21st Century Restoration Companies: A Radical Look Ahead

Radical changes are coming our way in restoration. It is time to start a dialogue about not only the changes that companies can make but also the next-generation characteristics of a successful restoration company.

This requires looking into insurance and restoration trends and advances in the areas of business and technology. Throughout the course of this series, I will explore some of the root causes of the challenges the restoration industry faces today, as well as the resulting impacts and considerations for excelling in an uncertain environment.

Claims management has become quite confusing, due to ongoing issues that need to be addressed, such as internally managed vendor programs, third-party administrators, working with the restoration franchises, specialty vendors, and full-service restoration contractors. The task to unwrap the contributing factors to these challenges, and then set a course for success in this ever-changing world, is certainly not easy. Making predictions about claims management will be difficult, given the fact that the insurance world appears to be unclear on its own direction. Given this difficulty in predicting the future, formulating one’s business strategy will also be very challenging

One of the biggest changes to insurance is the development of new technology. Things like mobile communication, artificial intelligence (AI), predictive analytics, and cloud computing may seem futuristic but are actually playing a role in insurance and claims management today. When we understand how these issues impact the claims settlement, we can then be more aware of how we can support this process.

The insurance world of yesterday was fairly simple. Property owners would drive to their corner agent and purchase needed coverage from the same company that had been writing their policies for years — and perhaps, for that matter, even had their parent’s prior coverage. Today, people can sit at their computer or smartphone and pull up quotes from dozens of companies instantaneously. Analytics allow these companies to quickly determine if this is a desired client for the company and offer a competitive or expensive policy, thus expediting the underwriting process. Almost every mainline insurance company allows policyholders to purchase through agents or direct through their website or apps. A new wave of virtual insurance companies is hitting the market using analytics to screen clients, AI computers to fill the sales channels, and even the claims adjusting process. These new companies will offer a different insurance price point and also service level. Many of today’s younger clients are more comfortable communicating through computers, which will help facilitate this process of automation.

The claims side of technology is nearly as dramatic as the sales side. Insurance companies realize that there are substantial cost savings through utilizing technology. The first thing to understand is that nearly 80 percent of an insurance company’s costs are associated with claims fulfillment. When these companies need to make financial adjustments to their business, it is natural to start reviewing settlement costs from first notice of loss through conclusion. Technology will have a huge impact in all areas of this process. Companies realize they need to take action to speed cycle time, reduce fraud, improve service, eliminate redundant processes and cut claims administrative time. These adjustments will have a direct impact on profitability in their business.

The future of claims relies on linking the communication systems, starting with the first notice of loss. The customer could conceivably connect with the insurance company on their smartphone, showing impacted areas and verifying actual damage. This limits fraud and also starts the documentation process. This process will improve the subrogation success as well, due to more timely and detailed documentation. The in-house adjuster or even AI systems are able to properly dispatch services, adjusters, or even administer payments.

Rather than drawing any conclusions, the intention instead is to lay the groundwork for influences in the insurance world that will impact restoration. I hope that you are starting to see developing trends that will be pushed through to contractors. In future columns, I will explore topics such as labor issues, program expectations, and contractor impacts.RIA

Hey there! We're glad you're here!

This content is only available for subscribers. Please enter your email below to verify your subscription.

Don't worry! If you are not a subscriber, simply enter your email below and fill out the information on the next page to subscribe for FREE!

Back to homepage