Eru gögnin þín rétt

Data are considered deadly boring so we tried to be clever with the title of this piece. It’s Icelandic for “Are your data accurate?” We hope our choice of language makes the subject sound cool.

Insurers love data with a passion. Some of the stuff is accurate, most is open to varying degrees of interpretation. However, per Clifford Stoll, “Data is not information, information is not knowledge, knowledge is not understanding, understanding is not wisdom.” In other words, you can own terabytes of statistics, figures, numbers, and records and still remain utterly uninformed. It’s similar to a gym membership in a way. Just having access to all that exercise equipment isn’t going to make you fit; nor is just using it occasionally. You have to set goals, be consistent, and work to a plan.

The trouble is, coming up with a plan to utilise data is quite difficult when the goal is vague. For example, insurers have a very difficult time choosing between cost savings and customer service (contractors have done a first-class job of asserting that these are mutually exclusive aspirations). So they jink. Adjusters push on cost, vendor departments pull on customer service. Loosely related “data” fly like popcorn in a vending machine. Contractors go crazy.

This lack of consistency is a direct outcome of poor data coupled with feeble purpose. Contrary to popular belief (strongly held by vendors), insurers cannot flick a switch and instantly see which vendor is being nice and which is being naughty. In a nutshell, insurers have no readily available statistical information on contractors. It’s there but getting it is like digging out fossils. That’s because the claims department in most property insurance companies relies on outdated enterprise software that offers nothing to the modern-day procurement manager seeking succinct data on individual vendors. Incredibly, most insurers cannot even readily state what they pay individual contractors over a period of time and, therefore, have no factual idea of who their largest contractor partners are in terms of revenue. In fact, most insurance companies will struggle to come up with anything more than very rough estimates of their entire annual spend on restoration work performed by restoration contractors. It’s mixed up with all sorts of outlays including the cost of contents replacement, additional living expenses, engineer and environmental fees, and even claims adjustment fees. Really. As a result, many insurers cannot accurately state what their average water damage claim, restoration job, or rebuild cost actually is let alone identify their most effective restoration partners. Some actually believe that the answer lies in their estimating software database even though it is riddled with duplicate entries, unclosed files, and multiple bids.

It’s a lot worse when one considers the situation from a restoration contractor’s perspective. That’s because most haven’t seriously started managing their supply chains yet let alone proving their value to their customers. Therefore, current practice is mostly about achieving adequate margins and this is not something to share with others. Of course, contractors do have access to very interesting, significant, and relevant data – all sorts of statistics about costs, resource-utilisation, and timelines but this is buried deep and is rarely mined with a view to collaborate more effectively with their partners.

We believe that one of the most astonishing wake-up moments in the industry will occur when an insurance company assembles what they think are their average water-damage, restoration, and rebuild claim data and asks each of their vendors to provide the same. Worlds will collide … unless both parties mine their estimating software data for the information; in that case the status quo will prevail and the moment will pass peacefully.

It’s little surprise, therefore, that virtually every restoration contractor has chosen to rely on services as a means of differentiation instead of sharply-focussed analytics. This in an industry where every single contractor employs exactly the same trades and tools, acquires the same accreditations and licences, operates the same estimating software and works off roughly similar margins. Little effort is made to prove how they excel at operating effectively, to demonstrate how they outclass their competitors at managing their time or verify how efficiently they plan their jobs. There’s a big difference between knowing the numbers that you need to run your business properly and understanding the statistics that prove this to stakeholders. That’s the difference between having data and using it wisely. In fact, there’s every reason to believe that most contractors run their businesses to their entire satisfaction. That would be fine and dandy if contractors and insurers had identical goals but that’s not the case.

Relevant analysis of accurate data is the only route to successful collaboration in a complex environment. Will you take it?

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