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Lewis To Carlisle

"The Troubled Route"

If profit or economy was a goal for insurers they appear to have misjudged their property claim management process & equally if contractors seek to develop a successful business why wouldn’t they adopt money saving technology?

The answers are as plain as day but few if any have had the bottle to accept that the property claims and restoration industry has been driven to the depths of incompetence and apathy.

This can be seen initially and as an early warning in the floods affecting Lewes in Southern England in 2000. Contractors descended on the SE of England and an audit taken then showed massive overcharging, unnecessary rip outs and demolition, drying equipment charged for when electricity wasn’t even available. These audits undertaken for insurers resulted in further nationwide audits of nominated contractor and loss adjuster action in various types of property restoration. They identified scope drift and equipment overcharging. More importantly they showed a vast difference in restoration protocol and practice which resulted in gross overcharging and claim closure time lines extended. Of course loss adjusters and auditors were undertaking their usual inspections and comparing average claim values but the reality was that they were not technical audits, but rather policy building, and cost audits

The reasons for then and are still the same, poor education, training and significantly poor procurement procedures.

The property restoration industry in the UK developed technically over the past 15 years with independent contractors being the main source of innovation usually importing technology from the USA where training from organisations such as IICRC and ASCR provided first class but expensive training.

The UK responded with the National Carpet Cleaners Association who provided basic fire & flood training but generally saw carpet cleaning as their main task in education.

The upshot was that only the successful independent contractors travelled to the US for training together some executives from the franchise companies. Education and training was therefore restricted to the elite, and the transposition of some technology was seen by some to be counter productive for fear of affecting profits.

This is readily seen even today when you ask almost any loss adjuster or claims manager to explain technically or indeed practically the empirical measurement of damage or restoration.

The position has been made worse by the insurer’s quest for streamlined and manageable contractor networks. The 200 or so independent contractors seen only 5 years ago have generally been replaced with the National franchise operations such as Rainbow, Munters, Belfor & Chemdry. Others have materialised such as First front and Homeserve each now showing devastating losses as they compete for more business in the hope of making a small profit from a high turnover. It would be acceptable if contractors losses were the result of incompetence or indeed that their loss resulted in a gain for the insurer or the insurance company client but the reality is there are no winners.

Professional procurement in the insurance industry can be credited with the failures of the industry, competition has been fuelled with necessity to gain contracts at any cost and collars and ties accompanied with audit trails have replaced common sense and competence.

A glance at any insurance contract for nominated contractor services will include a price list of equipment and services. The procurement supply chain management teams have squeezed the profit out of the very items which could save money and shorten the claim and replaced profit with gloss, the result is a mismatch of goods and services where contractors have little chance of profit, charge exorbitantly for needless line items and insurers invariably pay for these unnecessary line items in the mistaken belief of economies.

Carlisle?

The Carlisle audits I undertook and published identified poor contractor skills and general management, the audits were sent to the ABI claims forum but despite the clear evidence of fraud or incompetence they refused to communicate in any way.

Of course my evidence could have been flawed or biased which therefore would have been easily criticised, the reality is that my audits underplayed the incompetence and 9 months after the Carlisle floods homes are still wet, business destroyed needlessly and insurers left with claim costs far in excess of their true value.

Industry conspiracy?

Could it be feasible that there is a general conspiracy by insurers to raise the cost of flood restoration in the hope that government assistance will be forthcoming? A far reaching and silly conclusion but why on earth would insurers stand for incompetence and overcharging? Three years ago I wrote to major insurers and said that they were paying far too much for fire and flood restoration, I said technology used in the UK but developed for the US buildings and climate was unsuitable here. I was met with disbelief. I said mould and asbestos would become a major concern in property claims, scaremongering.
Today the BDMA are staging a seminar on both subjects nearly 4 years after I provided a training seminar to the BDMA executive. It could be said mould and asbestos wasn’t a problem 4 years ago but the same can’t be said about drying.

UK Drying

The Post magazine supplement dated 27th October 2005 included a review of what went well in Carlisle. Several startling statements were made by leading authorities in the industry. Bob Spencer said as chairman of the BDMA that “insurers and the adjusting industry need more education from restorers” I would point out that the BDMA doesn’t even provide training for it’s own members and that it’s member restorers were the very people that showed in my opinion gross incompetence in Carlisle. What appears to be astounding is that Bob wearing his company Rainbow hat then went on to say that he realised that drying technology in the UK generally relied on American systems that were great for American buildings 20 years ago but were possibly not suitable in the UK. Bob went on to say that is why his company has introduced Scandinavian drying equipment. It seems to have taken the BDMA by surprise that existing technology has moved on and I wonder just how many companies have written to insurers of these developments and reduced drying costs or time lines? Another gem is the statement from my old sparring partner John Wickham the property claims from NU. John stated that “New Techniques for drying were appearing” and that changes were ahead in this area. Unfortunately for NU these techniques were available years ago but for some unknown reason they weren’t interested in even testing them then.

Carlisle was and still is a marker of incompetence and apathy, buildings still wet, torn apart needlessly and business needlessly destroyed. My personal experience and I stand to be corrected or challenged was the hotel on the Warwick Road that was surveyed by me and in the presence of the hotelier, his wife and independent witness. The hotel was to be closed and all floors wall plaster and doors fittings and fixtures were to be ripped out and the building completely renovated. The flood waters had hardly breeched the door threshold, the floors and doors, walls were dry. The reason was that a loss adjuster had said the building was devastated. My evidence can be seen in the Carlisle Audits published on my web site http://www.disasteradvice.org/, where is the evidence from the loss adjuster? The hotelier had his home and business destroyed needlessly.

Moving forward and embracing technology should be a goal of procurement and claims managers, it is abundantly clear to see that incompetence and apathy rule, but the public and FSA are unlikely to be hoodwinked for much longer and claims management will need to audit effectiveness and time lines of property restoration. The current general procurement requirement of a site visit within 24 hours is meaningless if it takes 9 months to claim closure more importantly if it takes a week before technicians actually arrive with equipment.

About the author

Jeff Charlton is a consultant with http://www.disasteradvice.org/ 08700 789 999
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