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Archive for the 'policyholder' Category

Will Proposed Insurance Bills for New York Backfire?

Insurers fear that a collection of nine different insurance bills up for consideration in the New York state senate will backfire, placing the state on the “worst insured markets” list.


Lawmakers, looking to help insured affected by Hurricane Sandy, have recently approved a post-Sandy insurance reform package that has several methods to better serve policyholders affected by Sandy and other related disasters. This includes:

-Establishing a “homeowner’s bill of rights”
-Creating standards for hurricane windstorm deductibles
-Restricting an insurer’s ability to cancel or not renew a homeowner’s policy
-Reducing time frames to settle claims

One group that has been vocal in the fight against these bills passing is the American Insurance Association (AIA). Believing the legislation is “misguided”, the AIA warns legislators and the public that this group of bills can create a scenario similar to that of legislation that passed in Florida after 1992’s Hurricane Andrew, also intended to help and further empower policyholders who suffer from catastrophic weather. Those laws backfired, creating a 40% decrease in insurers in the state of Florida and consequently, shrunk the insurance marketplace.

For New York, AIA warns that following in the same footsteps similar to Florida will create a tight marketplace where insurance will now come into a situation of high demand, low supply and increased premiums to the policyholder. Part of the increased cost to policyholders may come from the fact of putting more litigious power in the hands of consumers against insurers, which will get passed back down to the policyholder’s premiums eventually.

AIA also stated that insurers have closed 95% of all Sandy related claims with $5 billion going directly to New York with a 1% complaint rate, further defending AIA’s stance that this legislation is unnecessary.

With two weeks left in the legislative session, it remains to be seen if the Senate will bring the measures to the floor.

Maryland Joins Other States In Banning Contractor Rebate Offers

Earlier this month, Maryland joined other states that are putting the kibosh on contractors who offer rebates to homeowners as a way to secure the repair contract. These contractors typically come with a shady motive behind the rebate, as they will perform substandard and inflated work, leaving the homeowner with a property not restored to pre-loss condition and affecting the overall value of the home.

These contractors use rebates of the homeowner’s insurance deductibles as a way to dangle the “carrot” so to speak in efforts to secure the contract. The homeowner, who sees savings of hundreds of dollars, believes they are getting the deal of a lifetime. In the end, they are disappointed to find that subpar materials and questionable or downright improper repair was performed.

In the cases of area-wide catastrophic weather damage, storm chasing contractors of the predatory nature will knock on the doors of homeowners who are under a great amount of stress and need even more urgent repairs. Once the shady contractor is able to get in and secure the contract by offering the rebate, they again perform substandard repairs, or in some cases, ask for a large amount of money up front and disappear completely with no work done, and never to be seen again.

It’s also important to note that a homeowner’s policy may not cover the repair of the fraudulent work done by the shady contractor. (To read more about Maryland joining the fight to stop scrupulous contractors in their tracks, click here.)

This type of fraudulent actions tarnishes our industry and makes it harder for honest contractors to assure their customers that they will follow the Standard of Care and follow the guidelines, ethics and practices set forth by our major industry associations and institutes. In order to help protect their reputation in the community, restoration contractors can use a variety of methods to get out their “good news stories” and spread customer testimonials, both online through their website and social media platforms. There’s also more direct marketing tactics you can use as well to spread the good word about your company.

Are you facing sales and marketing challenges that you need help with in order to grow your company? If so, reach out to us at info@theBDAway.com or, call us at 777-773-9956 and we can setup a brief time to talk about them and how BDA might be a good fit to help you get to the next level.

State Farm Fine-Tunes Risk Assessment, Decreases Rates

A.M. Best recently reported that carriers are looking at more than just rate increases to help them maintain profitability in a volatile property insurance market. Other risk-management initiatives that are being looked at include mandatory wind/hail deductibles, percentage hurricane deductibles and roof limitations based on the age and condition of the roof. Geo-coding and better understanding a specific home’s (versus an area’s) risk is also becoming a new trend in risk management practices.

Looking at “micro-zones” versus more broad measures is one way that State Farm in CA is able to manage the carrier’s risk while also offering more discounts to their client’s premiums. Beginning April 15th, State Farm, the largest homeowner insurer in CA, is dropping rates by an average 12.6% for more than a million customers. When looking at State Farm’s customer base in CA, that means 85% of the homeowners they insure will see an approximate $100 savings in their premiums. Renters will also see some savings upon renewal.

