Reggie Brock talks to us today about in s and outs of insurance work and managed repair programs and where it is heading In the construction industry Is It good or bad. You have to decide for your business
I have another awesome guest Reggie Brock and Reggie has been in the last three years has been in the construction business. But, regarding managed repair companies and he’s been into 23 years in the insurance industry, seven years in the roofing contractor and consulting and two and a half years as the director of Manage Repair Program.
So, for some of you guys who don’t know what manage repair as far as the insurance industry works going on. How it was good for your business or bad for your business. And I thought it’d be really great to have you Reggie on the program so he could explain some of that to you guys who are in the insurance industry or doing business with insurance companies and for some of you guys who might think about whether you want to wade into that area or jump in, however, you want to do it.
So, Reggie I just want to thank you for being with us today so you could share this. I know this is an important topic for a lot of contractors.
Well first, thanks for having me David and you’re right. This is concerning insurance work with its retail work. Insurance is a part of that. Or if you want to get into the insurance industry.
This is a segment of the industry that really needs to have great consideration given to it. And, my job, my opportunity to really show it and then other places that I just educate and to inform.
Dave, I’m not going to tell people what recommendation particularly through our conversation or just get the full view so to speak of the industry and the impact that manager cares having not only just on the industry. But there them as individual contractors as well.
All right. So, you know we talked earlier about this and I know that there’s a lot of guys who make a great living at doing insurance work. And I think for you they were in Manage Repair Program. So, you can explain a little bit differently but there are pros and cons aren’t there?
Absolutely. There’s no question about it. And you know it’s like anything, in my opinion, Manage Repair is not for everyone. Right. And insurance work is not for everyone. And you know I mean I think that people do make a great decision.
People, many contractors to make a great decision. They just need to have an abundance of facts right. And so, when you hear a lot of the conversation that you’ve heard like in the last eight months to a year and the industry has been pretty negative about managed repair in some circles.
And so, what I found in listening to that information is it was more fear based and it was they just didn’t understand so based upon my background you know 23 years in the insurance business I understand policy construct I understand payment I understand how the insurance company views things. I mean the guys that are out doing the work, the contractors I did that for seven years.
I know what it’s like for those guys get knocking’ doors. So, they are knocking until their knuckles bleed.
I know what it is to be on a roof that I have no business being safe. And then the second the third side of it is you know I’ve worked with the manage repair company for two and a half years so really what I’m able to do is come up blend without endorsing.
So, I want to speak good information to these contractors. They’ll make up their own mind based on facts not just feelings.
Yeah, that’s pretty awesome because I think that so many times we get asked. Contractors we’d see dollar signs. Right. Or like I remember when I first went into the painting business. My brother was in the painting business. I saw a big wad of cash and said I could do that, once I started doing all sorts of you know started this road I got to finish it. It was so much harder than just looking at the end results
But you know a lot of times we get into things like I’m really trying to say is we get into things under false pretenses.
So how do we how do we get by that? I know, we’ll talk about that a lot of that today. Your job is basically like you said to inform you said there’s a lot of negative stuff going on
But a lot of it has to do with failing I guess from my information on the right procedures and paperwork and stuff like that.
Yeah, I think I think the biggest difficulty for most contractors that I talked to who had been. let’s start with the guys that who are you know most of their business work is working insurance claims.
Manage Repair Programs are really a secondary way of working and insurance claims most contractors are not comfortable with because they have really contractors generally speaking control the insurance job from start to finish. So, to speak.
And the problem Dave is that contractors and insurance companys for years and years and years have been more enemies. To some degree right.
You know the insurance company they will overpay at times, contractors think they underpaid, and really that was caught in the middle as the policyholder. And so, you know I made a lot of times because of that bad mentality so to speak. The policyholder suffers from a servicing standpoint and an experiential standpoint so you know managed to repair is just another version of how insurance claim work.
It’s just that the controls look a little bit different. And so honestly to really understand the shift you know. Here’s one of the things that I hear all the time is Reggie you know Manage Repair is it a trend or is it a shifted you know like I know Dave that you know trends come and go it’s not anything you need to be concerned about that if there is a shift you better prepare yourself.
One of the top ten insurance companies last year basically lost money they spent more money than they took in all but three of them of the top ten carriers across the country. They’re going to make adjustments and usually Yeah. And usually what happens is what motivates that is really two things and that is there’s a sense of overpayment that the insurance company has had a claim that they paid too much money for. And the second thing is there’s usually fraud involved in billing.
And you know from a historical standpoint that’s kind of a hint that things arent going right. Those are the indicators of what it meant when insurance companies are going to get a better grip on its payment and reconciliation. And that’s kind of what’s happening right now.
