Uninvited

Uninvited

Uninvited

I was recently asked to speak at a regional claims conference.  Two days later, I was uninvited.

The reason? I’m have an adjuster’s license.

At first I wasn’t really bothered by it.  I’m a busy guy. I wasn’t overly excited about paying for a plane ticket, hotel room and other travel expenses involved in attending a conference in another state.  I anticipated out of pocket costs exceeding $2,000.

I also have a business to run.  I’m incredibly busy writing Xactimate estimates for contractors across the country.  Taking two days away from producing sheets was guaranteed to reduce the ROI of speaking at the event into the negative.  I’m not an in-demand speaker (yet).  Folks don’t pay me to go anywhere.

It’s been a couple weeks now.  I should be over it.  But I’m not.  I’m still bothered.  Maybe telling this story will help me let it go.

I wasn’t uninvited to the conference simply because I have an adjuster’s license.  The real reason is that I have experience adjusting claims for HOMEOWNERS.  That’s right; I’ve done some public adjusting.  And because I have been a public adjuster, my opinion (and presence) was not welcome at a claims conference.

It sounds more ridiculous and short-sighted after I type it.

Public Adjusters Not Welcome

That’s about the jist of it.  I can’t help but feel a kind of discrimination.  No, I’m not a minority.  I’m a white male, born in the United States.  Yet my opinions and presence is not welcome because of who I am.

To be clear, simply being licensed as a “General Adjuster” in the state of Oregon doesn’t necessarily make me a “Public Adjuster.”  There is no differentiation between PAs and IAs in my state.  I could just have easily said I was an Independent Adjuster without being dishonest.  I’m sure that if I worked for Mclarens or Crawford there wouldn’t have been any problems. (Actually, my employer might have payed for my trip)

Instead, I explained my role(s) in the industry as best I could.  I write Xactimate estimates for contractors and homeowners.  I charge an hourly fee for my services and my clients are happy to pay it.  I also provide large loss consulting for other claims companies and construction consultants.  And yes, I’ve tried to adjust losses – mostly unsuccessfully. (if you want to hear those stories, send me an email)

I discussed possible topics for “my” speaking engagement with the nice young lady who was eager to fill the breakout sessions for the upcoming conference.  I told her more about what I do every day and we worked out a rough outline for my talk.

I told her how I routinely write estimates which are DOUBLE what the insurance carrier’s initial offers.  There aren’t any black hat tactics or secret tricks; just looking at a loss from a different perspective.

That Sounds Great

Why thanks!  I think so too.  I would think that adjusters and carriers would be interested to learn what the “other side” of the claims process looks and feels like.  No one likes to see their reserves blown out of the water.

Who wouldn’t want to better understand the claims process and how it affects their work?  Well, it turns out that a couple hundred “claims professionals” don’t care to learn about what I know. Or, more accurately, my anticipated message was deemed too risky to share with an audience of claims adjusters and underwriters.

Pity.  I think I would’ve been awesome.

Risk and Innovation

Innovation is risky.  That’s the jist of the book The Innovator’s Delima (Clayton Christensen).  The larger and more established a company, or industry, the lower it’s tolerance for risk is.  The very nature of large structures is risk aversion and a high degree of outcome control.

New ideas, or anything not previously vetted by upper management, are dangerous to the status quo.  It is highly likely that presenting a topic which shown some light on systemic problems within the industry would be met with either a high level of resistance or completely ignored.  Neither of which is a useful way to expend energy.

That’s the real problem though.  We have an entire industry living in a state of willful ignorance.  Outside opinions (and public adjusters) are actively avoided and ignored.  Meanwhile TPAs, claims “consultants” and lawyers are bilking carriers by promising to lower “claims severity” and reduce claims costs.

The reality is that they’ve all found a way onto the gravy train by vilifying the very folks who do all the heavy lifting: contractors and insureds.  Think about it.  What incentive does an SIU lawyer have to find that there was no wrong doing? Zero.  That would be bad for billable hours.

I have seen firsthand what happens when lawyers and the SIU department get into a case that has a slight chance of fraud. Months and hundreds of thousands of dollars later, we all end up in court.  And who wins in court? Lawyers.

How much could be saved by taking a more favorable view of your clients? No SIU salaries, no lawyer fees. Heck, no PAs because the insured actually feels like they are being treated fairly! Wow, that’s a thought.

Personally, I would love to live in a world where my services weren’t needed.  I can find something else to fill my time for sure.

Innovation from Outside

Change is coming whether we all want to acknowledge it or not.  Keeping a little adjuster like me away from the microphone won’t make a lick of difference.

Companies like Lemonade and Zenefits are already going full steam ahead into the market.  Believe me, they’ve got zero romantic notions about keeping claims personnel employed into the future. Or agents, or any of us for that matter.

