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The Myth of 10 and 10- The Myth of 10 and 10- Developing a Win/Win Developing a Win/Win
for Insurance Companies for Insurance Companies & Contractors& Contractors
Win-Win-Win or No DealWin-Win-Win or No Deal
By Les CunninghamBy Les Cunningham
CGC, CR*, CCR*, CGRaCGC, CR*, CCR*, CGRa
http://www.businessnetworks.comhttp://www.businessnetworks.com*A NARI Certification*A NARI Certification
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Basis of my information:Basis of my information:Basis of my information:Basis of my information:
Business NetworksBusiness Networks 200+ companies200+ companies
a. Hands-on review of their numbersa. Hands-on review of their numbers
b. Participation in all the major associationsb. Participation in all the major associations
c. One-on-One consultingc. One-on-One consulting
d. Owned and operated my own d. Owned and operated my own
business for 15 years business for 15 years
e. Won 15 C.O.T.Y. awards in a 7 year periode. Won 15 C.O.T.Y. awards in a 7 year period
Business NetworksBusiness Networks 200+ companies200+ companies
a. Hands-on review of their numbersa. Hands-on review of their numbers
b. Participation in all the major associationsb. Participation in all the major associations
c. One-on-One consultingc. One-on-One consulting
d. Owned and operated my own d. Owned and operated my own
business for 15 years business for 15 years
e. Won 15 C.O.T.Y. awards in a 7 year periode. Won 15 C.O.T.Y. awards in a 7 year period
It will offer you a different perspective thatIt will offer you a different perspective thatmay lead to significant results for you may lead to significant results for you personally and corporately. personally and corporately.
It will offer you a different perspective thatIt will offer you a different perspective thatmay lead to significant results for you may lead to significant results for you personally and corporately. personally and corporately.
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Financial Reality:Financial Reality:
With Financial Pressures on With Financial Pressures on the Insurance Companies the Insurance Companies and the Restoration and the Restoration Contractor, it must beContractor, it must beWIN-WIN-WIN or WIN-WIN-WIN or
NO DEAL!NO DEAL!
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WIN-WIN-WIN or NO DEAL!WIN-WIN-WIN or NO DEAL! (Insurer-Contractor-Policy Holder) (Insurer-Contractor-Policy Holder)
Actually, for the Insurer and Actually, for the Insurer and Contractor to succeed, it needs to be:Contractor to succeed, it needs to be:
Win (Insurer)…Win (Insurer)…
Win (Contractor) … Win (Contractor) …
Win (Policy Holder)Win (Policy Holder)
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The Insurance Marketplace The Insurance Marketplace is a War in Progress. is a War in Progress.
Mergers & AcquisitionsMergers & Acquisitions Cost sensitivity over the past 8 Cost sensitivity over the past 8 years, resulting in reduced quality of years, resulting in reduced quality of service to the insured.service to the insured. Direct Writers (Internet, Banks)Direct Writers (Internet, Banks) Competitive marketplace – Competitive marketplace – everyone’s positioning themselves.everyone’s positioning themselves.
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What do the Insurance What do the Insurance Companies Need to “Win”?Companies Need to “Win”?
Great Service from the Great Service from the Contractor Contractor (Absolutely!)(Absolutely!)
Happy Policy Holders Happy Policy Holders (Yes!)(Yes!) Rock-bottom prices from the Rock-bottom prices from the
Contractor Contractor (Really?)(Really?)
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What does it cost the Insurer to What does it cost the Insurer to meet Policy Holder’s Expectations?meet Policy Holder’s Expectations?
Knowledgeable Staff (training – lots of Knowledgeable Staff (training – lots of turnover)turnover)
Lack of Knowledge costs money (when a Lack of Knowledge costs money (when a simple water damage turns into a major simple water damage turns into a major mold problem) – this in turn affects costs mold problem) – this in turn affects costs for the insurer and their ability to be for the insurer and their ability to be competitive.competitive.
Professional Contractor Resources Professional Contractor Resources 24 / 7 Emergency Response24 / 7 Emergency Response
(Internal call center or outsourced)(Internal call center or outsourced)
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It Hurts the Insurer to Lose It Hurts the Insurer to Lose Policy Holders…Policy Holders…
Loss of Policy RevenueLoss of Policy Revenue High Turnover of Policy High Turnover of Policy
Holders increases the marketing Holders increases the marketing and administration expenses in and administration expenses in order to obtain, set up and order to obtain, set up and cancel the Insured.cancel the Insured.
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What do Policy Holders What do Policy Holders Need for their “Win”? Need for their “Win”?