I’ll give you a perfect example I’m with contractors constantly and all the contractors tell me they know I’m underpaid I’m not overpaid you know they’re not giving me too much money and I ask them if you ever had you ever done work or been paid for work that you didn’t do and all of them are like, well absolutely not. Well if you just look at a simple roof and gutters to be replaced because of hail and windstorm.
You know there’s most of these guys out here, or not most of them because they’re crazy high deductibles I mean especially we do a lot of work in Texas. And there’s a lot of. And I’m sure certain Florida’s kind of the same way.
There are high deductibles that these homeowners are having to wrestle with to get the claim handled and so they pay out of pocket So contractors creative in one of the things that they do is they take money that was allocated for a repair. And you know they don’t do it and they use the money that was given to the homeowner to offset the cost that the deductible. Now isn’t that fraud? Well, it’s not.
When it becomes Fraud is when you send the insurance company a bill stating you did the work and didn’t because the way insurance companies set their pay up is that they’ll give the contractor, the homeowner money upfront to start the job that they want to make sure they pay all the money that they want to make sure the work was actually done.
And so, in a lot of cases like for example gutters things like that. Contractors you know get reimbursed for work that they didn’t do. And that’s where the fraud comes into play. So that’s kind of historically what’s created the shift that we’re seeing today.
OK, so I’m going to ask a question for her because we’re the guys that know nothing about insurance work and manage repair is because I don’t know. And I’m just gathering stuff I know it we talked a little about it before but manage repair is basically a go between the contractor and the insurance company is that correct.
That’s a pretty good way to describe it. You know we’re a third-party administrator. Companies like us are. And you’re exactly right. Rather than the conventional method of a homeowner called to set up
I have roof damage you know they’ll call the insurance company and the insurance company route’s it to their field or generators and they all have the conventional way of doing it.
What made these repair companies do is they find qualified certified contractors in areas all across the country. And then when a claim them from a carrier partner that they have a relationship with a particular insurance company a claim comes in and the insurance company will generally rub it to the managed repair company who then from start to finish manages through the contractor the local contractor the project until completion. And so, the insurance company has what you know they trust the banister payer or third-party administrator.
That’s what some many of these companies are called to handle the customer experience right from start to finish. So, there’s not a whole lot of moving parts so to speak. This confuses homeowners. And so Manage Repair Company sits in the middle way the customer of the contractor and the insurance company tries to coordinate what I call a smooth landing with the customer experience with.
All right. Exactly. You know I’m thinking I’m going to play the Devil’s advocate. I’m going to think about it from a homeowner’s point of view and then from a contractor from a point of view, I think that Manage Repair would help me have a better experience with both the insurance company and the contractor because there is, in essence, a mediator.
And now from a contractor’s standpoint. And so, before you go to a contractor let’s talk about homeowners for a second. You bring up a point. The homeowner, If you and I don’t know how, or where you live in the US, but like in Texas and Colorado where I spent a lot of time. Hailstorm comes in particular and it’s like ants on a landfill in a neighborhood right. I mean people knocking on doors. I mean there’s flyers being left the door and they said so what happens is homeowners truly don’t understand who to choose in many cases. So, one of the things that a Manage Repair Company provides a requirement from the insurance carrier is the vetting of the contractor.
So, they have to pass financial background they had to find credibility in the local market. Those type of things, that also when a homeowner says Hey I’ll say that one of our preferred contractors that contractor has gone through the strenuous process before they ever can walk on the property. That creates a lot of confidence with the homeowners.
I didn’t mean to interrupt but I will I see the next perfect the perfect scenario because you know as a homeowner I want to know that I’m not stuck in a truck that has been ok by the insurance company to do my work yes because I just can’t tell you from an experience from a family member. We had a process where they directly worked with the contractor and the insurance company and it was not it was very interesting. And it really it took probably two months longer than it should have. Right.
And not saying that they were good or bad either way. It’s just I can’t see the benefit of especially the family member because she was on the phone every day, almost little every day between the contractor and the insurance company where it could have been handled with the one person and they could have been done and in a way, that was acceptable to all.
Yeah and the home owner’s ordeals with the Manage Repairs Programs, generally speaking, getting them whole or back to like normal life isn’t much faster project much faster process. Because the insurance company with most of the Manage Repair Companies that they have they have very strict requirements in terms of getting that homeowner back to a lack prior to a storm in a very expedient way. So, there’s not a lot of finger-pointing . I mean it’s a very process driven system that ultimately is geared to the way it is to make sure that the customer experience is what the insurance company promised.
So, it’s interesting you’re right. Now just like with anybody. I mean there are people in Manage Repair Contractors and Manage Repair Companies who mess up and you know create problems that are by and large that’s kind of the reason behind Manage Repair from the carrier’s standpoint and how often is to vet them to make sure that they’ve done work in the past.
