How Restoration Contractors are Successfully Using the RIA’s Advocacy and Government Affairs (AGA) Position Statements and TPA Surveys To Get Paid Fairly For Their Work.
The restoration industry is incredibly varied, running the gamut from water damage to fire damage and everything in between. Restoration companies range in size and composition, from independent single locations to large multi-location and franchise entities. Restorers are located around the world, with the types of challenges they face dictated at least in part by their local geography. But what each restoration company has in common is the need for advocates who can work on their behalf to ensure fair payments and claims processes, a manageable level of administrative work, and a unified front for the industry.
In pursuit of this goal, the Restoration Industry Association (RIA) established its Advocacy and Government Affairs (AGA) committee in 2019. The AGA has been working ever since to develop resources restoration contractors can use to help establish best practices for pricing and other concerns.
“Now, three years later, thanks to the effort launched by RIA Immediate Past President Mark Springer, we have the opportunity to share effective strategies and tools to establish more consistency and to convey defensible messages,” said attorney Ed Cross, RIA’s Restoration Advocate. “The AGA and its various task forces are comprised of many of the nation’s leading experts in the areas of pricing, working with third party consultants (TPCs), working with third party administrators (TPAs), and monitoring legislation.”
Two of the committee’s major achievements since its inception are its peer-reviewed position statements, which are unprecedented within the industry, and its TPA surveys. These materials are designed to help all aspects of the industry work together by opening the lines of communication.
Position Statements Yield Improved Negotiations
To help restorers convey unified messages on controversial issues, the AGA developed position statements articulating strong arguments that restorers can incorporate into their communications with the materially interested parties in the insurance claims system. To date, the AGA has published 11 position statements: “Third Party Administrator (TPA) Scope Change Requests”; “Pricing Position Statement #1 – Deviation from Standardized Price Lists”; “Pricing Position Statement #2 – New Construction Price Lists”; and eight different “Third Party Consultant (TPC) Position Statements.”
“These position statements were previewed by some of the leaders in each respective industry: third party administrators, third party consultants, and publishers of standardized pricing software,” Cross said. “The result is a set of effective tools that restorers can use in their discussions with insurance adjusters and consultants to convey a balanced, logical, and fair response to the objections that restorers face every day while simply trying to get paid for their work.”
The position statements were developed in such a way that contractors can choose whether to send them to adjusters in their entirety or use excerpts from them in email or telephone conversations — whatever makes the most sense for a particular negotiation. Through the peer review process, the experts on the AGA committee were able to refine strategies for addressing these issues. And RIA members have already begun to reap the rewards of their usage.
Recently, Frank Mirabelli, CEO of First General and RIA Board Member, received a request from a junior adjuster at an insurance company to reprice a large restoration project using the “new construction” price list within Xactimate. Prices in that list are lower than regular restoration prices. The AGA’s “New Construction Price Lists” position statement explains crucial differences between restoration and new construction and how the use of new construction pricing is often inappropriate for restoration work.
“As we are all aware, the restoration process does not yield the same labor efficiencies that new construction does. The junior adjuster had difficulty with the concept of restoration versus new construction and the negative impact on productivity and efficiency,” Mirabelli said. “We agreed to provide peer reviewed documentation that he could reference for his supervisor to permit pricing under the restoration model.”
After Mirabelli provided the “New Construction Price Lists” position statement, the insurer reversed its position and agreed to pay the higher restoration prices, as opposed to those from the “new construction” price lists.
“The insurer accepted the use of our pricing model instead of the new construction price list,” Mirabelli said. “The position statement prepared by the RIA provided clear and concise information that assisted us in our discussions.”
TPA Surveys Pave the Way for Better Communication
The position statements are not the only tool at the disposal of RIA members. The AGA has also undertaken the creation of TPA surveys, which offer restoration contractors the opportunity to rate TPAs on their service in several categories, and the results are incorporated into TPA Scorecard Reports. In the first survey, published in October 2020, most TPA scores were fairly low. The survey ignited a robust dialogue among parties from both sides on how best to work together going forward.
“We have highlighted areas where improvement from TPAs is needed, and also recognized their strengths based directly on contractor feedback. And we’ve given them an opportunity to see what areas need attention by giving them unfiltered commentary from their users,” Cross said. “This has revealed that there is an important disconnect between the restoration industry and the TPA industry. Both sides seem to believe there is a communication problem. The TPAs largely believe that the contractors don’t understand how to use their programs. And the contractors largely believe that the TPAs don’t understand the challenges, constraints, and limitations to performing restoration work under the programs, particularly with respect to emergency service.”
By using the surveys as a starting point for resolving these miscommunications, the AGA aims to improve the working relationship between the two industry sectors. The second survey is available on the RIA website, and you can take it now.
“We want to encourage everybody who is currently part of a TPA program to take that survey. In short order, we will be collecting that data and producing the next report, which will implement a new, more user-friendly star rating system,” Cross said. “We’re going to be very interested in seeing whether the favorability ratings of the TPAs have changed since the last survey.”
As with the position statements, RIA members are able to use the TPA survey results to improve their bottom line.
Brendon Rumsey, President of Rumsey Construction & Restoration, used the TPA Scorecard Report to his great advantage in a legal proceeding with an insurance carrier. The proceedings took place just a few days after the first Scorecard Report was published.
“The survey results were very crucial for us,” Rumsey said. “The carrier hired an expert who works for one of the TPAs, and he did a very good job of expressing his opinion. But we were able to share the survey at the proceedings. The TPA that employed the expert received extraordinarily low scores in the survey. It showed the arbitrator that the credibility of his testimony was questionable.”
Rumsey was able to secure a favorable award from the proceeding. In both this instance and cases where he’s used the position statements in mediations, having access to the resources has been extremely helpful.
“It’s nice to get those things settled and done with so you can do what you do — restoring properties, not trying to become a paralegal,” Rumsey said.
Continued Advocacy from the AGA
The AGA is dedicated to continuing its advocacy on behalf of the restoration industry. By working to align the interests of disparate groups, the committee hopes to improve the restoration landscape for everyone. Cross hopes to see this improvement take shape in many forms.
“I’d like to see faster, smoother, less adversarial claim settlements, negotiations, and resolutions. I’d also like to see less controversy and debate over fundamental issues with scope and price, as well as the category of water that’s used to classify certain losses,” Cross said. “Obviously, I want to see better awareness about the proper use of standardized prices. And I want to see contractors making liberal use of the Position Statements, whether by incorporating the concepts of them or just using them in their entirety.”
Cross also pointed out the vital importance of RIA membership. Restorers’ businesses face great risk if the industry is not united. The organization will be rolling out a new dues structure in the coming months that will lower the barrier to entry by offering reduced dues for smaller companies.
“Now, no one has an excuse not to join the association! And once they join, they have immediate access to a treasure trove of incredibly valuable assets that can benefit their businesses today,” Cross said. “The membership pays for itself on day one.”
To learn more about how the RIA’s AGA Committee is helping restorers, visit www.restorationindustry.org.