“Forget Everything You Know About Insurance,” is says on Lemonade’s home page. Yep, that about sums it up.  What’s the scariest thing people can tell their government? “We don’t need you.”  That’s what their customers are telling their current insurance companies.

And that’s it.  I’m glad I finally got that out.  I do feel better.

For all ya’ll still reading, thanks for coming along for the ride.

For those who are afraid of outside opinions, good luck.  I’ll be over hear riding the wave called “the future.”

Ultimate Xactimate Opening Statement

Ultimate Xactimate Opening Statement

The Xactimate Opening Statement is one of the most overlooked and under-utilized tools in the Restoration estimator’s tool box.

Buy it now here: https://gum.co/XactimateOS

The opening statement is your first best opportunity to introduce your client to the claims process.  Properly written, an opening statement sets the tone of the rest of the claim.

Why do so many folks overlook the importance of opening statements?  I believe it’s because a lot of people don’t understand what an Xactimate estimate really is.  They think it’s just another step in the process of doing work as a restoration contractor.

They treat it as a flexible, fuzzy document that somehow gets them the money they need to do the work they really came here to do.  This lack of seriousness when it comes to Xactimate estimates is why some of you are not experiencing the success that you could.

Xactimate Equals Revenue

As I’ve mentioned before, the Xactimate estimates you write are EQUAL to your company’s revenue.  Think about it; have you ever settled a claim for less than the Xactimate estimate?  If the entire revenue of your company is dependent upon the estimates your write, shouldn’t those estimates be taken very seriously?

I teach my clients that the Xactimate estimate is an official claim document.  It is used as a legal document in a contract negotiation between two parties: the insurance company and your client.  Once your estimate is accepted by your client, the insured, the insurance company must consider it as part of the claim file.  Any changes must be made with the utmost seriousness and detailed accountability.

That’s why most adjusters and TPA’s ask you NOT to show your estimate to your client.  Until your client accepts it, the carrier can beat you up all they want.  It’s just an opinion at that point.  They don’t have to take the estimate, or you, seriously yet.

That also happens to be the reason I tell my consulting and coaching clients to send their estimates directly to their client – the homeowner or business owner who has suffered the loss.  Once that happens, the adjuster is forced to take a much more serious tack with you in regards to your estimate of damages.

This helps YOU avoid the sticky situation of being an unlicensed adjuster, trying to negotiate the claim on behalf of your client.

Xactimate Estimates are Settlement Tools

Now that you’ve got a deeper appreciation for what the Xactimate estimate is, a settlement tool, let’s give you a tool to super-charge it with a powerful Opening Statement.

The Ultimate Opening Statement I use covers a lot of bases.  It allows the project manager/estimator to begin having some helpful conversations with their client.  It also addresses some common trouble spots.  This allows you to deepen your client relationship and avoid tricky situations which may arise later in the claims process.

I’ll give you a brief overview of the main sections.

The Price is Right

Right up front you’ll notice something that I believe most folks are shy about: the PRICE.

I don’t like to make people search through the estimate to know what the bottom line is.  Isn’t that what most people want to know first anyway?  Why do we hide it behind forty pages of mumbo-jumbo that the client won’t understand anyway?

Give it to them. Then you can start the conversation about how you’re going to earn it.  Keep in mind, this is THEIR claim and THEIR money.

CODE, OPEN items and Scope Changes

The first three sections lay the groundwork for the concept that this estimate will change.  It’s important for your client to know that this is a work in progress.  There is a long road ahead and they will need your help to navigate it. See what I did there?

Insureds don’t know how to talk to their adjuster about these things.  They need the help of a professional.

This also opens the door for you to start doing some fortune telling.  What are the “OPEN” items?  When will they be added?  Will you talk to the adjuster about them?  All good questions for you to answer right up front.

Overhead and Profit: The Three Trades Myth

This is a biggie.  Carriers are beating the O&P horse to death these days.  And if you find yourself on any TPA programs I’m afraid you’re gonna have to lose this section all together.  Don’t complain to me, you’re the one that agreed to their “rules.”

Adjusters and carriers have become very adept at throwing up objections to General Contractors getting Overhead and Profit.  This section is your answer: we’re charging it, so deal.

In case you didn’t realize it, the property damage repair industry is still the wild west in many regards.  There are no federal or state guidelines regarding with a contractor can or cannot charge a markup on their work. The reason insurance companies are so eager to tell you “we don’t pay that” is because it’s an easy 20% to shave if the contractor happens to be uneducated on the process.

The fact is that I, along with hundreds of estimators across the country, have been writing one-trade estimates for contractors for years which include a 10% overhead and 10% profit calculation.  All you have to do is stand your ground. And bill your client.

