Put Me In, Coach!

Put Me In, Coach!

It’s a common dilemma. You had a flood in your house. The insurance company offers $10,000 to fix it. You can’t find a contractor to do the work for under $40,000. You may feel this is unfair. It certainly is. This is also by design. The insurance company makes more money when it pays you less than what you’re OWED.

Insurance companies use a very complicated program called Xactimate. This is also by design. If it were easy to use, the common property owner could master it. Xactimate software is very expensive. If it were affordable, the average property owner would have a copy.

We’re not talking about Microsoft Word, here.

Is it starting to feel like the deck is stacked against you? The insurance company is trying to get you on the ropes. They want you to feel powerless and hopeless. When you’re in that position, you will accept ANY low-ball offer they give you. Hint: You don’t have to accept the first offer.

Time to get US in your corner!

Like it or not, the insurance company uses Xactimate. That is their “language.” Speaking the same language as the insurance company generally leads to bigger and more successful claims. That’s why you need Xactimate.

Don’t let the insurance company tell YOU how much the damage is worth. Let an advocate fight for you. We’re on YOUR side!

We’re industry veterans. We’ve been doing restoration jobs for decades. We know the REAL cost of fixing a damaged property. Hint: The first offer from the insurance company will ALWAYS be less than what they think your claim is worth.

We need to be on the same page when we go to the mat with the insurance company. They have a “professional” quote that says the damage can be fixed for $X. We have a quote that says the damage can be fixed for $Y. Which quote is going to succeed? Hint: The property owner (YOU) have more power than you think you do!

Andy McCabe is a licensed Public Adjuster. He is insured and bonded. He’s been doing this a long time. Let him go after your carrier! Put me in, coach!

Managed Repair Programs versus Google Adwords – FNOL costs

Managed Repair Programs versus Google Adwords – FNOL costs

The TPA Trade-off: First Notice of Loss (FNOL)

[In order to remain strong and viable into the next version of the restoration industry, contractors must change their mindsets and approach to the market.  The RESTORATION2.0 Movement advocates changes to six main areas of contractors’ businesses. FNOL is one of them.]

Why do we put up with third-party administrators?  These so-called “programs” were put in place for one reason (officially), but we all know what the real reason is.

The “official” reason is to “ensure a better customer experience.”  Sure, so why is it that TPAs interact so little with the actual customers?  Fact is, contractors and “vendors” deliver the customer experience, so THEY are the ones being managed.

TPAs enforce their program rules ONTO vendors and service providers.  Their SLAs (service level agreements) were not designed to deliver better service.  These contracts and rules were designed for a completely different goal: reduction of claims severity.

Someone please explain to me how reducing claims severity translates into a better customer experience.  The metrics and surveys which point to a “better experience” through reduced cycle times, were designed with the answer in mind – before the question was asked.

I will admit that the less time customers have to actually interact with TPAs and claims departments, the happier they are.  That doesn’t mean that reduced cycle time is the best tool to use in order to create satisfied customers.

No, claims departments and carriers have know the truth for a very long time; the shorter the cycle time, the smaller the claim.  Small settlements DO NOT necessarily mean happier customers.  But we contractors are still playing along with the charade.  Why?

I believe the main reason restoration contractors (and body shops and doctors for that matter) still play around with TPAs, HMOs and the like, is because they either 1) don’t know how to get their own customers or 2) can’t see another way of doing business.

It’s all about F.N.O.L. : First Notice of Loss.

You see, service providers have been spoon-fed customers for so long, they’ve forgotten how things worked BEFORE managed repair programs.

Since the carriers, and then programs receive a large percentage of losses FIRST, they are perceived as the holders of the keys.  Once contractors get used to having their jobs just appear every day/week, they get lazy and forget how to feed themselves.

Then, just when the contractor has hired staff and added capacity, the program turns off – or goes away completely. Now what?

The new battlefield of restoration is FNOL.  He who gets the call first, gets to call the shots.  If you caught the fish, would you continue to let someone else tell you how to gut and cook it?

The RESTORATION2.0 Movement is all about helping contractors become more self-sufficient, in order to survive and thrive into the coming next version of insurance repairs.  Make no mistake, the future of our industry will look VERY different from today, and likely unrecognizable to some of the old guard.

When it comes down to it, you as a contractor are paying for every lead that comes in the door, no matter the source.  First notice of loss will not come easily.  Incumbant networks and carriers are actively fighting every day in order to maintain their positions as the “first call” from insured property owners.

They have been telling us contractors for years that without their “programs”, we would all starve.  At the same time, they have built up huge organizations to “administer” the claims process.  They get First Notice, then sell it to contractors with a markup.  So, in a way, we are paying for the privilege of paying for leads… twice.

