How to Protect Your Restoration Business Against AI-Driven Claim Reductions

The insurance industry is rapidly adopting artificial intelligence to streamline claims processing. While this brings efficiency, it also introduces new challenges for restoration contractors who may face automated claim reductions without human review.

The Rise of Claims Management Models (CMMs)

Insurance carriers are deploying Claims Management Models (CMMs)—specialized AI systems designed to analyze restoration invoices, compare them against standardized pricing databases, and automatically flag or reduce line items that exceed predetermined thresholds. These systems use machine learning to identify patterns and can process thousands of claims faster than human adjusters.

While CMMs promise consistency and speed, they can also create friction. Automated systems may not understand regional pricing variations, specialized equipment needs, or unique project circumstances that justify higher costs.

How AI Evaluates Your Invoices

Modern AI claims systems analyze several factors:

• Line item pricing compared to regional averages and industry benchmarks
• Labor rates matched against local market data
• Material costs validated against supplier pricing databases
• Scope of work assessed for necessity and industry standards
• Historical data from similar claims to identify outliers

6 Strategies to Protect Your Business

1. Document Everything with Photos and Notes

AI systems flag anomalies, but thorough documentation provides context. Take time-stamped photos of damage, work in progress, and completed repairs. Include detailed notes explaining why specific materials or methods were necessary. This evidence becomes crucial when defending your invoice.

2. Use Industry-Standard Pricing Software

Leverage tools like Xactimate, Symbility, or similar platforms that carriers recognize and trust. When your estimates align with industry-standard databases, AI systems are less likely to flag them as outliers. This creates a common language between you and the carrier.

3. Justify Every Line Item

Do not just list "water extraction" or "demo." Specify square footage, equipment used, labor hours, and any complications encountered. For example: "Emergency water extraction (2,500 sq ft) using truck-mounted equipment due to category 3 water contamination, requiring PPE and antimicrobial treatment."

4. Understand Regional and Market Factors

If your pricing is higher than the AI benchmark, provide documentation explaining why. Perhaps you are in a high-cost urban area, experiencing supply chain delays, or responding to a CAT event with surge pricing. Include supporting evidence like supplier invoices or market rate reports.

5. Build Relationships with Adjusters

While AI may review invoices first, human adjusters still make final decisions on disputed claims. Maintain professional relationships with adjusters in your market. When they trust your work and integrity, they are more likely to override automated reductions.

6. Partner with a TPA or Network

Third-party administrators like Reli-Able pre-negotiate pricing and processes with carriers. When you join a vetted network, your work is automatically trusted, and disputes are handled by the TPA's advocacy team, not by you alone. This significantly reduces invoice rejections and payment delays.

What to Do When Claims Are Reduced

If an AI system reduces your invoice:

• Request a detailed explanation of the reduction and the data source used
• Provide supplemental documentation that supports your original pricing
• Escalate to a human adjuster or supervisor if needed
• Consider engaging a claims advocate or TPA to negotiate on your behalf
• Keep records of all reductions to identify patterns and adjust your processes

The Future of AI in Claims

AI in insurance claims is here to stay and will only become more sophisticated. Forward-thinking contractors are adapting by investing in better documentation tools, joining managed networks, and learning to "speak the language" of AI systems through standardized pricing and thorough work records.

The goal is not to fight technology, it is to work alongside it. Contractors who embrace transparency, documentation, and standardized processes will thrive in this new environment.