Another Year

January 10, 2011 Comments Off on Another Year

We’re a couple of weeks into the new year and it’s now safe to move from cheer and goodwill back to reality. So, how was 2010?

Well, by most accounts it was sort of OK for most in the insurance restoration industry. Business volumes didn’t follow the usual pattern so it was uncomfortable for part of the year waiting for claims to get back to normal frequency. Claims happened in the end but not entirely in the right places at the right time. The good news was that the economy righted itself in comparison to the US.

However, an absence of setbacks doesn’t mean there was progress.

Questions that come to mind are: Was there any noticeable improvement in 2010 in the restoration industry’s business processes, management systems, commercial relationships, long-term plans, customer service, or competitive strategies? A few organisations have had some success but, overall, the industry hasn’t matured much at all. In fact, there are arguments that support the premise that the industry’s standards are moving backwards in relation to the available opportunities. Let me explain that.

Issue: Global warming has created a new industry fad. There’s a veritable tsunami of water-mitigating, contents-drying, IICRC-certified, ASD-trained, water-expert wannabes ready to leap into action at the mere hint of a dripping tap. For good reason: Water damage losses bring in the bacon. They’re relatively quick to turn around and insurers have little idea what they’re paying for. Most contractors don’t want to repair structures any longer but just to dry them. In return, insurers focus on reducing prices by moving from unit prices to square foot prices (and back again) but often fail to actually reduce overall costs. In the end, it’s the same old price thimblerig and industry standards haven’t budged at all.

Opinion: The few contractors who put their resources into full service instead of relying on increasingly unpredictable weather patterns will continue to prosper; the H2O contingent risks being hung out to dry.

Issue: Every contractor is an estimating software expert. Estimating programs serve two purposes: (a) to allow a consistent approach to estimating a loss, (b) to accumulate data to with a view to identifying opportunities to improve service or costs. It’s been about 10 years since the industry started using these programs. Yes, the industry has achieved some consistency in creating and presenting estimates. No, these programs offer absolutely no useable data. Zilch. Not a shred of information has ever been extracted from a commercially available estimating program that has led to any improvement in service or cost. It’s not that the programs are flawed. It’s because filling in all the fields and forms just takes too much time. It’s odd that despite paying license and user fees for these estimating programs, neither insurers nor contractors actually make an effort to derive benefits from them.

Opinion: Estimating software programs offer a huge opportunity. Unfortunately, this is completely ignored. Unless someone figures out a way to obtain value from estimating programs, insurers will drop them as part of future cost-cutting initiatives.

Issue: Every contractor has ‘proven’ service standards. This holds true particularly for the major contractors who track all sorts of arcane data that only they understand. Yes, it’s great to know how well your business is doing but don’t expect your customers to see the value of what benefits you! Customer-centric businesses collect data that their customers need. They do this because they’re confident they offer real value. Then they regularly share that data with their customers and work out ways to make the relationship better.

Opinion: Until contractors make the effort to agree with their customers what needs to be tracked and then do this diligently, the industry will continue to slide backwards on the trust scale. The hesitation to do this is inexplicable and indefensible. One cannot expect a successful partnership where there’s no evidence of value.

And that’s the way I see it: The greatest opportunities lie in providing complete services, using estimating programs intelligently, and tracking and managing worthwhile data. All of these are readily achievable and yet all are largely ignored.

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