Verisk's Xactimate estimating platform is the de facto standard for property insurance claims in the United States, used by adjusters, contractors, and carriers to price restoration work. But a growing number of restoration contractors are raising concerns that Xactimate's price lists are not keeping pace with actual labor and material costs, creating systematic underpayment in insurance claims.
The concern centers on Xactimate's methodology for updating its regional price databases. Verisk updates price lists quarterly based on data from contractors, suppliers, and market surveys, but critics argue that the update cycle is too slow to capture rapid cost increases and that the data collection methodology underrepresents actual market rates.
Labor costs have been a particular flashpoint. The restoration industry has experienced significant wage inflation over the past three years, driven by labor shortages, increased demand for skilled technicians, and competition from other construction trades. Contractors report that Xactimate labor rates in many markets are 15 to 25 percent below what they are actually paying technicians.
The Restoration Industry Association (RIA) has been working with Verisk to address the issue, and Verisk has made several adjustments to its data collection methodology. However, contractors say the changes have not been sufficient to close the gap.
Contractors have several options for addressing the discrepancy: supplementing Xactimate estimates with market-rate documentation, using Xactimate's 'additional line items' feature to capture costs not covered by standard line items, and negotiating directly with adjusters when price list rates are insufficient.
The issue has broader implications for the insurance claims system. When contractors cannot perform work profitably at Xactimate rates, they may decline insurance work, reduce quality, or exit the market — outcomes that ultimately harm policyholders.
