What it actually takes to run catastrophe claims, ALE, and vendor operations when events hit. No theory. Just the workflows, metrics, and decisions that determine outcomes.
This is part of our 5-part series, Atlis Field Manual.
In most P&C organizations, Additional Living Expenses (ALE) and contents are treated as a necessary cost of doing business. Everyone agrees the spend is “high.” Very few can say—with confidence—how much of it is avoidable.
That ambiguity is expensive. ALE leakage isn’t a rounding error. It behaves like a recurring line item that quietly compounds every year.
What we really mean by “leakage”
When people in claims talk about leakage in ALE and contents, they’re not usually pointing to one-off, dramatic errors. Leakage shows up in small, everyday decisions and gaps:
- Paying above-market nightly rates because availability checks are rushed or inconsistent
- Extending stays longer than necessary because status information is scattered
- Double-paying for overlapping services—hotel parking plus storage, two vendors doing similar work on the same claim
- Missing tax exemptions or long-stay discounts because they rely on individual memory
- Approving invoices that don’t fully align with expectations simply because no one has time to contest them
On a single claim, any of these can look reasonable. Across hundreds or thousands of claims, they add up.
Industry analyses frequently put ALE leakage in the 15–30% range. That’s not an outlier; it’s the structural result of manual, fragmented workflows.
Why leakage hides in workflows, not just in invoices
By the time an invoice is generated, most of the financial outcome is already locked in. The real decisions that drive leakage happen much earlier:
- How vendors are selected
- Which rates and terms are accepted
- How upgrades and extensions are handled
- What information was available at the moment of decision
If those moments live in email threads, phone calls, and personal spreadsheets, there’s no reliable way to understand patterns, let alone improve them. You’re looking at the smoke, not the fire.
The invoice is the artifact. The workflow is the cause.
The compounding effect over time
A little leakage feels tolerable when you look at a single event. It doesn’t feel tolerable when you quantify it over time.
A simple example:
- Average ALE per claim: $5,000
- Estimated avoidable leakage: 20%
- ALE claims per year: 1,000
That’s about $1,000,000 in leakage annually. Over five years, that’s $5,000,000—before you factor in CAT spikes, inflation, or increasing claim severity.
This is why the C‑suite should care. ALE leakage behaves like a structural drag on results, not an incidental variance.
Treating ALE as a managed line item
Once ALE is discussed as a controllable line item, rather than a vague “cost of doing business,” better questions emerge:
- What is our current ALE leakage rate, and how do we measure it?
- Where does leakage cluster—rates, durations, vendor selection, billing?
- What guardrails exist today, and how often are they applied?
- Who owns improving these metrics over the next 12–24 months?
Answering these questions requires more than a new report. It requires a different way of running ALE workflows.
A more disciplined approach typically includes:
- Clear benchmarks for nightly rates and durations by market and peril
- Structural checks on exceptions rather than ad hoc approvals
- Consistent capture of key decisions (who chose what, based on which information)
- Vendor performance views that link cost and service quality
Leakage becomes a measurable phenomenon instead of an uncomfortable suspicion.
Where we’re focusing
At Atlis, we’re building around the idea that ALE and contents leakage can be actively managed
—but only if the underlying workflows are consistent and visible.
The work is deliberately unglamorous: standardizing how ALE requests flow, embedding rate and duration guardrails into the process, and turning every assignment, extension, and invoice into data that can be inspected. The goal is not to eliminate all variance; it’s to make the sources of variance explicit so leadership can decide what’s acceptable.
Whatever tooling a carrier ends up using, the principle is the same: ALE should be treated as a line item with levers, not as an unexamined block of spend.
Next up in the Field Manual: Your Adjusters Aren’t Logistics Coordinators →
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