In short, NO!

In a recent episode of Last Week Tonight, with John Oliver, the issue of Automation was the ‘main story’. 

Throughout the segment, all I could think about is the resistance and push back that our company has received from the ‘legacy adjuster‘, thinking that we are trying to replace him/her.  

In that episode, Oliver did a much better job that I could of dissecting the transition from blue collar manufacturing to a more efficient automated workflow, requiring less and less human task, and replacing them with automated tasks.

Here is a chart from the Brookings Institute that illustrates the long-term trend. (Brookings Institute)

When looking at this graph I see the way that insurance claims process will unfold.  Increased overall efficiency with hyper specialized adjusters playing a critical, (non-replaceable role) as the conductor of this automated symphony.    

But if you look at the employment line, though it has reduced, it has not gone to zero.  It’s down by approximately 40%.

To the employer, that means cost savings.  To the adjuster, that means those who are good at their jobs, have indefinite employment.

Oliver pointed out that the jobs of the future will be ones that consist of ‘a series of non-routine tasks, that require social intelligence, complex critical thinking and creative problem solving’.  

If that is not the job definition for an adjuster, it should be!

So, the next logical question is… How?  

How do you increase productivity, while hyper-specializing our adjusters and continue to provide excellent customer service.

The answer, an integrated workflow solution that allows the adjuster to perform a series of non-routine tasks, that require social intelligence, complex critical thinking and creative problem solving.

 

If you would like to know how our innovative claim process can help you make effective real time decisions, maximize control and minimize costs relating to your claims. Click here to schedule a brief chat with me!

Would love to know your take on the topic, if you’d like to chat, once again you can set up a time right here.

 

 

When talking about these hidden industry costs, the thought going through your mind may be that of an unscrupulous contractor packing a mitigation loss site full of equipment beyond written industry standard –with the intention of maximizing his daily rental profit.

Though not unlikely, this scenario only describes part of the problem. For example –equally important to consider is the possibility of a contractor who might install TOO FEW pieces of drying equipment.

In any case, you end up with an inefficient and poorly managed drying program.

The result will be missed deadlines and costs overruns.  And since the vast bulk of a mitigation invoice is made up of the costs of equipment rental –guess who gets stuck with the bill…

That’s right –the Carrier!

In this article I’d like to cover the most common causes of unnecessary costs of water damage mitigation, and how to avoid them.

So, let’s start with…

THE GAPS IN TOOLS, TECHNOLOGY, AND TRAINING

Not all contractors invest time, money, and training to ensure they’re providing the most efficient drying programs to policyholders.

For example, the difference between a mitigation contractor who uses infrared thermography to monitor losses and one who only employs moisture meters is huge from an outcomes perspective.

Equally as important, is the difference between the mitigation contractor who TRAINS his/her technicians on how to properly interpret what an infrared camera is showing them over the contractor who doesn’t!

These gaps in tools, tech and knowledge allow for a wide range in drying results –in addition to the potential risk for secondary damage, like mold for example.

If you’re hiring a water damage mitigation contractor, what are some questions that you might ask to ensure you’re getting a company that values the latest tools and techniques?

 

LACK OF DATA VERIFICATION & HOW THE NUMBERS GET MURKY… REAL FAST!

Any reputable mitigation contractor backs his drying program results up with empirical data, compiled into what is referred to as moisture mapping.

And this seems all well and good, but how is the accuracy of these numbers verified?

Even among well established nationally franchised brands, mitigation contractors can and do manipulate some of these numbers in order to show a linear and effective dry down –whether that was the case on a particular loss or not.

Furthermore, it’s seldom the case when the carrier and their adjusters have any significant grasp on what the numbers on the spreadsheets sent to them really mean, and/or how to interpret them.

This lack of oversight process, coupled with once again, a gap in knowledge –is costing carriers millions of dollars in unnecessary water damage mitigation costs.

To the consumer: Plan ahead, always be prepared to ask a water damage mitigation contractor to supply you with a copy of their daily drying logs.

To the carrier: What are some instances you can think of where you could have prevented supplemental damages if you had managed to have more oversight of a policyholder’ mitigation contractor?

 

BILLING DUPLICATION & THE USE OF EXTRANEOUS LINE ITEMS

While most of the industry has adopted the use of estimating software (Merge, Xactimate, Symbility, etc) which has positively reduced most of the billing inconsistency in unit costs for services & equipment, there continues to be substantial inefficiencies at play.