Instead of looking at just the zip code, State Farm’s new rate-setting system breaks down risk factors such as geology and fire danger, based on the exact geographic location of the home. This will position State Farm as having the ability to offer competitive pricing based on a fine-tuned set of risk assessments.

Spending Increase on Personal Lines; Commercial Rates Remain Steady

According to new research by Bankrate.com, more than a third of Americans spent more on insurance last year, while 52% spent the same, and only 7% spent less.

Of those that spent more on insurance in 2012, 62% said they did so due to rising premiums. The second biggest reason for increased insurance spending, according to survey respondents, was due to the purchase of a new home, car, boat or recreational vehicle.

Spending increases on multiple types of insurance was also seen, including homeowners, renters, life, auto and health coverage.

On the commercial side, rates are expected to continue rising later on in 2013 due to above average losses, low investment returns and receding reserve releases. The occurrence of a hard market is not in sight as of now, as both competition in the insurance marketplace and capacity remains high, and price increases continue to differ across the board.

Some suspected that commercial insurance rates would have started to rise in early 2013, but Superstorm Sandy’s effect on the market is predicted to stall or even out current rates that at one point had seemed to be improving.

Insurers across several types of lines and industries will continue to adjust their pricing and coverage in efforts to maintain their profitability. In addition, the rising severity of losses means that carriers to look more closely when processing claims to ensure the claim and the circumstances that caused the loss matches the coverage currently carried by the insured. For restoration contractors, this could result in further challenges with insurance companies, uncovered losses and angry policyholders who didn’t realize their lack of or gaps in their insurance coverage.

Mobile and Tablet Usage Rising-Is It Right For Your Mix?

There is no question that smartphones and tablets have not only revolutionized how we engage with each other both personally and in business, but both technologies continue to provide greater marketing opportunities for both B2B and B2C purposes. And everywhere you look, it seems that everyone has one, and for those that are has a lower adaptability rate, (for example, the Silent Generation), they too are gradually increasing in their consumption of the latest technology.

And for marketers, increased mobile and tablet usage means the ability to leverage various tactics and strategies in order to communicate and provide interactive opportunities with their company, from QR codes, push messaging, Mobile Apps, mobile and tablet friendly Websites, sharing abilities, interactive TV, mobile banner ad opportunities, location-based marketing and much more.

For the consumer, the immediate gratification of finding information or products they want is also a big plus, as they can quickly perform a Google Search or buy the item they just saw on TV or in a magazine in a matter of minutes. For the company that consumer is buying from, the ability to maximize on the consumer’s impulse and need for immediate information or for the product itself can be result in shorter buy cycles and quicker profit. And to top all this, the rising market penetration rates of both mobile devices and tablets have marketers looking at a way to start shifting part of their marketing mix over to this new communications platform.

To give you an idea of how entrenched mobile and tablet technology is here in the U.S., below is a quick snapshot of US smartphone users and penetration into the population from 2010 and projected into 2016. In 2010, smartphones were used by 20.2% of the population, where in 2013 it will have jumped to 48.9%. In 2016, it’s projected that nearly 60% will have a smartphone.

- 2010: 62.2 million (26.9% of mobile phone users / 20.2% of population)
- 2011: 93.1 million (39.2% / 29.7%)
- 2012: 115.8 million (47.7% / 36.6%)
- 2013: 137.5 million (55.5% / 43.1%)
- 2014: 157.7 million (62.5% / 48.9%)
- 2015: 176.3 million (68.8% / 54.2%)
- 2016:192.4 million (74.1% / 58.5%)

The following numbers reflect those of tablet users. By 2014, it’s predicted that over a quarter of the U.S. population will be using tablets. As tablet adoption increases, older devices will get replaced and eventually, will become more like smartphones, which typically have a single user and less sharing.

U.S. tablet users and penetration, 2010-2014:
- 2010: 13.0 million (4.2% of total population / 5.8% of internet users)
- 2011: 33.7 million (10.8% / 14.5%)
- 2012: 54.8 million (17.3% / 22.9%)
- 2013: 75.6 million (23.7% / 30.9%)
- 2014: 89.5 million (27.7% / 35.6%)

Another advantage of mobile and tablet marketing in a company’s mix is not only the benefits we spoke of above, but the ability to be truly integrated and interactive with other elements of your mix. Marketers can cross-pollinate what can be considered a traditional form of marketing with the newer forms like mobile marketing. By doing so, you can give a “facelift” to what some people might be considered “dead” forms of advertising, like print advertising.