Now the smart among us understand that there is always an alternative.  If you’re going to pay for leads, shouldn’t you understand the FULL costs of every option?  Google Adwords is one of my favorite alternate lead sources.

Let’s break down an example of TPA “program” work versus Google Adwords.

Most “managed repair” program fees start at 5% of gross revenue. (We won’t talk about CodeBlue because their fees start at 20%).  That means that for every dollar of sales, you give five cents to the TPA – pre-tax.

If your sales volume is $1mm, that means you are paying the TPA $50,000 a year ($4,166/mo) in exchange for these leads.  On the surface, this doesn’t sound unreasonable.  After all, a full-time sales person is going to cost AT LEAST that much before commissions and overhead expenses.  But the up-front fee is only part of the story.

Managed Repair also means managed PRICING.  Program contractors are forced to agree to the carrier-specific pricing schedule.  In most cases, this means the off-the-shelf Xactimate pricelist for your region.  Those of us who know (and teach Xactimate pricing courses), understand that the “standard” pricing from the monopoly-in-Orem makes zero consideration for contractor overhead or profit.

The prices from Xactimate are inclusive of contractors’ COSTS only.  It is a very detailed and thorough pricing and estimating system, but it is up to the user (you, the contractor) to customize it to their specific business needs and goals.  Xactimate will not tell you how much overhead your business has, nor what an appropriate profit margin for you is.  How could they without price fixing?

Smart, proactive contractors understand this and revise their pricing accordingly.  If the regional pricelist has zero profit or business overhead built in, then they must build it in.  My clients are increasing their pricing by 20-36% depending on their individual needs.  And no, there is no rule or law against this.  It’s called being a contractor.

If we take our hypothetical $1mm annual revenue and add the Pricelist Penalty of 15% (a conservative guess of what you could be charging if you weren’t on the program), your revenue should have been $1,150,000.  Or, put another way, you only made $850,000 compared to your non-managed peers who made a million.  Oops, make that $800,000 after the TPA fee.

But wait, we’re not done.  There’s also the Program Penalty to consider; aka “We don’t pay for that” rules and guidelines.

How many things can you name off the top of your head that the non-licensed-adjusters at the TPAs say they “don’t pay for” or are “included in your overhead”?  I’ll take a quick stab at it:

  • Mask and Prep for paint
  • Emergency Service Calls
  • Mileage or Travel Time
  • Equipment monitoring and decontamination
  • Daily progressive cleanup
  • Professional services like testing, engineering and estimating
  • Anything above “standard quality” materials
  • O&P on “one trade” projects
  • Any drying beyond three days
  • And on, and on…

What do you believe these things add up to as a percentage of revenue?  Can we agree that it is AT LEAST 5%?  That’s another $50,000 drag on your top-line revenue.

Finally, there’s the Admin Tax for performing managed repair work.  This is the added staff and time needed to administer the program and adhere to the SLAs (service level agreements) and maintain KPI dashboards.  Many of you will recognize the POMS scores from programs like Contractor Connection.

The majority of companies I’ve worked for and consulted with have hired at least one full-time person to their administrative staff in order to remain compliant with the various TPA programs they were on.  Often I see a dedicated division of people whose sole responsibility is to maintain the button-pushing and paper-processing involved in operating in the managed repair environment.

Let’s pick a fairly conservative Admin Tax rate of 3%.  That adds another $30,000 in burden to your business to remain compliant in the TPA environment.

For those of you playing at home, we’re now at a total operations cost of $280,000 (15% Pricing Penalty + 5% TPA fee + 5% Program Penalty + 3% Admin Tax) for the simple pleasure of servicing the managed repair program.  All those “steady claims files” are starting to look a little pricey, aren’t they?

So what’s the alternative?  There are many that I cover in my RESTORATION2.0 course, but today we’re talking about Google Adwords.

What is Google Adwords? Here’s a little snippet from the interwebs.  Bottom line: Adwords is a great way to generate leads and get FNOL.

As you can imagine, if it were easy or cheap then everyone would be doing it.  But it IS effective.  There are national franchise restorers who spend six-and-seven figures monthly on the Google Adwords platform.  That doesn’t mean that YOU have to spend $50,000 a month in order to replace the current TPA lead stream you enjoy.

Let’s use a round number of $5,000/mo for your Adwords budget. I know this is higher than the $4,166/mo TPA fee, but I need some round numbers.  Keep in mind that we are trying to replace actual revenue of $720,000 – our revenue after fees and burden in a managed repair environment.

While no two ad campaigns are alike or 100% predictable, we can expect a $5k spend to generate about 35 leads per month.  If you close 60% of those leads (and really, who couldn’t?) that is a NET of 21 jobs per month.

The average water claim of $3,500 means you could expect revenues on closed jobs of $73,500 per month for an annual revenue of $882,000.  Subtract the $60,000 in advertising and you’re at $822,000.  That’s a full $102K MORE than your expected post-TPA revenue of $720k.

