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Everyone struggled during the COVID-19 shutdowns, right? Well, a recent $140 million civil money penalty was leveled against insurer USAA by the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) for "not maintaining an anti-money laundering program" according to News 4 San Antonio. In short, their profits soared during the pandemic, and even though they made some policy dividends, premium credits, and other financial relief efforts, their "kindness" did not exceed their profits or reporting.
Many consumers are callous to the headlines of "record profits" as it has been a hot topic for some time. But policyholders for homeowners and business property insurance should take note as this is a common point of contention where the carrier is often able to leverage the consumers' lack of knowledge in this area to shortchange themselves and their contractors. Contractors who specialize in responding to (mitigation) and repairing damaged structures during the insurance claims process are no strangers to endless arguments regarding overhead and profit. For the reader who may not be familiar with these terms,
These are very simplified definitions but they should be helpful in framing what we are about to discuss. If you file an insurance claim because there is damage to your home, you likely will work with a property restoration contractor who specializes in navigating the nuances of the insurance claims process. It should be known that only within the insurance claims paradigm is overhead and profit presented as a markup, often observed as "10 and 10" (10% overhead and 10% profit). Whereas in the example from above the O&P is embedded into the overall cost of goods and services. When you go to the grocery store, the price of a tomato includes the "loaded" cost, i.e. the overhead and profit of the grocery chain is included in the price that you pay. It's the same as when you purchase your insurance policy for your home. Your insurance company does not show you what their overhead costs are or how much they plan to profit for the year; the cost is the cost. If you file an insurance claim for damages to your home, you may find that you learn more about the inner workings of the insurance claims process than you ever wanted to know. You may find that your contractor composes an invoice for their drying services or an estimate for their repair services and one of the many potential arguments may be over the structuring of overhead and profit. Just so we are clear:
A recent article demonstrated that a prominent insurance carrier, USAA, benefited from reduced driving by their insureds during the pandemic. Reduced driving resulted in reduced automobile accidents which resulted in reduced cost of anticipated payouts on claims. On the one hand, the insurance carrier provided the same level of coverage for the cost quoted, so there was a net-zero effect on the insured. Yet, a lawsuit alleges that, "At least 30% average refund of paid premiums would be required to make up for the excess amounts paid by consumers for just the period between mid-March and the end of April 2020." USAA was aware of the windfall and continued to charge the same rates throughout 2020 and 2021. Your costs for your insurance premiums may have gone down some, but your carrier likely still hit or beat their profit goals. Your local contractors were shut down and/or had their costs for goods and services increased. If you happen to be reading this, understand that when a contractor and the carrier are engaged in a heated discussion about whether overhead and profit are owed on your insurance claim, insurance companies have consistently defended their "right" to both O and P. Contractors don't disagree that businesses should cover their indirect expenses (overhead) and maintain a healthy profit, but are frustrated when the insurance company negates their responsibility to provide the consumer and the contractor with access to the same considerations. The policy that you purchased included the insurance company's O&P as well as the risk of covering these costs in the event of a claim. You paid for O&P. Keep this in mind if there is a scenario where your insurance representatives are arguing against the scope and cost of the work that your chosen contractor is presenting. O&P should be paid by your insurance carrier to your contractor. And if you are insured with USAA, you may want to keep following this case.
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The DYOJO Podcast Leveling Up As An Industry Season 3, Episode 81 This episode provides you with some behind-the-scenes and recap items from the 76th Annual Restoration Industry Association (RIA) Convention and Expo 2022. A few items of note include:
Our discussion includes shoutouts and/or appearances by these guests:
THURSDAYS ARE FOR The DYOJO Podcast We aim to entertain while we inform (INFOtainment), helping you shorten your DANG learning curve. New episodes of The DYOJO Podcast are released on Thursdays via video through YouTube and/or audio is distributed through platforms such as Apple, Spotify, Google, etc. Learn more by visiting our website READ MORE in The DYOJO Blog Additional Resources from The DYOJO:
Lisa Lavender, Restoration Technical Institute (RTI) reached out to me about developing a course around the principles in my first book, Be Intentional: Estimating. While this book centers around the mindset and habits for insurance claims estimating success, the course will dig deeper into the technical aspects. The working title for the book and the course is How To Not Suck At Estimating: Habits For Better Project Outcomes. Module/chapters will include Developing The Agreed Upon Scope, The Claims Standard, A Good Sketch Is A Good Start, Don't Play The Blame Game, and more Episode 80 of the The DYOJO Podcast will center around four common estimating approaches including, using drywall repairs as an example:
Our discussion includes appearances by these guests:
THANK YOU TO OUR SPONSORS:
THURSDAYS ARE FOR The DYOJO Podcast We aim to entertain while we inform (INFOtainment), helping you shorten your DANG learning curve. New episodes of The DYOJO Podcast are released on Thursdays via video through YouTube and/or audio is distributed through platforms such as Apple, Spotify, Google, etc. Learn more by visiting our website Have you considered making videos for your business to share on YouTube or social media platforms but you are worried that they may be too cringe? Embrace the suck. As Paul T. Long says, "People bank [insert your business] with people." When he was deciding whether or not to create content for his business he considered:
For Paul, this meant creating 42 videos on The Commercial Real Estate Process. Doing so forced him to think through his client on-boarding process and help his clients to better understand and work their way through achieving their goals. Paul reports great engagement as well as process improvement. BUT, it started with him being willing to be terrible at making the videos, following through with the vision, and hitting the "post" button once they were ready. To encourage business professionals, we share some of our early cringe videos to help inspire you to follow through on that initiative that you are considering.