For example, in Quarter 2/2012, the use of mobile action codes In the U.S. top print magazines rose 61% compared to the previous quarter. In comparison to last year, the print-to-mobile marketing strategy rose from 5% overall to 10% and continues to rise. Action codes in magazines right now are actually outpacing action codes in direct mail. Direct mail is typically receiving about 4.4% overall in a response rate while catalogs garner a 4.3% response rate; a direct mail letter receives an approximate 3.4%). But, with the implementation of mobile code actions, that response rate on direct mail rose from 4.5% to 5.9%.

It’s important to note something here…one of the best rules in marketing is this: don’t implement a marketing activity into your mix just because it’s the latest buzz trend. Rather, does a proper analysis of your target market, how they engage with your applicable medium and then see how the rubber will hit the road, if it does at all. The numbers we provided here are some high-level stats. There’s lots of ways to drill down and seek out further information about your target market on a much deeper level, and you should make every effort to do so. But, with some powerful data and the obvious impact both mobile and tablet technology has had and will continue to make on our society, it’s certainly something that can’t be ignored and should be considered!

In the end, what you choose in your marketing mix and what you decide to say and how you say it are all integral, critical parts in acting strategically with your message. Finding the ways to communicate your message is half the battle — figuring out what to say is the other side of it!

What’s your experience with mobile and tablet marketing? Restoration Contractors are you currently utilizing any mobile or tablet strategies? We’d love to hear your thoughts and/or experience!!

For more information about Business Development Associates, Inc., visit www.theBDAway.com.

Forewarned is Forearmed: Understanding the Small Stages of Business Growth-Part 1

In our experience, business owners tend to approach growing their company as one long continuum from the day they open to the day they retire.

And, while growing the business may seem like a foregone conclusion for most entrepreneurs, they soon find out that the reality of growth is much more organic, much messier and far more likely to create new challenges that will stress the owner and his or her management team in ways they never imagined.

We often have the opportunity to see this firsthand as we help restorers grow their businesses by turning on their “marketing engine.” Even so, we are emphatic that “handling the new business will be harder than getting the new business.”

Given the fact that most restorers find growing their business in today’s market one of their biggest and most difficult challenges, they have a hard time accepting this statement. Perhaps they are so focused on having found a new way to grow that they figure that handling the growth will be a nice problem to have and they’ll figure that out as they go along.

This is a problem. They fail to realize there are distinct stages of growth, with different challenges, stressors and potential outcomes. Growing companies can greatly profit from advanced knowledge of the challenges they are likely to face at each step.

Facts of business

Before we get into these distinct stages, let’s look at some general truths about growing companies. The most important is that “growth increases complexity.” What most owners do when confronted with increased complexity is to throw people at the problem, meaning that they simply hire to add the necessary capacity.

But what is the real effect of this strategy? After all, the point of growing a business should be for the company to produce more net profit. If the increased gross profit — and therefore net profit — of a growing business is simply consumed in the salaries and related overhead expenses necessary to handle the growth, then all that a business owner has accomplished is to create a bigger, more complex set of headaches for the same net profit as before.

So, while some new labor resources may be required, the reality is that growth and its attendant complexity requires changes in the way the company operates — a new paradigm that requires new processes, systems and procedures and new ways of measuring and thinking about the business.

All of this requires a transition away from the old, comfortable, safe and yet moribund paradigm that got the business from Point A to Point B, but will not take the company from Point B to Point C, something that is likely to be extremely uncomfortable for the owner and many employees who simply may not be able to make the transition.

Another truth is that for companies to grow, the owners and management team will have to learn new skills to support that growth. Companies embarking on a growth strategy must consider how they will gain this education. There are several industry specific consultancies and programs that can help dramatically, but an intensive self-study program is highly recommended, starting with Peter Drucker’s “The Practice of Management.”

This new, more complex, more demanding paradigm will require not only a revision of all of the company’s processes but also a way of codifying those new processes and integrating them into “the way we do things around here.”

It will also require running the business “by the numbers,” and an owner and key managers must have job and overall profitability numbers in near real time in order to insure that margins are met. For this reason, growing restoration contractors simply must be looking at “enterprise” software solutions as the software backbone to support their growing companies.

There are many theories and models of small business growth, and one of the classic papers on this topic was published by Neil Churchill and Virginia Lewis in the Harvard Business Review. Understanding the stages of small business growth helps owners understand what to plan for, what changes there will be in the company’s structure, the owner’s responsibilities and focus and can serve as a way of diagnosing problems that arise.