Change Orders and Credits

I used to hate it when clients would start “cherry picking” my estimates.  “I’ll do my own cleaning,” and “I can paint that room,” are the most frustrating.  What would happen, before I implemented this section into my opening statements, is that clients would take all the high-margin trades out of my estimate in an effort to either save money or get upgrades.

And they always seemed to do it AFTER we’d started the job.

So let’s get all that nonsense out of the way right up front.  Your client needs to understand that your time as an estimator has costs involved.  They need to realize that the value you bring as a company goes beyond the $1.25 a foot you’ve got for paint.  There are certain sunk costs associated with contracting their job.

Talking about this first usually sets the proper understanding.

This section also lays the rules by which you agree to play.  There’s nothing wrong with changes, they just need to be in writing.

Owner Responsibilities

The next three sections set the expectations you have for your client to follow.

Matching is a huge issue, and the contractor usually gets stuck in the middle.  This is your way out.

When your client says, “This new flooring doesn’t match the existing,” you can remind them of this section.  Any problem they have with matching can then be addressed with the adjuster WITHOUT you in the middle.

I do this all the time with drywall texture.  Why do adjusters believe that a perfect texture match is possible 100% of the time?  The reality is that there are few drywallers that can match a knock-down patch without floating out the entire continuous area.

I always tell the client that we’ll do our best to patch the affected area.  If the adjuster is digging in, I say that we can’t guarantee a match, but we’ll try.  (This is usually best done in writing, sent to BOTH the adjuster and the client.)  When the patch doesn’t come out perfect, I let the client chew on the adjuster, not me.

Warrantee

The warranty section is one that you’ll probably want to talk to your owner about.  I believe it’s important to set up front, but different companies have different warranty periods.

That’s it folks.  If you want to super-charge your Xactimate estimates, get your hands on this opening statement today.

And if you need some instructions on how to create your own opening statement, I’ve got you covered there as well.

[INSTRUCTIONS LINK]

8 Basic Insurance Policy and Claims Guidelines For Happy Customers

8 Basic Insurance Policy and Claims Guidelines For Happy Customers

The insurance claims world is a dangerous place for amateurs.

“Beginning in the 1990s…insurance companies reconsidered [their] understanding of the claims process. The insight was simple. An insurance company’s greatest expense is what it pays out in claims. If it pays out less in claims, it keeps more in profits. Therefore, the claims department became a profit center rather than the place that kept the company’s promise(s).” – Jay Feinman Delay Deny Defend 2010
I read this book about four years ago, when I was first thinking I could take the insurance industry and flip it on it’s head.  Ah, the arrogance of ignorance.  A few years on, and I’m a little closer to making a dent in the claims universe.  No revolution has happend yet, mind you, but I can see some changes coming.
I picked up a journal from 2013 tonight.  I like to re-read my thoughts from time to time, to help keep perspective.  I saw some notes I made in February regarding this book and thought it was time to put together a post for them.  What follows is my top eight takeaways from reading Jay Feinman’s wonderful book on insurance claims.
I’ll elaborate on each after I list them.
“You are an amateur in a field of professionals.” Jay Feinman Delay Deny Defend 2010

1) Evaluate your relationship with your carrier.

2) Pick a good company.

3) Buy the right policy.

4) Understand your coverage.

5) Understand the Claims Process.

6) Fully Document your claim.

7) Meet your adjuster.

8) Decide on your need for professional guidance.

  1. Evaluate your relationship with your carrier.

We’ve all been taught that we were in “good hands” or that our insurance company was like a “good neighbor”.  The commercials and jingles are burned into our heads with millions of dollars of advertising.  The reality is that our insurance companies are not our friends or neighbors.
Jay calls the situation a “special kind of business relationship.”  Insurance companies should not be viewed as friends.  Nor should they be viewed as enemies.  You’ve entered into a contract with a large corporation.  The takeaway advice is to look out for yourself first, while being cooperative.  No need to be abrasive or combative.
Afterall, you want this large corportation to write you some potentially large checks, right?
  1. Pick a Good Company.

I’m not going to share my opinion here regarding the good, bad & uglies out there.  You don’t have to wander around the Claims Delegates blog for long to get my thoughts on who the bad actors are.  There are a couple web sites that will help you figure things out though:
The Consumer Federation of America is a wonderful place to start.  This little piece sets the tone nicely, right on the front page.
” Consumers spend hundreds of billions of dollars a year on car, home, and life insurance products whose complexity and individual pricing permit insurer inefficiency and abuse. A large majority of the state insurance departments that regulate these insurers have neither the resources nor the will to do so adequately.”
I think they might have seen folks get taken advantage of once or twice, no?  I read in my notes that I found a quote saying, “avoid Allstate at all costs.”  I wasn’t able to locate that specific quote just now, but I did find quite a scathing report from ’07.  I don’t think things have gotten better over at Allstate over the last nine years.  I’ll just leave this link here.
Of course you can use the Google as well as I can, but here’s another “Hall of Shame” list I found.
What you should do is find a good, independent agent who has access to more than one carrier.  They have the best opportunity to shop your premium and get the best coverage.  Which leads us to…
  1. Buy The Right Policy.

