as needed)

• Invoices/receipts (as needed)