The Myth of 10 and 10Developing a Win/Win
for Insurance Companies
& Contractors
Win-Win-Win or No Deal
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By Les Cunningham
CGC, CR*, CCR*, CGRa
BUSINESS
http://www.businessnetworks.com
1-800-525-1009
*A NARI Certification
Basis of my information:
It will offer you a different perspective that
may lead to significant results for you
personally and corporately.
Business Networks 200+ companies
a. Hands-on review of their numbers
b. Participation in all the major associations
c. One-on-One consulting
d. Owned and operated my own
business for 15 years
e. Won 15 C.O.T.Y. awards in a 7 year period
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BUSINESS
1-800-525-1009
Financial Reality:
With Financial Pressures on
the Insurance Companies
and the Restoration
Contractor, it must be
WIN-WIN-WIN or
NO DEAL!
BUSINESS
1-800-525-1009
3:18
WIN-WIN-WIN or NO DEAL!
(Insurer-Contractor-Policy Holder)
Actually, for the Insurer and
Contractor to succeed, it needs to be:
Win (Insurer)…
Win (Contractor) …
Win (Policy Holder)
BUSINESS
1-800-525-1009
4:18
The Insurance Marketplace
is a War in Progress.
 Mergers & Acquisitions
 Cost sensitivity over the past 8
years, resulting in reduced quality of
service to the insured.
 Direct Writers (Internet, Banks)
 Competitive marketplace –
everyone’s positioning themselves.
BUSINESS
1-800-525-1009
5:18
What do the Insurance
Companies Need to “Win”?
 Great Service from the
Contractor (Absolutely!)
 Happy Policy Holders (Yes!)
 Rock-bottom prices from the
Contractor (Really?)
BUSINESS
1-800-525-1009
6:18
What does it cost the Insurer to
meet Policy Holder’s Expectations?
 Knowledgeable Staff (training – lots of
turnover)
 Lack of Knowledge costs money (when a
simple water damage turns into a major
mold problem) – this in turn affects costs
for the insurer and their ability to be
competitive.
 Professional Contractor Resources
 24 / 7 Emergency Response
(Internal call center or outsourced)
BUSINESS
1-800-525-1009
7:18
It Hurts the Insurer to Lose
Policy Holders…
 Loss of Policy Revenue
 High Turnover of Policy
Holders increases the marketing
and administration expenses in
order to obtain, set up and
cancel the Insured.
BUSINESS
1-800-525-1009
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What do Policy Holders
Need for their “Win”?
 Coverage as Per Policy
 Immediate Response
 A Competent Professional
Contractor
 Life Back to Normal, ASAP
 Constant Communication
(i.e. a sense of control)
BUSINESS
1-800-525-1009
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Why Do Policy Holders Leave
the Insured?
 Price (Coverage costs too much.)
 Poor Service on a Claim
(Not meeting customer expectations.)
BUSINESS
1-800-525-1009
10:18
What does the Contractor
Need to “Win”?
 A Reliable and Regular
Source of Work.
 Clear Communication from
the Insurer.
 Insurers who pay
“Timely” & “Fair Prices.”
BUSINESS
1-800-525-1009
11:18
What Does It Cost the Contractor to
Meet Customer Expectations?
 24/7 Immediate Response
• Infrastructure to Manage this (Overhead).
 Training Costs – Ongoing
• Technical & Customer Relations
 Risks of Not Training
• Being sued for not following published
standards (ASCR & IICRC).
• Fines for not following Ministry of Labour
Occupational Health & Safety regulations.
A knowledgeable
contractor will save
the insurance
company money.
BUSINESS
1-800-525-1009
12:18
The “10 & 10” Myth
The Restoration
Contractor can prosper
(survive) on 10%
overhead and 10% net
profit. Doesn’t Work.
Let me show you…
BUSINESS
1-800-525-1009
13:18
See For Yourself:
Overhead
Net Profit
Mythical Company
$5-Million, 10 & 10
10.0%
10.0%
32.4%
2.0%
25.5%
7.8%
22.3%
10.5%
Real Companies (35) with
with avg. of $1.5 Million
Real Companies (30) with
with avg. of $4.8 Million
Allstate, 2000 Revenue
of $29.1 Billion
State Farm, 2000 Revenue
of $29.6 Billion
BUSINESS
18.0%
7.0%
1-800-525-1009
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14:18
10 & 10 Analysis (Source Data):
Revenue
$ Overhead
$ Net Profit
% Overhead % Net Profit
Total
Mythical 10 & 10
$5 Million Revenue
Sample Company
$5,000,000
$500,000
$500,000
10.0%
10.0%
20.0%
Fire/Restoration
Contractors (35),
$500,000 - $2.5
Million(1)
$1,507,955
$488,538
$30,786
32.4%
2.0%
34.4%
Fire/Restoration
Contractors (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
BUSINESS
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Does Volume Make a Difference?
1-800-525-1009
Conclusion: Win-Win-Win
or No Deal
 Quality services retain Policy Holders for
the Insured.
 Knowledge & Training saves money for
everyone.
 The contractor needs fair pricing in order to
provide knowledgeable and quality
services.
BUSINESS
1-800-525-1009
16:18
Questions?
? ?
?
?
? ?
?
BUSINESS
1-800-525-1009
17:18
Thank You!
From the Business
Networks Team
for the opportunity
to be of service to
you and your
company!!
BUSINESS
1-800-525-1009
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