The most important thing to consider when buying ANY insurance is coverage.  And when you’re talking about what IS covered in your policy, you also want to check out what things ARE NOT covered in your policy: the EXCLUSIONS.  I’ve seen policies which weren’t worth the paper they were written on because of the exclusions which were hidden inside.  I spoke with a client last week with a Builder’s Risk policy that excluded damage by fire if the fire was caused by “combustible materials.”  Really.  A job site with combustible materials? What are the odds?
They suffered a total structural loss and their claim was denied. Because they didn’t understand their policy. (oh, I’m a little ahead of myself)
  1. Understand Your Coverage.

Along with the previous section, I’ll add this advice: READ YOUR POLICY!  Just do it. That is all.
  1. Understand the Claims Process.

This is where things get tricky.  Mr. Feinman said you’re an “amateur in a field of professionals.”  Once you have a claim you’ve entered a “system designed to make the company money.” (refer to the paragraph that started this post).
The claims center has become a profit center for insurance carriers.  They take in over $1 Trillion in premiums every year, and they want to keep as much of it as possible.  They have a lot of paid professionals on their side.  You need to have someone on yours.
Choose your champion.  Is it your contractor? Fine, as long as they aren’t the contractor your adjuster brought with them.  Just tell them that you need their help.  And ask questions.  Don’t think that you have to come off as an expert.  I’ve seen plenty of highly educated doctors and lawyers screw up their own claims because they thought they were the smartest folks in the room.  They can afford to pay for arrogance and pride, most of us cannot.
I could right a book on this section, and probably should.  Just not right now.
Be polite, be prompt and above all BE PERSISTENT.
  1. Fully Document Your Claim

This is another section that could use it’s own book, but let’s get the basics down.
Once you have a loss, you need to get incredibly organized and start keeping EVERYTHING.  Pictures are king, and don’t throw away anything.  Don’t let your contractor throw anything out either.  Keep it until you’ve been paid for it.
Don’t overshare.  There is a section in the book which talks about how too much information can be harmful to your claim outcome.  Be polite and answer questions truthfully when asked. Just don’t volunteer your life story.
Your job is to Prove your Loss.  The adjuster is not going to give you the benefit of the doubt.  It is up to you to prove, within any reasonable means, your loss.
I’m adding to my list of to-dos, a list of all the things you’ll need to include in your own claim file.  DO NOT assume that documents, emails or pictures that you send to your adjuster will be available for later viewing.  Heck, don’t assume they’ll even exist.  One of the oldest tricks I see is the “I’m afraid I don’t see that in your file ma’am” trick.  Billions of dollars of premiums yet they still have a basement full of filing cabinets where everything is cataloged. Please.
You’re apt to have to send the same form to different departments multiple times before things are settled out.  You may as well keep everything yourself in an organized fashion.
  1. Meet your Adjuster

This section is a little vaugue for me right now.  It’s been a couple years since I read the book and I’ve since given it to someone.  So I’m ad-libbing some here.
If you don’t get a good feeling from your adjuster, make the call right away.  Find their manager, and their manager’s manager, and get a new adjuster assigned.  You’re going to be dealing with this person for a long time.  If you don’t get a good vibe or believe they are going to handle your loss adequately, move on and don’t look back.
These days the person that comes to inspect your loss likely won’t even be a company adjuster.  If an IA (independent adjuster) comes to inspect, find out who the Desk adjuster is and open direct dialogue with him/her.  The IA is just a contractor to the insurance company who’s job is to write as small of an estimate of damages as possible.
Ask for advance payment.  The idea is to get them used to writing checks.  It doesn’t have to be a huge settlement check either.  Tell the adjuster about the clothing you had to replace or the groceries you had to buy.  Get them to write you a $1,500 or $5,000 check right away.  You shouldn’t have to come out of pocket for anything claim related.
  1. Decide on Your Need for Professional Guidance.

I realize this last one is exactly why you’re reading this blog post right now.  You got stuck/confused/frustrated with the progression of your claim and went to the Google for answers.  I’m glad you found us, and I hope this is helping.

Professional help is not free.  Good help is not cheap.  Getting what you pay for certainly applies here.

No, you probably won’t have coverage in your policy to pay an expert to represent you.  That’s why a lot of PAs (Public Adjusters) work on a commission or contingency basis.  I don’t, but I’m not normal.

If you’re insurance company is being completely unreasonable, it may be time to hire an attorney and let them fight it out.  A PA will do the same, except they can only take things so far before having to hire an attorney anyway.  The going rate for public adjusting is 15% of the claim settlement.