South Sound Conneciton (SSC) is all about sharing the stories of local people, business professionals, community members, and entrepreneurs. SSC is sponsored by:
 Obligations For Insurance Claims Investigations According to the state of Washington Administrative Code (WAC) 284-30-370: Standards for prompt investigation of a claim. Every insurer must complete its investigation of a claim within thirty days after notification of claim, unless the investigation cannot reasonably be completed within that time. All persons involved in the investigation of a claim must provide reasonable assistance to the insurer in order to facilitate compliance with this provision. In the second part of our conversation with Roger Howson (Seattle, WA) and many others, we discuss the insurance claim appraisal process. Episode 78 of The DYOJO Podcast will touch on topics, including
While many contractors dabble in policy interpretation, often because they think they are doing the right thing for the client, they may be crossing into the territory of public adjusting without a license. Roger discusses how, "If it walks like a duck and talks like a duck, it better be licensed like a duck." Andy McCabe shares a story where he had to answer some tough questions with an Oregon insurance investigator. Our guests will include:
THANK YOU TO OUR SPONSORS:
THURSDAYS ARE FOR The DYOJO Podcast New episodes of The DYOJO Podcast are released on Thursdays 9am PST via video through YouTube and/or audio is distributed through platforms such as Apple, Spotify, Google, etc. Learn more by visiting our website - www.thedyojo.com/podcast  Contractors and customers feel the squeeze when the insurance carrier plays pricing games with the estimating and collection process of insurance claims restoration. We discuss New Construction Pricelists being applied to restoration scenarios with contractors in Minnesota, California, and Washington. We discuss the issue, rebuttals, and resources including the Restoration Pricing Position Paper from the Advocacy and Government Affairs Committee (AGA) of the Restoration Industry Association (RIA), “New construction price settings in certain pricing programs increase labor productivity which reduces prices in a way that may not be appropriate for restoration. Indirect tasks that must occur to accomplish direct repairs – known as “Supporting Events” – may need to be appropriately adjusted due to the extent of the damage in a restoration project. This discussion educates the listener on the underlying factors which lead to these manipulations and provides the contractor with some well-thought-out rebuttals. While there are no cheat codes that will eliminate the squid games, restorers will find it refreshing to know that resources are being created and advanced regain and maintain sustainable claims practices. The DYOJO Podcast, Episode 77 includes these guests and appearances:
Sponsors of The DYOJO Podcast: * Restoration Industry Association (RIA) - Restoration Industry Association (RIA) Join your fellow intentional restorers at the RIA 2022 International Restoration Convention and Industry Expo, April 11-13 at the Peppermill Casino in Reno, NV. Let them know The DYOJO sent you. * Restoration Technical Institute (RTI) provides world-class training. Designed for those who serve the Restoration, Cleaning and Industries related to the Built Environment. * Office Services by Brandi, LLC provides unparalleled personalized bookkeeping services to a broad range of clients in many states. Brandi will help tackle the never-ending list to be done in the restoration industry by handling the R&M billings, collections and many other key areas to take the burden off the owners. THURSDAYS are for The DYOJO Podcast New episodes of The DYOJO Podcast are released on Thursdays 9am PST via video through YouTube and/or audio is distributed through platforms such as Apple, Spotify, Google, etc. Learn more by visiting our website - www.thedyojo.com/podcast |
AuthorJon Isaacson, The Intentional Restorer, is a 19 year veteran of the property restoration industry and a business coach through his organization The DYOJO. Archives
May 2022
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