This month, we will look at the first two stages of growth, and next month, the final three.

Stage 1: Existence

This is the start-up phase where the focus here is almost exclusively on getting enough business to start your business model.

Overhead costs will be, or should be, at a minimum because the owner will be performing most tasks personally with the help of a few employees of average skill. There will be few, if any, formal systems or planning processes as the business will be run largely “in the owner’s head.”

In the very beginning, the company’s very minimal requirements and nascent capabilities often allow the company to generate business relatively easily. This is especially the case if there is an existing business (such as a carpet cleaning operation) that can support the basic needs of the owner as he begins his foray into the brave new world of restoration.

The first crisis for a start-up will likely be managing cash flow. This is often the biggest problem and impediment to growth, causing owners to develop skills in accurate estimating, efficient management of company and sub-contractor labor so that jobs are profitable, negotiating with adjusters and policyholders for payment, understanding the impact of customer service on getting paid, etc.

This is an extremely demanding phase for any business, but perhaps even more so for restorers given the peaks and valleys nature of the workflow and the challenge of keeping a solid team on staff to do the work properly and profitably.

It is easy for restorers at this stage to want to move too fast in terms of growing their organization without putting into place the necessary systems, processes and procedures.

The people selected may be chosen more for industry familiarity and the “show up” factor (they just showed up on my doorstep — must be serendipity) than possessing the necessary management or other skills that the company will require to grow.

This can also be a time of really challenging stress for business owners, especially if they don’t have a carpet cleaning or other business to fall back on.

Stage 2: Survival

The good news here is that the company’s basic premise has proof of concept. The crisis is now one of generating a necessary profit as the company grows to the next step.

Owners are likely putting out fires on a daily basis and the toll of the start-up phase may have drained them of energy and financial resources.

If the business is growing, the problem becomes a very serious one — can the company generate enough cash flow to stay in business and add the necessary fixed expenses (equipment, trucks, technicians, first managerial position such as Project Manager) as well as maintain the current capital assets and replace them as they wear out?

Again, in the restoration industry this can be dramatically exacerbated by unforeseen circumstances like “The Winter That Wasn’t of 2011-2012″ where the expected work from frozen pipes, ice dams, etc., never materialized.

Keeping a talented crew together at this point to handle the peaks in the work is extremely challenging, and many companies at Stage 2 are unable to keep everyone working on a full-time basis. This creates a quality problem as well as massive training problems, as there can be a revolving door of technical talent.

The Project Manager at this stage is a key employee, and owners typically do everything possible to keep this person in place, often ignoring whether or not they have (or can develop) the necessary managerial qualities that will help the company grow.

At Stage 2, the company is still relatively simple; systems are still rudimentary at best, requiring the involvement of the owner in practically every decision. Planning will mostly revolve around cash flow forecasting and it is now critical that the company utilize a basic accounts receivable process to get paid as quickly as possible.

The crisis of cash flow at this stage also creates a dangerous potential pitfall for restorers. When a company is desperate for cash, it is easy for the emotional demands of running the business to spill over when negotiating payment with adjusters.

If Stage 2 companies manage their challenges effectively, they may grow to Stage 3. However, many Stage 2 companies do not meet these challenges and stay in a perpetual crisis where the owner wonders why he ever got into the restoration business in the first place. Given the boom and bust cycles of the industry, he may lurch onward from one fortuitous job to the next, hoping that the lean times in between doesn’t exceed his ability to cover payroll and stretch his suppliers.

Our experience is that many restorers can stay in this place for a long time — even 20 years — never doing what is necessary to understand and break free of Stage 2 and move on to Stage 3.

But if they are able to get past Stage 2… they will find Stage 3 quite interesting. Stay tuned for Part 2, Coming Soon!

The 1(800) Way Agents Put Client Relationships In Jeopardy

We are pleased to bring you a newly published article written by Tim Miller, and is currently running in Cleanfax Magazine’s online monthly publication, “Restoration Insider.”

This article, titled “The 1(800) Way Agents Put Client Relationships in Jeopardy,” discusses a recent fire loss experienced by one of our own BDA team members. Luke’s apartment complex, consisting of eight units all together, caught fire on the east side of the building, while the west side (where Luke lived) incurred heavy smoke damage.

As we all know, times like these are when an agent can step in and become their policyholder’s hero, providing above and beyond service when their client needs it the most, or lose the opportunity all together by a lack of action on their part.

We hope you enjoy this story, and please feel free to send us your thoughts and comments!



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