That just about covers it for now.  It looks like I’ve obligated myself to more writing.  I’ll get right on it.  In the meantime, you can read the rest of the blog here.

Need Some Advice Quick?

<a href="https://www.amazon.com/Property-Casualty-Insurance-Concepts-Simplified/dp/0578053977/ref=as_li_ss_il?ie=UTF8&qid=1475596738&sr=8-1&keywords=Property+and+Casualty+Insurance+Concepts+Simplified&linkCode=li3&tag=claimdeleg-20&linkId=78d69b142297d3dd78bc4ad8a9061438" target="_blank"><img border="0" src="//ws-na.amazon-adsystem.com/widgets/q?_encoding=UTF8&ASIN=0578053977&Format=_SL250_&ID=AsinImage&MarketPlace=US&ServiceVersion=20070822&WS=1&tag=claimdeleg-20" ></a><img src="https://ir-na.amazon-adsystem.com/e/ir?t=claimdeleg-20&l=li3&o=1&a=0578053977" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important;" />
<a href="https://www.amazon.com/Insurance-Dummies-Jack-Hungelmann/dp/0470464682/ref=as_li_ss_il?ie=UTF8&psc=1&refRID=KR3XWQRRJ9A046FN0KST&linkCode=li3&tag=claimdeleg-20&linkId=32602d312b019c1fba02205ff96189ba" target="_blank"><img border="0" src="//ws-na.amazon-adsystem.com/widgets/q?_encoding=UTF8&ASIN=0470464682&Format=_SL250_&ID=AsinImage&MarketPlace=US&ServiceVersion=20070822&WS=1&tag=claimdeleg-20" ></a><img src="https://ir-na.amazon-adsystem.com/e/ir?t=claimdeleg-20&l=li3&o=1&a=0470464682" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important;" />
<a href="https://www.amazon.com/Good-Hands-Boxing-Gloves/dp/1941007074/ref=as_li_ss_il?_encoding=UTF8&psc=1&refRID=42427FTA7EQ9HP2B7PAC&linkCode=li3&tag=claimdeleg-20&linkId=4d449502ca44cea65af3ebaf33903bd0" target="_blank"><img border="0" src="//ws-na.amazon-adsystem.com/widgets/q?_encoding=UTF8&ASIN=1941007074&Format=_SL250_&ID=AsinImage&MarketPlace=US&ServiceVersion=20070822&WS=1&tag=claimdeleg-20" ></a><img src="https://ir-na.amazon-adsystem.com/e/ir?t=claimdeleg-20&l=li3&o=1&a=1941007074" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important;" />
<a href="https://www.amazon.com/Insult-Injury-Insurance-Fraud-Business/dp/1576753492/ref=as_li_ss_il?_encoding=UTF8&psc=1&refRID=5PSWK7JTY4MJMTPR8BFA&linkCode=li3&tag=claimdeleg-20&linkId=276fc57bc52d7419bbef4cbcfa187667" target="_blank"><img border="0" src="//ws-na.amazon-adsystem.com/widgets/q?_encoding=UTF8&ASIN=1576753492&Format=_SL250_&ID=AsinImage&MarketPlace=US&ServiceVersion=20070822&WS=1&tag=claimdeleg-20" ></a><img src="https://ir-na.amazon-adsystem.com/e/ir?t=claimdeleg-20&l=li3&o=1&a=1576753492" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important;" />
Adjusters Are NOT Responsible

Adjusters Are NOT Responsible

Adjusters are not responsible for the final work product.

They never have been.

Here is an excerpt from a recent Clarity.fm call I had with a client.  The adjuster with Mercury insurance underbid his repairs by at least $10,000.  Mercury insurance also made him move back into his home despite having no kitchen, and with all his contents and cabinets filling his living room.

Not cool buddy. Not cool at all.

(Client): Any advice on what to expect on a claim like mine would be much appreciated. Thanks again.

 

Tough to say without pictures. 30-40k maybe

Jul 19 2016 7:45 PM

 

(Client): The adjuster normally bids that low? Cognitive dissonance.

Jul 20 2016 8:22 AM

No adjuster is the history of adjusting has ever been responsible for the work that needs to be actually done.

If they don’t have to build it or warranty it three years from now, what frame of reference do they have to actual costs?

The only folks who can honestly give a cost estimate are those that are actually willing to do the work – all of it – for the price they quote.

The problems arise when you have “program” contractors, who are willing to compromise the quality of their work, and their integrity, by fitting a project into an unrealistically low “adjuster” estimate.

“We’ll do it for that,” actually means, “We’ll cut enough corners on YOUR project in order to make the adjuster look good.”

*Andy McCabe*

(END Clarity.fm conversation)

I’ll take this one step further.