Good for their word and the reputable men are honest and all of them.
And there again from I’m not talking about from the contractor’s standpoint from two different areas because I would think that from the contractor who is above board who is honest about his business dealings. Really goes out of his way to create the value for the customer.
And I believe most do. I agree. I believe that most do and of course, it’s the squeaky ones that screw things up for it but I think again from that contractor who’s been vetted that this poses a unique situation for them.
The fact that they don’t have to deal with the insurance company you know in their dealings they’ve got you know the Manage Repair Company and that if they’re good at what they do and there are like registered with a managed repair company that it is a nice avenue of income. Right.
I’m not going to say because I’m always I’ve never been an advocate of putting all your eggs in one basket. I believe in multiple things of income. That’s why I say it could be a nice avenue of income from them for them as long as they do other things.
And that’s you bring up, that is the greatest point probably of this conversation. Manage Repair should not be looked at as replacement but simply the addition to.
Because honestly depending on the type of Manage your Repair Program you’re involved in I can pretty will tell you that contractors are going to make generally as much money in particular with working to manage repair because major repair companies have to be paid.
But if you look at the work that they’re doing and what we’re not doing and compare the income cap is strange is a lot closer than most people think. The biggest thing that we hear from, I’ve heard from contractors was manage repair programs is that a couple of few things number one: By going, send basically by an insurance company because you’re a preferred contractor to the homeowner, the homeowner knows who you are coming as a contractor.
It kind of moves you to the front of the line in terms of marketing. Because you are endorsed, when I say endorse you’re absolutely vetted by the carrier and that just create confidence with the homeowner.
The second thing it does is it puts them into neighborhoods and usually because of managed repairs, especially in roofing.
Manage repairs there’s such a quick turnaround in a big storm hit area that got us with a major repair program getting there first get his side or her side of the arch. They get the roof done. In many cases before the other company’s insurance suggests even better out there. So, it’s giving them a huge advantage.
Yeah. And there again, it’s from a marketing standpoint. You don’t have to pay for marketing. Why do you need to be paid as much? I mean and I’m not saying and like you said the variables are close. So, there’s a lot of things that you need. You should consider is that you know how not to pay for a multiple callback stuff like that because my face and my appointment are being made for me in a sense by a referral and your closing rate are always higher with such.
And then you know I mean the smart contractor is not going to wait to put a sign in the driveway or in the yard saying oh you know we’ve done this or we’re confident this is going to go out and you’re going to do five or 10 rounds and say hey we’re a trusted adviser or trusted by a managed repair for these companies or insurance companies you know can we assist you in any way.
That’s a great point. I mean that’s a real winning card played here so to speak if you don’t mind me saying it that way and you say I need to make sure that there is like going into an ice cream shop when it comes to looking for manage repairs.
You know there’s a variety of tastes. Right, and each of them do different things you know. So, I hear guys saying well manage repairs does this. No, they don’t. They don’t they have a different taste and a different approach to the market. And in many cases, they have different services that they render which kind of helps a contractor realize Well you know.
So, this is not a minor Manager Repair. It is. Is it an another as you said Avenue to the business that I’m already doing that can help me add income strain to our portfolio as a business so to speak and you know so I guess what I’m trying to say in that is everything there’s so many different varieties. What I try to help guys to do is OK how do I choose which means prepare to be a part of them, like for example, my next year I’m sure that there’s an A-Z.
You’ve got find the one that’s going to fit you and in your business. How you operate your business I would imagine because I’m sure there’s a like this.
So, one of the things that I took us the most important is you need to be a part of a Manage Repair Program that is extremely close and what they do to your core competency as a business. Right. So, if you’re a roofer you need to be looking for MRP’s or Manage Repairs or third-party administrators that their focus is on roofing. And why is that. Because the transition will be easier you’ll understand. The training will be closer to what you’re already doing so that it won’t be a huge lead in terms of energy.
The second thing I tell them is you need to figure out what the what I call the exchange rate is. What am like giving as a contractor and what am I getting in return. Because if it doesn’t make sense for the time you’re getting and there’s proper compensation that you feel then you don’t need to do it. Doesn’t matter how sexy or how trendy or whatever the opportunity is made for sure that it makes sense in terms of the time and it’s not just yours but the resources required of your staff.
That’s what people do not to make monetize off and that is what is okay for me to run one of these assignments when they give it to me. And so that because I have a guy, he does a lot of transfers for one of the local roofers in town. He makes a lot of money but he does all the paperwork and you know that’s, you know he does it all by himself. It’s a lot of time invested he said.
Nobody understands the amount of time I am invested in doing make sure the paperwork right. And you know he’s kind of down to almost the size now, and he’s worked with the adjuster so much in the past that you know they’ve helped them and they help more now than it did before.
