Is it 'fair' for the adjuster to bring in your competitor as a consultant?

Large losses have their challenges, and adjusters are not expected to be experts in every trade there is let alone the restoration industry. God save me from an adjuster who has been to a 3 day WRT class and thinks he knows more about drying a commercial loss than I did after 25 plus years drying commercial losses. So they bring in 'consultants'. Is the best solution to bring in an 'independent consultant' who is actually a restoration competitor that just wants to 'steal the job'? Many adjusters think so.

There has a been a dark side to the restoration industry since the beginning with some restoration companies using every dirty trick in the book to inflate the job costs, use too much equipment for too long, and even billing for equipment that wasn't even there.

Then there are the restoration companies that play "the warehouse dumb" on every loss, bring everything in their warehouse to load up a job site. To combat these and other restoration company 'dirty tricks' the insurance industry has made a practice of using consultants on large losses.

When my old friend and mentor, Lloyd Weaver invented the carpet drier in the early 1970's in Rapid City, South Dakota, he also figured out the formula for the number of fans needed on a job site:

Rule 1: Is there any left on the van to rent to the insurance company?

Rule 2: Is there anyplace to plug them in?

Now it would be referred to as the "warehouse dump," and with power grids and gen-sets, the electrical outlet issue has been replaced with gang boxes and quad stings.

So many restoration companies use too much equipment and keep it there for too long, the insurance companies, who would much rather keep the money in their bank accounts, and record billions and billions in profits, have gotten smarter and pushed TPAs who promote to cut all restoration bills by 30%. With the result being restoration companies increase their restoration bills by 50% so "let them cut 30%". The game goes on, and of course Xactimate, where 'smart' restoration contractors know every code in the book and keep it so complicated that even TPAs have a hard time figuring it out. Buy a fan for $200. rent it for $28 a day and keep it on site for a week, then the adjusters cut it to 3 days, so more fans get put on the loss.

Most adjusters are just working guys, with bills to pay, many have a family to support. They know they will never be rich, and they are working for a pay check. If that pay check would suddenly end, they would be in a world of hurts, so they do their job and go on with life. They just want to close the files on their desk and next week they get more files on their desk. They sure to not want last month's file to suddenly show up on this week's desk too.

When the adjuster sees a restoration company's billing, and look at their own paycheck they might wonder if all of the job's billing is going in the pocket of that restoration contractor anyway.Then the restoration contractor shows up in a new fancy truck or Denali bragging about their new boat with twin 250's on it. And the adjuster know they are being hosed. Never looking at their insurance company's executives owning jets and islands. Most adjusters have never met a payroll in their life and never will. The reality of owning a small business and the expenses to maintain that state of 24/7 -'anywhere' readiness never is taken into consideration. Restoration is a 24/7 life, when you are not working it, you are thinking about it and then when you do sleep-you are dreaming about it. It is your life.

On large commercial losses, the insurance industry has for decades used 'independent consultants' brought in to curb the waste and over billing on job sites. Don't get me wrong, many time the local yokel restoration company is way over his head on large losses, and in addition many if not most smaller operators think that this loss being "huge" will pay off all of their bills and now they finally hit the retirement golden goose. I heard of a major franchise player raising the price of the pickup trucks from $55 a day to $200 a day because the loss was "so big"? Why would the square footage of a job change the rental price of a truck?

SEND A CROOK TO CATCH A CROOK

Insurance company adjusters have independent consultants that they trust and feel comfortable with on jobs so many times they bring in the restoration company's competitor as an 'independent consultant'. The restoration consultant, who as a 'expert on the claim' gets to see the job billings, job costs, Job Hazard Analysis, plan of attack, time schedules and a number of other factors that frankly a competitor bidding a job would love to see up front. I have even heard this called "send a crook-to catch a crook",

Then surprise-surprise-surprise; the restoration 'independent consultant' tells the adjuster and the insured, "your restoration firm is not qualified and in fact doing more harm than good". Which prompts the adjuster to say, "well Bill do you think you could wrap it up faster and save the insured some money" at which the restoration 'independent consultant says "yes we can". All of a sudden the first restoration company gets booted off the job. (Yes, just maybe in some cases, the adjuster gets a nice envelop as a gift-after all everyone else is make money off it why shouldn't he? If not it sure might appear that's what happened).

The 'independent consultant' now restoration job contractor is asked "when can you start' and he states that "as a matter of fact I have 4 semi-trucks and 24 crew guys just one exit down on the interstate at a truck stop", he could bring them in this afternoon while the other company is still gathering up their equipment. I called this 'nasty' in a recent article and was corrected by many insurance guys stating that this is a very normal business practice and nothing 'nasty about it'. Who better to know restoration pricing and tactics than a national competitor?

I'll call your bluff.

Knowing that the insurance industry is always fair and wants to play by the rules, (in-spite of what I have personally seen over the past 30 years: yes, many are great adjusters who are honest as can be and great guys too-but a few rotten apples can ruin the lot) the solution is very simple. Make it the insurance industry's standard policy and practice to use consultants who are in fact consultants. If your consultant calls themselves an 'accountant' make sure that they have an accounting background and verify their education and credentials in accounting, the same with 'engineers' or other professions.

It seems simple enough. Believe me, insurance companies for decades sent in 'phony experts' on major losses. It saved them tons of money. As regards to restoration consultants, if they are true independent 'consultants' just have a policy that no consultant can finish any job where they were used as a consultant. Period-end of issue. If a restoration consultant is called in on a job, then their firm is not allowed to bid that job, work on that job except as a consultant, or finish that job.

If a restoration 'consultant' was really a 'consultant' then they should help consult the Restoration company on the large commercial loss with that job giving good advice and expertise. If the restoration company on the job is not up to the task, then see how many of the restoration consultants would recommend that their competitor take the job and finish it Let's just see how many national restoration 'consultants' will be consultants for insurance adjuster if they have to give the job to their national competitor. After all it would only be fair if the consultant was actually a consultant and not trying to steal the job wouldn't it?

When I say 'Secrets of Large Losses' at my workshop- I do mean it! Don't worry, I never name names.

Cheers

Jim

Jim Thompson & Co. LLC

724 424 2000

www.jimthompsonco.com