These inefficiencies are mostly due to line items written by the contractor that are either used in duplication, or incorrectly.

One example of this would be when billing for laminate flooring removal. Xactimate factors-in the removal of the underlayment of the flooring as a separate item in addition to original line item. And even though it’s clearly written in the explanation of the line item, it’s often overlooked –and an additional line item is written and billed for removing the underlayment separately.

While these types of oversights are typically small charges at the individual claim level, they stack up quickly; particularly when viewed broadly across all claims.

Quick math: As an insurance carrier, if each of your mitigation related claims had $50 of duplicate charges per affected area and you averaged 4 affected areas per claim…….how many dollars per year are getting wasted in small charges across all claims?

 

THE LACK OF UNIVERSAL STANDARDS ADHERENCE

The Institute of Inspection Cleaning and Restoration Certification (IICRC) is the de facto standard in the writing of standards for the mitigation industry.

The standards the IICRC write cover everything from equipment sizing equations to the salvageability of different building materials affected by water. And while there is always room for professional judgement on a loss, there are many occasions when standards are simply overlooked or misinterpreted.

This causes inefficient drying conditions and secondary damages to property or cross-contamination of previously unaffected areas on a loss.

Creating more user-friendly applications that adhere to standards is an area of focus that would benefit the insurance industry at scale –while also providing knowledge driven oversight to guide more strict adherence for contractors.  

To the consumer: Always ask your water damage mitigation contractor to supply you with their technicians IICRC qualifications, and make sure that only technicians carrying “WRT” certifications are in charge of your property.

To the carrier: Are there ways for you to more efficiently manage standards compliance in water damage mitigation to catch potential problem losses, BEFORE they become problems?

 

CONTRACTORS – ACTS OF OMISSION & COMMISSION

It’s easy to lump every mitigation contractor in the category of a bad apple.

The stereotype of greedy carpet cleaner comes to mind, and frankly this mindset affects the decision making processes of adjusters throughout the industry.

It is certainly true that there are some contractors who manipulate and overcharge for their services, but these are not the majority. Often overlooked is the contractor who makes mistakes of omission, due to lack of training and/or knowledge.

Even though acting in good faith, these vendors’ mistakes of omission can be equally damaging –such as improper mitigations leading to replacement costs of items that should normally be salvageable, drying times that exceed all normal expectations, and a host of other secondary issues.

It’s in the carriers best interest not only to weed out the bad apples, but to focus also on what might appear to be “cheap” vendors on the front end  –that are ultimately MORE expensive on the back end.

What are some ways that carriers and contractors can build more symbiotic relationships versus adversarial?

 

AN INDUSTRY BUILT ON SCIENCE BUT MANAGED BY NON-SCIENTISTS

Removing unwanted moisture from a building is a matter of physics.

Phase changes of matter, vapor pressure, grains per pound, relative humidity and temperature  –these are all just a few of the elements making up the juggling act that contractors are performing to get water to displace from one area to another.  

A deep knowledge of how and why a mitigation program completes its objectives is essential to finding contractors who make good decisions quickly and efficiently, particularly when drying challenges arise.

Unfortunately, these contractors are not easy to find. Most of them don’t possess the background knowledge of the science of drying. My suggestion is to thoroughly  interview them and review their past work.

Here are some question you should ask and details you should be aware of…

• Ask your water damage mitigation contractor what their drying plan is, before they start it. Many times you can sense a knowledgeable contractor by listening to them lay out their strategy.
• Pay attention to the cleanliness and/or condition of the drying equipment that a water damage mitigation contractor installs on a loss. If they don’t treat their equipment well, they won’t treat your property well.

 

CARRIERS ARE CARRYING THE COST OF IGNORANCE

It may be easy to blame mitigation contractors for any and all associated cost overages caused by water damage, but carriers are no innocent bystanders either.

Generally speaking, carriers’ attitude toward the mitigation industry default somewhere between uninterested and apathetic.

Carriers routinely pay out on inflated invoices because they don’t know how to contest them. They also underpay reputable and honest vendors causing working and relationship friction, and inevitably future invoice inflation. This cycle repeats itself from claim to claim without anyone challenging its process.

A more proactive and caring role is needed by carriers if they want a more predictable and equitable playing field when it comes to their water damage related costs.

Most water mitigation cost overruns are not only avoidable, but one hundred percent preventable.

What are some best practices you can think of for insurance carriers to be more proactive in making sure that their receiving excellent service and appropriate pricing?

