Insurance Companies Greed is Killing Restoration Companies
Having been in the water restoration and drying business since 1992 I have seen sweeping changes by the insurance companies. Some of these changes have been great for the industry but some are absolutely killing and controlling companies all over the U.S.
Some of the good changes are now everybody is more accountable. The documentation of the claims are now very comprehensive which is great if there are ever any issues with the claim. From photos documenting the entire loss, to moisture readings, and documenting all conversations a water restoration loss is documented more thoroughly than your last doctor visit.
The bad thing about this is that the paperwork is extremely time consuming. This can be a full-time job for someone just on the paperwork except for the fact you can’t bill for the time doing the paperwork. There are a lot of companies out there that can dry a house and do it in a relative short amount of time. However, the paperwork is what sets the good ones apart from the bad ones. Just like doctor’s though water restoration companies are hiring people to do paperwork. This extra employee expense was not necessary a few years ago and it is increasingly difficult to find money to pay for this when the same insurance companies are constantly cutting the prices they will pay for everything.
A good example of this is in 1992 when I started in the water restoration industry the going rate was 30.00 a day for a centrifugal air mover. Today we get 27.00 a day. In 2001, I got 135.00 a day for an extra large dehumidifier, today we get 103.00 per day for the same unit. Also, within the last year insurance companies are not wanting to pay for call out fees. They still want you to be available 24/7 but they are getting mighty picky about paying for that service. The prices they will pay are constantly going down while the demands on my staff’s time is increasing exponentially.
Rather than cutting the money water restoration companies earn there are other ways they could cut their cost and have better contractors. If they stopped paying for inefficient, out-dated standard refrigerant dehumidifiers and only allowed lgr dehumidifiers sized correctly to the jobs then they would have to replace less items on claims and the dry times in the entire industry would be faster. This would ultimately lower their cost on claims. I doubt this will occur though because of most people’s lack of drying knowledge.
Another way they could control cost would be to have two sets of preferred contractors, mitigation companies and general contractors. Then don’t allow mitigation companies to do rebuilds or general contractors to do dry outs. There is no incentive to dry anything within the structure if you know that you can make 10x the money removing it and replacing it. This is a huge problem within the industry, in my opinion.