Segregating the Industry Organically

RIA members typically take their trade very seriously and seek to identify themselves with the most current education along with possession of state-of-the-art technology. Members attend the annual International Restoration Convention + Industry Expo with this mission and expectation.

However, while RIA members diligently seek to improve their own competence and product offerings, part of their effort has the distinct purpose of distinguishing their brand from the many far less reputable restoration brands that currently occupy the marketplace. Sadly, it seems that there are many restoration brands that are willing to provide services that are clearly substandard, incomplete and even dangerous for both workers and occupants.

Why would a restoration business owner ever choose to offer such compromised work product?

The answer is clear after carefully reading the terms of participation within insurance preferred vendor programs, third-party administrator (TPA) and network programs, insurance claims representative directives and other referral sources. These programs clearly stipulate rules that fail to reflect competent restoration and generally accepted fair business practices. In return for agreeing to such terms of engagement, they will receive more referrals from the program administrator. Many feel that only the ethically challenged would agree to participate in such programs.

For the conscientious restoration tradesman, such a compromise to their practice is deeply offensive. Such program expectations dilute the integrity and honor that RIA members diligently seek to reflect in every project they perform.

Serious restoration professionals find it important to not only identify themselves as among “the best” available;
they also seek to identify and make obvious those restoration firms who lack the integrity to safely deliver services that are considered usual, customary and in accord with the standard of care to be followed.

For the sake of our industry’s healthy future, the bad restoration brands need to be segregated from the flock of good restoration brands.

But how can the industry effectively segregate these two demographics?

HURRICANE MICHAEL OPPORTUNISTS

Category 5 Hurricane Michael devastated the panhandle of Florida in October 2018. The devastation to property and structure affected local citizens in a fashion that few had ever experienced before. As with most catastrophic events, property restoration professionals and claims representatives swarmed into the area to offer their assistance in processing insurance claim property repairs.

Catastrophic events tend to attract a disproportionate quantity of splash-and-dash restoration contractors who are nothing more than charlatans and con artists. The victims of the storm are victimized a second time by these restoration contractor wannabes who provide shoddy workmanship and skip town with a handful of ill-gotten cash within a couple of weeks of arriving. They are the scum of our industry.

Insurance claims representatives also have a similar demographic of incompetent and unqualified participants. These individuals demonstrate a lack of understanding in how a building should be repaired after a catastrophe. However, they do know how to demand concessions that are in accord with their employer’s expectations — not necessarily the language of the insurance policy. These individuals, too, are a poor representation of their trade. The policyholder is in fact victimized yet again as a result of these poor claims representative’s practices.

Sometimes these insurance claims representatives bring in their own preferred contractor who is perfectly willing to be entirely controlled by them. Scope of work, protocol and even price is dictated by the claims representative who is neither licensed nor qualified to be the general contractor on the project. Yet, if there are any issues
on the project, the claims representative is perfectly comfortable faulting the contractor and demanding they repair the issue created by the claim representative themselves — at no charge.

In the end, the policyholder is egregiously wronged by both contractor and claims representative, and the restoration industry is smeared with the broad brush of disrespect and distrust.

When such entities mess up a job in this fashion, a quality contractor is frequently retained to correct the errors while the bad guys scramble to protect themselves from being caught in the cross hairs of subrogation.

LET THE CHIPS FALL WHERE THEY MAY

Hurricane Michael presented such an opportunity to an attentive RIA member and restoration contractor. It would be understandable if this contractor struggled with a natural temptation to throw the other players under the bus.

Rather than maliciously seek to smear their competition and the incompetent claims representative, the competent contractor merely allowed these poor representations of their trade to dig their own grave. This required nothing more than to surround himself with qualified, third-party experts and diplomatically demonstrate how the project was incompletely addressed. As a result, their own workmanship and approach condemned them, resulting in their excommunication and blemished reputation. The RIA member merely arranged the reveal.

It seems that third-party experts who speak for the structure rather than for the interests of the insurance carrier are an important part of the competent restorer’s future, and the restoration industry would do well to use them far more frequently.

HERE’S HOW HE DID IT:

Eight weeks post Hurricane Michael, the RIA member contractor’s team was called and asked to complete an inspection on a large church with multiple buildings that had received extensive damage from the storm. Upon the completion of the initial inspection, they identified several major issues with the property’s current situation. Most of the issues we found were directly related to incompetent restoration efforts and poor claim handling by the carrier’s independent adjustment firm.

The policyholder had hired a restoration contractor and a roofing contractor who also does restoration. Both of these firms were from out of town. Initially, the customer was fearful of losing their church because they did not feel they would have enough money to repair the buildings.

Their insurance carrier and prior contractors had been in disagreement since the beginning of the claim, while the customer was being told by the carrier that their claim would be handled quickly. The policyholder’s two contractors were telling them that the carrier was not being fair and advised the policyholder to hire the contractors recommended by the independent adjuster.

All of this was both discouraging and confusing to the customer. Everything finally came to a head when the carrier’s independent adjuster dictated — and then mandated — both contractors’ scope of work.