Hopefully I’ve given you a few guidelines that will help you mitigate some of the hidden costs of water damage restoration services.

My hope is that you build on this, and ultimately develop your own water restoration vendor QA system!

If you would like to know how our innovative claim process can help you make effective real time decisions, maximize control and minimize costs relating to your claims. Click here to schedule a brief chat with me or David!

Would love to know your take on the topic, if you’d like to chat, once again you can set up a time right here.

There is a hundred-year storm brewing, and it’s sitting offshore, just a few miles from where you are. Its impact will be imminent and direct.

Sadly few will survive it. But those who do will also thrive, primarily because of two things.

ONE, they read this blog post 🙂

TWO, they re-read this blog post, took action,  and shared it with their colleagues in the industry.

Here’s the problem…

Millennials are indifferent to all-things insurance.

In insurance, you often hear the term thrown around, “a hundred year storm”, referring to an adverse event that statistically only happens every 100 years or so.

This may sound like an apocalyptic view of the issue, but insurance is among the industries with the lowest appeal among millennials today.

That should scare the crap out of people in our industry!

The adjuster shortfall experienced after the recent storms pales in comparison to the perfect storm of adjuster deficit that’s slowly brewing and approaching the daily claims handling process in the next two decades.

The statistics are scary:

• Average age of an insurance pro in the US is about 60 years old.
• The number of insurance pros over 55 has increased by 74% between 2002–2012 compared to 45% in overall workforce (McKinsey & Company Building a Talent Magnet)
• There’s 80 million Boomers, 60 million Xers, and 80 million Millennials. That 25% difference with so few Xers is a huge deal
• 88% of CPCU members are over 40 years old.
• Only 41% of millennials expect to be at their current job in 2 years.
• Insurance companies expect 25% of retirements in the next 4 years.
• Only 2% of recent grads express interest in the insurance industry (Accenture — The Insurance Workforce of the Future).
• 66% of Millennials plan to be at a different company in 3 years (2016 Deloitte Millennial Survey).
• By 2014 Millennials were already largest generation in the US (Council of Economic Advisers)
• By 2025, 3 out of 4 workers will be Millennials (https://www.bdcnetwork.com/workplace-design-trends-make-way-millennials).
• Only 4% of Millennials are interested in working in Insurance (The Hartford — A Generation of Leaders).

But now that we’ve had the foresight to identify the problem, we need to fix it.

Here are a few ideas we are implementing at TelaClaims.

Let’s start by asking the right questions.

 

Why are millennials turned off by insurance?

It is well documented that insurance has an image of being stiff, boring, greedy, and exclusive.

Not exactly the kind of profession you’d have lots of fun on a regular Thursday.

These are exactly the sorts of characteristics  millennials tend to avoid in a workplace.

They want to work around arts & entertainment, education, technology, and healthcare.

They want work/life balance. They want to enjoy their work environment.

A cubicle is not a desirable environment for them.

Again, it presents as a rigid, formal environment, millennials don’t want ANY part of IT for ANY period of time.

The previous generations, such as baby boomers such as myself, we had a different perspective.

We figured that as long as the job supports your family and you did your job, you are a successful person.

It doesn’t matter if you are a businessman or a janitor — your paycheck justifies the fact that you spend much of your time doing something that you are not emotionally drawn to or even invested in some cases.

Millennials, on the other hand, don’t see it that way.

Boomers like me have always been willing to exchange time for money. Millennials, on the other hand, want a job that is fulfilling in and of itself.

Millennials need meaning from their work, more than almost anything else.

Insurance as an industry, has failed to give meaning to purpose, even if the work done is important and needed by many all too often, especially after a loss.

It is our role to change that cultural perception.

The claims process needs to be treated like an urgent care.

You first come in and you get triaged, stop the bleeding, and then get stitched up. Adjusting is not very different at all.

You had a terrible plumbing break in a wall, upstairs and a serious leak, the water is still flowing and your belongings and family possessions are being ruined. You call your insurance carrier.

A claims professional will need to assess the situation (triage) and stop the water (mitigate), send in mitigation experts (stitches), get the home dry and cleaned up (stabilize) to the then see how we can fix it using the terms and benefits contained within your policy for the home (recovery and follow up).

Millennials’ interactions with insurance are relatively brief and, if something does come up, it’s usually bad (newspaper articles about shady agents, horror stories from friends, etc.)

They also tend to pay higher premiums when they’re younger, so they’re likely to have an unfavorable impression from the onset.

