The Restoration Industry - 1st Half of 2024

Message to Restorers: We must build our businesses for repeatable revenue, diversified services, and maintain a steady book of business, whether it's claim-related or not. Just because the carriers are down and the weather is off a bit doesn't mean we should all be down. We need to prepare for both the slow times and the busy times.

Key Factors Contributing to the Decline in the Restoration Industry

Milder Weather Conditions: The first quarter of 2024 experienced significantly milder weather compared to 2023, with fewer severe weather events such as hurricanes, floods, and major storms. This reduction in extreme weather has led to a decrease in the number and severity of insurance claims for property damage. NOAA data indicates fewer severe weather incidents in early 2024, contributing to reduced catastrophe losses.

Reduced Catastrophe Claims and Insurance Expenditures:

• Allstate Insurance: Reported a 60% decrease in catastrophe claims, dropping from $894 million in Q1 2023 to $555 million in Q1 2024. The catastrophe ratio improved from 5.3% to 2.1%, and the loss ratio decreased from $87 to $72.4 per $100 earned in premiums.
• AIG: Catastrophe-related charges dropped by 20.68%, from $116 million in Q1 2023 to $92 million in Q1 2024. The catastrophe ratio also decreased from 5.3% to 2.1%.
• AON: Global insured losses dropped from $30 billion in Q1 2023 to $17 billion in Q1 2024, a 44% reduction, reflecting the broader trend of milder weather conditions.
• Verisk: The Q1 2024 financial presentation highlights that growth in property estimating solutions was negatively impacted by lower weather-related transactional volumes, indicating a decrease in job volume rather than a reduction in catastrophic incidents.

Conclusion: The significant decline in the restoration industry in 2024 is primarily due to fewer severe weather events leading to a substantial decrease in insurance claims and payouts for property damage. Financial reports from major insurers like Allstate, AIG, and AON highlight significant reductions in catastrophe claims and improved loss ratios. These factors have led to decreased demand for restoration services in 2024.