The independent adjuster declared his refusal to pay for any more of the contractor’s services — that the building was “dry” and they were just “milking the billing.” The contractors were not in agreement with the carrier’s hired representative. In fact, both contractors were debating with the carrier, resulting in a very hostile claims process.

The contractors ceased communications with the policyholder, yet continued to do work, which led to an inevitable catastrophic failure. The contractor had removed known asbestos tile flooring with no protocols or even basic health and safety measures in place.

The customer researched and arranged an inspection by an RIA member contractor.

The property inspection revealed substantial damages caused by Hurricane Michael. Upon review of the damage and mitigation details, it was very clear that the prior contractors had no true knowledge of what they were doing, nor did they have any intent of delivering mitigation in accord with the industry standard of care.

The main building roof had been tarped three different times; each attempt failed and introduced large amounts of water every time it rained. Visible microbial growth was rapidly growing inside the buildings. Even basic tasks like the removal of storm-related debris from the exterior of the structure remained, indicating neither contractor had the intent to complete the project correctly.

A CALL FOR PROJECT LEADERSHIP

The policyholder requested the RIA member contractor take over the project.

Professional acumen should cause an ethical contractor to pause in such a situation. The reputation of the entire restoration industry suffers when a competitor is exposed as producing substandard workmanship. For this reason, the RIA member contractor was very hesitant when asked to take over the project. The project was now “undesirable” — upside down with unusual complications and disgruntled parties involved. Yet compassion was felt for the customer who had such an unnecessary battle and complex challenges. If someone with the right skills failed to step up, then, indeed, the church might never reopen.

After careful consideration, a heartfelt decision was made to accept the project and help the policyholder recover. A recovery plan was established with the objective of both correcting the claims process and make the customer whole so they could rebuild.

The recovery plan started with a robust effort to produce proper documentation of the damages and involving qualified independent professionals to establish current structural engineering issues as compared to the original condition just after the storm. A qualified hygienist determined the contaminants relevant to this loss. An indoor environmental professional (IEP) quantified and declared the current category of water as well as the original source water. Engineers determined the penetrations produced by the wind, thus allowing water to come into the structure. The estimation team estimated the true cost of repairs.

In an effort to produce solutions, the RIA member contractor sat down with the customer and explored existing and potentially new revenue streams as part of their recovery plan while the buildings were being repaired.

The policyholder retained an attorney, as they lacked direction and were completely lost in the process. The attorney and RIA member contractor suggested the policyholder remain on the sidelines while the claim was reorganized and presented to the carrier. If the carrier’s independent adjuster failed agree with the necessary scope and repairs, then the policyholder would move forward with legal counsel to resolve the claim.

After careful consideration, a heartfelt decision was made to accept the project and help the policyholder recover. A recovery plan was established with the objective of both correcting the claims process and make the customer whole so they could rebuild.

policyholder remain on the sidelines while the claim was reorganized and presented to the carrier. If the carrier’s independent adjuster failed agree with the necessary scope and repairs, then the policyholder would move forward with legal counsel to resolve the claim.

A meeting was arranged with the carrier’s representative(s) where they were presented with a fully documented
claim with over 12,000 photos and reports from multiple third-party professionals. The eight-hour meeting with the carrier’s representative(s) and their consultants ended without agreement on the scope of damages.

The following day, the carrier requested another meeting and supplied an entirely different team of consultants. The carrier’s consultants actually agreed with the scope we had originally presented.

The independent adjuster’s original evaluation was a mere $200,000.

The RIA member contractor’s estimated initial scope of repairs was over $4 million.

Two weeks after the second meeting, the carrier’s consultants came back with a scope of work valued at $3,980,020, more than 1990% greater than the carrier’s original evaluation of $200,000.

The RIA member contractor’s due diligence produced a recovery plan that worked.

By involving qualified, independent professionals to document the loss and present the facts, the carrier had no choice but to do what was right and agree to a scope of work necessary for the competent repair to the property. In so doing, the policyholder received their four buildings sanitary and free of abnormal moisture.

But what happened to the original independent adjuster, his “consultants” and the two original substandard contractors? Short answer: They were never heard from again on that job. We can only wonder if they were able to collect any money for their substandard services.

By involving qualified, independent professionals to document the loss and present the facts, the carrier had no choice but to do what was right and agree to a scope of work necessary for the competent repair to the property.

WHAT WAS DONE RIGHT

It is always good practice to perform a review of a large loss project so as to identify what was done great and what has room for improvement. This project produced many important positive lessons:

1. Never celebrate the demise (and poor choices) of a competitor. Professionalism doesn’t behave that way.
2. Avoid the temptation to throw others under the bus. Rather, let the evidence speak for itself.
3. Use qualified independent third-party experts — freely! They are your greatest asset on any project that can be debated after the work is done.
4. Always speak to the needs of the project not the “wants” of those involved in the transaction.
5. When anyone in our industry gets a black eye from poor performance, we all wear it.
6. There will always be bad contractors in our industry. Don’t try and bury them; let them dig their own graves. They will find their way there without your help. RIA

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