This example illustrates the type of operational insights uncovered during a Level 1 Diagnostic Audit.

All identifying information has been removed to protect client confidentiality.

Industry: Roofing / Insurance Restoration
Company Size: Mid-size contractor
Annual Revenue: ~$2M–$3M
Claim Volume: 8–12 insurance claims per month

Diagnostic Audit Summary

The contractor demonstrated strong market presence and steady claim volume but exhibited several operational weaknesses affecting claim profitability and payment timelines.

The audit revealed gaps in inspection protocols, supplement documentation, denial management, and internal workflow tracking.

These weaknesses created measurable revenue leakage and increased accounts receivable aging.

Category Scorecard

CategoryScorePerformance LevelRevenue Flow Integrity71Moderate PerformanceDenial Management Efficiency66Structural WeaknessAR Aging Health63Structural WeaknessFront-End Controls59Critical BreakdownBilling Workflow Structure65Structural WeaknessCompliance Risk Indicators74Moderate PerformanceData Visibility & Reporting58Critical BreakdownStaffing Structure Alignment62Structural Weakness

Final Score: 65 / 100
Overall Performance Rating: D – Structural Weakness

Key Operational Findings

Front-End Inspection Controls

Initial inspections were conducted by sales representatives without a standardized inspection checklist.

This resulted in frequent omissions in the original estimate, including:

• starter strip replacement
• drip edge installation
• flashing replacement
• code-required underlayment

These omissions required supplements later in the claim cycle and created unnecessary delays.

Supplement Management

Supplement handling was reactive rather than structured.

Common issues included:

• inconsistent documentation supporting supplement requests
• delayed supplement submission
• lack of a defined rebuttal process when supplements were denied

Denial reports indicated that documentation deficiencies were the most common reason supplements were rejected or reduced.

Claim Workflow Structure

The contractor lacked a structured claim management workflow.

Responsibilities were distributed between:

• sales representatives writing estimates
• an office manager communicating with carriers
• the owner handling escalations

Without a dedicated claims management function, follow-ups and documentation consistency varied between projects.

Accounts Receivable Performance

Accounts receivable analysis revealed a significant portion of unpaid claims aging beyond 60 days.

AR aging distribution:

0–30 days: 42%
31–60 days: 28%
61–90 days: 20%
90+ days: 10%

Delayed payment cycles were frequently linked to unresolved supplement disputes and documentation gaps.

Data Visibility

Claim performance was tracked using manual spreadsheets with limited reporting capability.

The contractor lacked visibility into:

• supplement approval trends
• denial patterns
• cycle time drivers
• revenue leakage indicators

Without structured reporting systems, operational decisions were primarily reactive.

Estimated Revenue Leakage

Based on claim data and supplement approval trends, the contractor was estimated to experience measurable revenue leakage.

Average supplement submitted per claim:
$4,670

Average supplement approved:
$2,950

Average unrecovered supplement value:
$1,720 per claim

Estimated monthly claim volume:
~10 claims

Estimated monthly revenue leakage:
$17,200

Estimated annual revenue leakage:
$206,400+

This estimate reflects only documented supplement shortfalls and does not include additional missed scope opportunities.

Operational Risk Indicators

The audit identified several structural risks that could worsen as claim volume increases:

• lack of standardized inspection procedures
• inconsistent supplement justification documentation
• fragmented claim ownership across staff
• manual claim tracking systems
• reactive denial management

During high claim volume periods such as storm seasons, these weaknesses often result in increased revenue loss and operational strain.

Executive Summary

The contractor demonstrated strong growth potential but lacked the operational systems necessary to fully capture claim revenue.

Most issues originated from weak front-end inspection controls and inconsistent supplement documentation.

Because sales representatives conducted inspections without structured protocols, important scope items were frequently missed during the initial estimate. This resulted in heavy reliance on supplements later in the claim process.

Additionally, the contractor lacked a structured claim management workflow. Responsibility for supplements, carrier communication, and claim follow-up was divided among several roles without clear accountability.

These structural gaps contributed to delayed claim resolution and measurable accounts receivable aging.

Based on claim performance data, the contractor was estimated to experience more than $200,000 annually in recoverable revenue leakage.

With structured inspection protocols, improved documentation systems, and dedicated claim management workflows, the contractor could significantly improve claim profitability and operational efficiency.

Why Contractors Request Diagnostic Audits

Most contractors discover operational weaknesses that are difficult to identify internally.

A structured diagnostic audit provides:

• objective evaluation of claim workflows
• measurable revenue leakage analysis
• operational risk identification
• clear path toward operational optimization

Schedule Your Diagnostic Audit

If your company processes insurance claims regularly, a diagnostic audit can reveal operational gaps that affect claim profitability.

Schedule a consultation to learn more about our structured audit process.