There are adjusters who tell me, “I used to be a contractor, I know what it takes to [insert construction task].”

I’ve got a question for those adjusters: if you were such a good contractor, who was able to match brocade ceilings flawlessly and marry new base to old without visual differences, why aren’t you still doing it?

I’ve got your answer: you SUCKED as a contractor and couldn’t make a living at it.  

That’s it. Simple reality.

If you were good at hanging and refinishing cabinets, you would still be doing it.  If you were able to perform projects profitably and make owners happy with your final product, then you would be making a better living doing THAT than you are right now.

You chose adjusting as your profession because it was a decent paying job with above average benefits.  And when it comes to figuring out depreciation and interpreting policy provisions you ARE the expert.  When it comes to ordering materials, coordinating subcontractors, performing quality control and ultimately putting people’s lives back together after a major loss, you suck.

So stop pretending otherwise.

 

Need Some Advice Quick?

Organizational Culture Determines Organizational Success

Organizational Culture Determines Organizational Success

“We are creating an industry which is creating jobs that are less and less appealing to the potential employees in the job market.” ~Thomas Underbrink

 

Last month I had the pleasure of attending the Oregon Casualty Adjusters Association annual symposium.  It had been a while since I had attended this event.  I’ve been on the consulting side of claims for some time now, and it was great to connect with folks who I hadn’t seen since my time as a Restoration contractor.

It was also very interesting to see and hear how the claims industry has continued to change since my departure.  Restoration project managers and front-line claims adjusters operate in a much different environment than the one that existed only ten years ago.  “Programs”, TPAs and continued specialization and consolidation have created a far less personal (and appealing) working environment all involved.

The Symposium keynote was given by Thomas Underbrink, the Director of Litigation at Mutual of Enumclaw.  I was fascinated to hear things from his point of view, and very much felt like a fly on the wall as former contractor-turned-adjuster.  As the contractors and other vendors chatted it up in the exhibit hall, Thomas treated me to an inside view of the claims world that I was unaware of till that point.

“You’ve got to serve somebody.” ~Bob Dylan

The keynote began with this quote.  What Bob was telling us is that no matter who you are, you’ve got somebody to answer to.  In each of our own lives, we have to recognize who we’re serving, and learn their rules of engagement, in order to succeed.

In my experience on the contracting side of claims, there were always three masters: the insured (Clients), the adjuster (Carriers) and my boss (the Company).  This tri-chotomy (yes, I just made up a word) led to a great deal of cognitive dissonance in my own life (as I’ve mentioned in a previous video/rant).

What I was surprised to hear is that contractors aren’t the only ones who struggle with the often unfair rules and systems that they’re forced to work in every day.  Adjusters and attorneys, as it turns out, are feeling the same frustrations at how our industry is changing as contractors.

The rise of the “-ations”

Thomas spoke about the increasing use of financial metrics to manage the various litigation and adjusting services.  It’s only natural.  Big business and management have always looked to measurement metrics and financials to help boost bottom line profits and shave costs.

The problem, as I heard it, was that when you ONLY make decisions according to the “score board”, you miss some of the important things that make great adjusters and attorneys – the human factors.  An example he used was the increasing use of IAs to handle claims.

In and of itself, hiring outside adjusters isn’t a bad thing.  There are many qualified and experienced adjusters out there.  The problems arise when the IA and the hiring carrier have different intentions.  Things used to be more straight forward.  An independent adjuster was a partner in the claims process.

They were the eyes and ears.  They were the trusted party to help the carrier bring the claim to a successful settlement.  This isn’t the case any longer.

Increasingly carriers are turning to outside help for one singular reason: reduce claims severity.  That’s another word for pay less on claims.  For those who “grew up” in this industry, this runs contrary to the old way.  This becomes a problem and leads to a clash of cultures.  And when cultures clash, the carrier wins.

Thomas talked about the rise of the “-ations.”  By these he meant Segmentation, Specialization and Centralization.  These are another way to reduce claims expense and increase claims efficiencies.

Segmentation means the splitting of claims to certain groups or departments dependent on the level of complexity of a claim.  The thought is that if people can keep doing one kind of claim, every day, they can maintain a higher level of output.

Specialization is similar to segmentation except that claims are assigned according to claim type.  Glass only, BI, theft, liability; all these have been sent to special departments or vendors dedicated to each type of claim.  Some carriers have even begun to split parts of the same claim between two or more adjusters or departments: the water mitigation portion of homeowners claims are adjusted by a separate adjuster from the structure adjuster.

Centralization refers to the increasing popular strategy of physically moving claims centers to one geographic location.  This also coincides with the move to rely more heavily on outside adjusters and “vendor partners” (contractors) to handle the heavy lifting of claims documentation.