We need to start to re-frame the narrative. We need to re-focus on what insurance really does. And we need to deploy lots of empathy, especially when dealing with a group we don’t understand very well.

Focus on what insurance does for communities and families.

Insurance already has a huge impact, they just don’t know it.

We need to draw more attention to that by giving detailed descriptions of how people were helped.

I don’t mean it in a salesy way, because Millennials can smell a sales pitch from miles away.

But by providing human interest stories that showcase the impact on quality on life for families and policyholders. 

Encourage employees to be vocal about why they like their job/Give them a sense of purpose.

Provide employees a Twitter hashtag, encourage them to submit stories to be featured on the company website, and also share these with other employees in the company.

At TelaClaims, we encourage all employees, millennials, GenZs, Genexers, and Boomers to share their experiences on social media.

I can’t wait to hand things over to them in a few years knowing full well that I in a small way helped to pave the road for that much needed change.

If you would like to know how our innovative claim process can help you make effective real time decisions, maximize control and minimize costs relating to your claims. Click here to schedule a brief chat with me or David!

Would love to know your take on the topic, if you’d like to chat, once again you can set up a time right here.

Where do I start!

A project of our scope is built by so many people. It’s tested by even more people, and finally adopted by even a greater bunch of smart users.

I’m eternally thankful to everyone individually.

From our team of engineers who so many times have worked around the clock to meet a deadline, go home, shower, then come back to work on more code.

I’m thankful to the Heads of Claims, VPs, Directors, and Managers at the carriers we currently partner up with us.

These men and women believed in us from the start and embraced what we believe… That a claim is more than an event. It’s an opportunity to deliver on a promise and positively impact the world while making good on it.

To the adjusters, inspectors, and vendors who chose to affiliate themselves with us, even when so many of them had never worked with us in passed CATs.

I’m especially thankful to the policyholders, for being courageous enough to try something different and give us feedback in the process.

And finally I’m thankful for all of you… the listeners of our podcast, and followers on our Instagram and Twitter accounts. Thank you for engaging with us, for the likes, hearts, the comments and suggestions. Thank you!

Happy Thanksgiving,

-David

If you would like to know how our innovative claim process can help you make effective real time decisions, maximize control and minimize costs relating to your claims. Click here to schedule a brief chat with me!

Would love to know your take on the topic, if you’d like to chat, once again you can set up a time right here.

Happiness has been the topic of continuous study, research, and general interest in the last few years.

In his book, The Happiness Equation, Neil Pasricha observes:

“But after years successfully helping people lead teams, lead businesses, and lead organizations, something slowly dawned on me.

Hardly anyone was happy.

Every conference lunch was filled with conversations about struggling to find balance, feeling too busy, and keeping up with others. So many leaders said they didn’t have space in their lives, were stressed about time and money, and felt burdened with endless decisions and conflicting advice.”

But what does happiness look like for the insurance industry?

One thing for sure, it can’t be just a one sided happiness scenario while the other is bitter and frustrated.

How can the industry turns its biggest fears into its biggest successes?

Here’s a simple formula from The Happiness Equation:

A never ending loop ensues once you’ve dropped the mental barriers that block your creative and innovative drive.

I believe that necessary to achieve this, at the center of it from a Carrier’s point of view, is the sincere belief that they’re there to provide a service when required for their policyholders, and not the other way around.

In other words customers are not there for carriers. Carriers are there for customers.

Building a happy client or customer base is the only way to ensure a strong and thriving hundred year plus business.

A satisfied client, just like a wife or husband, doesn’t look for options elsewhere.

And as Seth Godin recently put it:

“If you want to create satisfaction, the two elements are:

Make useful promises
Keep them

Price is unrelated, except for one thing:

Charge enough that you can afford to actually keep your promise. The thrill of a low price disappears quickly, but the pain of a broken promise lasts a very long time.”

An interesting piece of advice for carriers isn’t it?

Being that an insurance policy is a promise. And the part about keeping that promise is what carriers specialize in, which is the Claim process.

I believe happiness in the insurance industry is defined as a claim being successfully handled and happily paid by a carrier … While the policyholder moves on with his/her life, stoked with the speed and quality of the service provided and telling all their friends about it.

It’s really that simple.

The rest is noise, misprioritized tasks, and poor execution on the things that matter most.

If you would like to know how our innovative claim process can help you make effective real time decisions, maximize control and minimize costs relating to your claims. Click here to schedule a brief chat with me or David!

Would love to know your take on the topic, if you’d like to chat, once again you can set up a time right here.