But yeah, you’re right. Those times spent that you don’t even think about you know going into it. Right. A couple of the things I would notice I took at, this look. What kind of program is it that that stretches your credit or your cash. Right.
So, if I get a storm in under the roofs I mean most guys you know these big national companies so they you know they’ve got a local roofing company and they have credit limits. And so, you know three or four storm comes in pretty quickly these guys run out of credit and are having to wait for you know mortgage companies to release funds or whatever the case may be.
So, you need to be really, really, careful that the opportunity that lays you has opened a reality. And from a credit standpoint you get a look and ask yourself OK how’s this manage repair company help me avoid getting myself into a credit crunch. Same thing with cash.
You know you need that. I mean these needs to guys to ask OK if I do a job for you, how long am I going to have to use my cash before you pay me what you owe me? Right. So, most of these major care companies are extremely quick on the draw when it comes to pay because they don’t understand that they say they get the big ideas and these big eyes are wide open say they oh great. What a great opportunity these manage repair companies are.
And then in the essence you know, if you ask if you really just back off of it. Look at it. It might not make sense because of your credit, straining your cash capabilities.
It doesn’t mean you’re a bad contractor just means you need to look at that stuff before you jump into it. Yeah because it’s all about you know you’re doing it for the money you’re thinking about it to make you more money, to do more business. And in the end, you know it’s like guys who grow too fast and they’re putting themselves out of business because they know how to handle it. Exactly. Who’s coming in at that time? A hundred percent.
So, is our manager repair company’s good programs have been involved in? I think generally so. And I think that they ever say that we’ve talked about today is considered it makes good business sense for some not all. You just got to slow yourself down and look by the company that you’re looking to talk to. The true fear factors. What am I giving? And what am I getting in return? Right. And so, guys I know here’s the thing that I was just thinking about too is the time to do it is before you need it. Right.
So, if you’re thinking about doing you know next storm season or you know if he knows stuff like that happening and start doing your research now because in the middle of a storm season when it hits you’re going to just grab at the closest straw you’ve got and you may end up being a loser.
Well, the other thing is the storm and storm that are so hectic. You know what I get afraid of is that people getting involved in manage repairs at the point of a storm at the event that just happened. Boy sometimes everybody bends the wrong direction in terms of training in particular what ultimately happens is it’s a bad experience for here. The manage repair company, the contractor, the insurance company and most importantly a bad experience for the homeowner so I concur.
If these guys are interested storm season for hail and wind kicks up probably in March. Now’s the time. I mean start looking around. Put your oars in the water so to speak and just try to figure it out because right now there will be no pressure.
Most major repairs some of them are still run running, some clients buying large they’re gearing up for the season before us. So, I agree with you. This has really been interesting. Just a lot of new stuff that I’ve never thought about and I’m sure that a lot of guys do think about it for how do I do it. But this is information. Useful information I think for you. I really appreciate you being on the show and going through this. Is there anything in the back your mind even thinking about you want to say that you haven’t gotten out yet.
Well you know I mean I think that the best thing that’s been said that needs to be reiterated is just make a decision on that manage repairs not going away right. I mean manage repair is going to grow in scope, more carriers are starting to roll out these types of programs across the country. And it’s only going to get. Let me give you one statistic I’d get egotistic so badly, bear with me on this one. So, insurance claims right now, less than half of all insurance claims that that occurred in 2016. I don’t have data for 17 yet. Obviously in 2016 less than 1 percent of all insurance claims done last year were done through manage repair program. That’s nothing right.
But it always that has kind of come out of that less than 1 percent. It’s been crazy. people are confused and frustrated and aggravated. Now they’re saying by 2020 10-12% of all claims will be run through managed repair program. Why. Because it’s allowing the insurance company to control the cost and to offset some of those as we talked about earlier that is overspending and fraud.
Now before this thing gets so overwhelming it’s too late. Take now just to analyze, gather your facts and you’ll make a great decision for you as an individual and a contractor to your local market. And that’s kind of what I would think sets it off for me, Dave. That’s pretty awesome. I think that you know demand manage repair program could be as far as the insurance company was looking at could also be in the long term you know to keep a lid on prices of insurances going up.
Yeah, I mean it again. Go ahead. And everything is happening in a due season anyway. That’s true. That’s true. That’s really been awesome.
How do our listeners can talk to you if they want to know more about manage repair or pretty much in terms of insurances, what’s going on? How can they get that?
Right. All right. That’s awesome this has really been great. I really thank you so much for sticking with us today and share all the stuff that’s going on that might make it really easier and help you understand a little bit better. So it’s cool. And I know that you will put your LinkedIn. You know to connect with you on LinkedIn to you first from the show notes. So thank you so much for the time, your interest in the topic and hopefully, it’s been helpful for contractors
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