All of these things are riding on a culture of reducing costs in order to boost corporate profits.

If you don’t understand this culture, you lose. 

IA firms lose contracts, law firms lose clients.  The ones who succeed learn how to work the system.  The key is to learn what the rules of engagement are, decide that you can accept them, and then play the game.

If the rules are not ones that you can succeed at, it’s time to find a new client/employer.

Someone asked the question, “How can someone [like an inside adjuster] change the current culture?”

You can’t.  Tom’s answer fell with a thud.  I think some folks thought he’d come with some magical answer, but there isn’t one.  The fact is that the only thing that we can affect change on is ourselves.  If we can’t succeed in the environment we’re in, the answer isn’t to change the environment.

The answer is to change ENVIRONMENTS.  You have to choose who you’re going to serve.  “It’s up to you to change your existence in this industry,” Tom said.  And he’s right.

We can’t hope to change the company culture to fit our needs. 

It works the other way.

We see this happening every day in other areas of the insurance juggernaut.  Take health care for example.  There are doctors who refuse to “accept” certain insurance programs.  There are even doctors who don’t accept any insurance at all.

Why would they do that?  Because they don’t have to.  They don’t agree with the rules of the game, so they take their ball and go home.  And I say “Good for them.”  The health insurance world is even more dehumanizing than the property damage world.  And the property carriers are trying harder every day to be more like the big “health” companies.

Profit over people.

I see contractors doing the same thing.  Making the conscious decision to choose clients over carriers.  The biggest “restoration” contractor in Bend, OR where I live is NOT a Servpro or ServiceMaster.  Even the Belfor outpost here is tiny.

CODR succeeds where these other “program vendors” don’t because they put their clients, the local people in Central Oregon front and center in their business plans.  They understand that programs exist to put carrier profit before contractor profit, and that translates to lower quality work for CODR’s clients – home and business owners.

Remember the “trichodomy” I mentioned?  It doesn’t really exist because in that situation someone always loses in order for someone to win.  And the contractor is just the lacky delivering the bad news and substandard work product.

Before you get all mad, let’s look at the numbers.  If you are part of the Code Blue “network”, what do you give on every single water loss?  30%? 40%?  Do you even have a chance to make that up by boosting your invoices? Nope.  They write YOUR sheet don’t they?

Let me get this straight: you go out in the middle of the night and perform services for a “client.”  Then you report to Code Blue and THEY tell YOU how much your invoice is going to be.  Oh yeah, and then they take 40% off and write you a check.  And then they pass a PORTION of that savings to their client, the insurance carrier.

Now you’ve got to compete with a business across town who does their own marketing, has established their own name and referral base in the local market, writes their own invoice and gets to keep ALL OF IT?  How do you survive Mr. Program Vendor? By handling more volume?

I’m sorry if you’re hearing this for the first time right now, but the only thing you’re doing is losing money on more claims than your competitor.

I know there are many out there, friends of mine included, who believe deeply in the programs.  They are viewed as a revenue foundation for growth.  And they may be – for now.

If there is any sure thing in this day and age it is this: things are changing faster than any of us can possibly comprehend.  The rate of change is only increasing.

The other sure thing? The insurance industry is due for a reckoning. With half a trillion dollars in claims every year, and ZERO true innovation in the last twenty years, the industry is just begging for disruption.

Do you think the taxi companies of the world saw Uber coming? No one saw Uber coming.

Did the founders of AirBnB ask Hilton permission to create their company?  The founders didn’t even come from the hospitality industry.  They just saw a big problem and solved it.

The main reason the insurance world hasn’t been rocked by a startup tech company is because it is an amazingly complicated machine.  Lots of moving parts and lots of invested players – players who are more concerned about the status quo than where the industry is going.

My take away from Thomas’ talk was this: adjusters and attorneys are finally feeling the squeeze that contractors have been feeling for the last ten years.  Profits before people.

The days of the 20-year adjuster are over.

Am I the only one noticing this trend?  The “old timer” insurance adjusters are now mostly folks who started in this game AFTER I did.

Yes, I realize that I’ve been at this a while. And yes, I am getting older.  But what happened to the adjusters who were here before I started?  They’re all gone.

Carriers have shown an incredible distaste for adjusters with years of claims experience (and expensive pensions).  The focus is now on reducing overall claims expense. That means it’s more important that a claim is settled quickly, than it is to thoroughly examine the loss, coverage and policy for the benefit of the insured.

Remember those days?  When the insured was treated like a client?

Now we’ve got a crop of college graduates who are taught one thing – the claims system.  The application of policy language and proper loss analysis is all but dead.  It doesn’t fit the new metrics.  So those who are accustomed to the old metrics and slowly weeded out to early retirement – or worse.