And that is all before you land that big $250k rebuild or $65k dry-down.

And that’s really it. No program rules, no referral fees; just you fishing for your own work – then eating what you catch.

What happens when a catastrophe hits your area?  Turn off your ad campaign.  You won’t be forced to take on more work than you can handle.  Rest assured: there will NEVER be enough restoration contractors to handle the crap when it hits the fan.

Need more volume? Turn up your ad spend. Period.

This business doesn’t have to be as complicated as we’ve made it out to be.  We can simplify our businesses AND make for profit.  It’s just the R2.0 way.

If you would like to learn more, and join the movement yourself, check out one of our upcoming courses:

R2.0 class in L.A. and DFW.

Change the industry by changing your business.

Los Angeles, CA  Wednesday, August 15th, 2018:  http://www.theclaim.clinic/R2LA2018

Dallas, TX  Friday, August 24th, 2018:  https://www.claimsdelegates.com/r2dfw2018

Adwords Info: http://unitedrestorers.com/solutions/adwords-management/


Check My Math: https://drive.google.com/file/d/12mamko_iwJPOYA9rH3OT6I5zLbAkZ-B-/view?usp=sharing

Why Pay For Insurance Claim Advice?

Why Pay For Insurance Claim Advice?

I went on a little rant tonight.  After re-reading what I wrote in an email to a prospective client, I decided this might have some value to ya’ll. So here goes.

We’ve had a major ice storm roll through and there are tens of thousands of homes with water damage.  I’ve been contacted by several homeowners who’ve recieved their insurance repair estimates and are getting worried.  Here’s one of them.

(Names have been redacted to protect the innocent)


“Hi Andy,

Thanks for the info.  I recall per our conversation the $XXX fee but do not recall your hourly rate for negotiations or changes with the insurance.  I am sure you are great what you do but I need to know what the total will cost me (even if rough estimate) and what I can expect with your results.  I know you can’t realistically answer that without inspecting my house and also knowing stance with insurance company.  There is also no recourse in your fee if you do not make any headway with insurance.  I hope you can appreciate my questions and concerns….I am always a little reluctant to sign on the dotted line with hourly rates and unknown results and timelines.  Feel free to call if easier to explain over the phone.”


I can appreciate your reluctance.  Most folks don’t understand why they need to pay for help, when it’s their insurance company who should be taking care of them. I get it.
I’ve also been in this industry for 18 years.  I know that insurance companies are not in the business of paying claims in full if they don’t have to.  Right now you don’t have the right tools to make them pay in full.
Do you expect your roof to perform next winter with some patched-in shingles?  Will your roofer guarantee that it won’t leak?  In my experience, no roofer will stand behind a patch job.
Were your gutters bent and dinged before this storm?  Just because they still hold water doesn’t mean they won’t affect your resale value.  New gutters are likely justified and covered by your policy.

I’m a busy guy with plenty to do.

I can only estimate as far as I can see.  Right now, I can see how much time it will take me to inspect your property and write up a proper estimate of repairs.
What I can’t see is whether [INSURANCE COMPANY] is going to play nice.  So there is no guarantee.  I can only tell you that in my experience, this claim is woefully deficient. You can’t know how deficient without an apples-to-apples comparison written in the same estimating program.
You pay for good information.
A Public Adjuster will want 15-25% and total control of your claim (and they don’t take projects under $250k).  A restoration contractor will want 35% and total control of the claim.
There is an entire industry of contractors who know the game and how to play it. That’s where I come from.  If you want to wait a month, you can probably get one of the local restoration companies to come write an estimate for you.  They’ll want the entire project in return.
What I’m offering is a realistic estimate for you to use to go back to [INSURANCE COMPANY] and get what you’re owed.  That’s all.  It’s a starting point.  I give you the ammunition and you’re not tied to anything longer term with me.  I should charge more for this service, but unfortunately most folks don’t see the value until AFTER.
I’m too busy to come out and take a look in order to provide a more accurate estimate of my ultimate charges.
There are hundreds of contractors in Bend that need my help right now.  Everyone thinks they know how insurance claims work, until they actually have to deal with one.  I can only work with folks who feel the need and see the value of my advice.
At the risk of giving away even more free advice, consider this.  You are going to hire a General Contractor to perform these repairs.  The standard markup in the insurance industry is 20% (10% Overhead + 10% Profit). O&P on your project is $3,008.73.  And [INSURANCE COMPANY] left it off because they are hoping you don’t know any better.
There. I just made you 3 Grand.  That one is on the house.
If you want to move forward with me, just fill out the link I sent and pay the deposit. If not, I’ll see you on the slopes some time.
Best of luck either way,



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.


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.


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.





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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.

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