Coverage as Per PolicyCoverage as Per Policy Immediate ResponseImmediate Response A Competent Professional A Competent Professional
Contractor Contractor Life Back to Normal, ASAPLife Back to Normal, ASAP Constant Communication Constant Communication
(i.e. a sense of control)(i.e. a sense of control)
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Why Do Policy Holders LeaveWhy Do Policy Holders Leavethe Insured?the Insured?
Price Price (Coverage costs too much.)(Coverage costs too much.)
Poor Service on a ClaimPoor Service on a Claim ((Not meeting customer expectations.)Not meeting customer expectations.)
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What does the ContractorWhat does the ContractorNeed to “Win”?Need to “Win”?
A Reliable and Regular A Reliable and Regular Source of Work.Source of Work.
Clear Communication from Clear Communication from the Insurer.the Insurer.
Insurers who payInsurers who pay“Timely” & “Fair Prices.”“Timely” & “Fair Prices.”
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What Does It Cost the Contractor to What Does It Cost the Contractor to Meet Customer Expectations?Meet Customer Expectations?
24/7 Immediate Response24/7 Immediate Response• Infrastructure to Manage this (Overhead).Infrastructure to Manage this (Overhead).
Training Costs – Ongoing Training Costs – Ongoing • Technical & Customer RelationsTechnical & Customer Relations
Risks of Not TrainingRisks of Not Training• Being sued for not following published Being sued for not following published
standards (ASCR & IICRC).standards (ASCR & IICRC).
• Fines for not following Ministry of Labour Fines for not following Ministry of Labour Occupational Health & Safety regulations.Occupational Health & Safety regulations.
A knowledgeable A knowledgeable contractor will save contractor will save
the insurance the insurance company money.company money.
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The “10 & 10” MythThe “10 & 10” Myth
The Restoration The Restoration Contractor can prosper Contractor can prosper (survive) on 10% (survive) on 10% overhead and 10% net overhead and 10% net profit.profit. Doesn’t Work. Doesn’t Work.
Let me show you…Let me show you…
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See For Yourself:See For Yourself:
Mythical CompanyMythical Company $5-Million, 10 & 10 $5-Million, 10 & 10 10.0%10.0% 10.0%10.0%
Real CompaniesReal Companies (35) with (35) withwith avg. of $1.5 Millionwith avg. of $1.5 Million 32.4%32.4% 2.0%2.0%
Real CompaniesReal Companies (30) with (30) withwith avg. of $4.8 Millionwith avg. of $4.8 Million 25.5%25.5% 7.8%7.8%
AllstateAllstate, 2000 Revenue , 2000 Revenue of $29.1 Billionof $29.1 Billion 22.3%22.3% 10.5%10.5%
State FarmState Farm, 2000 Revenue , 2000 Revenue of $29.6 Billion of $29.6 Billion 18.0%18.0% 7.0%7.0%
OverheadOverhead Net ProfitNet Profit
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10 & 10 Analysis (Source Data):10 & 10 Analysis (Source Data):
Revenue $ Overhead $ Net Profit % Overhead % Net Profit Total
Mythical 10 & 10$5 Million RevenueSample Company
$5,000,000 $500,000 $500,000 10.0% 10.0% 20.0%
Fire/RestorationContractors (35), $500,000 - $2.5
Million(1)
$1,507,955 $488,538 $30,786 32.4% 2.0% 34.4%
Fire/RestorationContractors (30),
$2.5 - 10 Million(1)$4,850,567 $1,238,904 $379,021 25.5% 7.8% 33.4%
Allstate(2) $29.1 Billion $6.5 Billion $3.0 Billion 22.3% 10.5% 32.8%
State Farm (3) $29.6 Billion $5.3 Billion $2.1 Billion 18.0% 7.0% 25.0%
Sources: (1) Business Networks 2000 Industry Averages, (2) Allstate 2000 Annual Report, (3) State Farm 2000 Annual Report
Does Volume Make a Difference?15:18
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Conclusion: Win-Win-Win Conclusion: Win-Win-Win or No Dealor No Deal
Quality services retain Policy Holders for Quality services retain Policy Holders for the Insured.the Insured.
Knowledge & Training saves money for Knowledge & Training saves money for everyone.everyone.
The contractor needs fair pricing in order to The contractor needs fair pricing in order to provide knowledgeable and quality provide knowledgeable and quality services. services.
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Questions?Questions?
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Thank You!Thank You!
From the Business From the Business Networks Team Networks Team for the opportunity for the opportunity to be of service to to be of service to you and your you and your company!!company!!