What is going to happen when Google’s AI machine figures out that it is better at applying your “program rules” to Xactimate estimates than you are?  Guess what slick, you’re gone too.

Just like Amazon will kill the Postal Service and UPS with their autonomous delivery initiatives, the button pushing you do as a “desk adjuster” will be deemed better suited to a machine sooner than anyone expects.  Just ask any taxi driver in San Franscisco, they’ll say the same thing, “Man, that happened quicker than I thought.”

The Times, They Are a Changing

I took a stroll around the exhibit hall after Thomas’ opening statements.  The changes were incredible.

“Back in the day” there would be all manner general and restoration contractors in at the booths.  I used to jokingly call the Symposium a contractor’s love fest.  It used to be wall to wall.

Now guess who’s exhibiting: lawyers.  Attorneys, benefits companies and forensic/analytics providers.  That and a couple IA’s thrown in for spice.  Is that any indication as to the direction the industry is headed?  Yes, there were some contractors represented, but their position as drivers of the industry has now shifted.

And the funny part is, the attorneys and IA’s were complaining about the EXACT same things us contractors used to complain about. Program rules, cut rates and layers of bureaucracy.  That’s just another day in Restoration to us, but to them, this is all new.  Forgive me if I happen to be all out of tears to shed.

We Should Have Seen it Coming

None of us should be caught off guard by these changes.  We’ve had an exact mirror image of our future right in front of us for years; the health care industry.  What is happening in the P&C space is nothing more than “managed care” for property.

What makes us all the more stupid is that we’ve all be part of HMO’s and PPO’s for years.  These companies were not created to enhance “patient care.”  They were created for profit.  I just got done paying off an ultrasound that my wife had THREE YEARS AGO, because our “provider” at the time deemed the procedure “unneccisary” – despite the fact that our doctor had ordered it.

If this had been a property claim, I would have known what to do – and how to fight.  But I had no idea what to do, so I paid $3,000 out of pocket for a procedure that should have been “covered” by my insurance.  And now they’re coming for property claims.

I’ve said for the past couple years that Xactimate is nothing more than medical coding for construction.  I’ve run my “construction coding” company for nearly four years now.  And there are many companies in my space now.

So What’s Next?

I’m no fortune teller, but I don’t have to be.  The future is more “managed care” for the property restoration industry.  Programs will become less and less profitable, and more restrictive.  Carriers will soon literally own their own stable of contractors, and the independent firms (both contracting and adjusting) will have to become creative in order to survive.

Just look at the Sedgwick – Vericlaim – First Choice conglomerate.  When has there ever been a completely vertically integrated risk management, claims management and vendor management company? Ever?  Please someone correct me if I’m wrong.

Sedgwick isn’t the last.  I fully expect someone like Home Depot or State Farm to put together their own property monstrousity.  Ever heard of Code Red?  How hard would that be to integrate into State Farm’s “Premier Service Program”?

These are all things out of our control as contractors and vendors.  Big companies will do what they want.  So what do I recommend?

I say double down on your local market.  Concentrate on doing the best work you possibly can and choose your clients carefully.

And if you don’t enjoy your work, stop it.  Find something better to do with the rest of your life.  Life is too short to be frustrated all the time.

Sometimes the Grass IS Greener

I saw an old friend at the Symposium.  She was talking with her former claims manager.  Both of them had recently left their employer – her to pursue a different business, him to work for a different carrier.  Both of them were happier than I’d seen them in over twenty years. Literally.

We all make choices in life about where we work.  Some of us compromise more than others.  I don’t believe anyone should compromise happiness in exchange for perceived stability and “benefits.”  Are you happy in your work?  If not, why?

You don’t get bonus points for staying in a crappy situation longer than anyone else.  You just get more crap.

Take a look at my resume and you’ll see that I’m living proof of the saying, “If you’re not living a life of your own choosing, you’re living someone else’s.”  I’ve been fired, layed off, cut back, overworked and underpaid by more businesses than I like to say.  But ever since I made the decision that I was going to be in charge, I’ve been happier.

There are thousands of ways to “make a living”.  We get to choose it.

Do you work in a company culture that you can’t succeed at?  Time to change companies, because you can’t change the culture.

 

 

 

 

Are You Ready to Get a REAL Estimate?

Stake Your Claim

Do you do construction estimates as well?

ScopingXM8Absolutely we do construction estimates in Xactimate. 

Our largest estimate to date is a $3.5million apartment building that suffered major water damage.  The project required the use of as-built architectural plans as the basis for our Xactimate sketch.

Of course, most projects fall into the more manageable $15,000 to $35,000 range.  Through the use of Scope Notes sheets and sharing of pictures via Google Drive, we put together a complete Xactimate estimate according to your needs and specifications.

And it all comes with your letterhead and estimator’s name attached.  In the end, the files are all yours (including any ESX files generated).