It should come as no surprise that the restoration industry is growing at a rapid pace. There are many reasons for this, but climate change, aging infrastructure, and the rise of anxiety industries are among the major contributors. As the field grows, like most industries, so too does the amount of consolidation in the form of mergers, acquisitions, collaborations, and outright collapses.

This consolidation, while likely necessary for the industry, also causes cracks in both the business-as-usual model as well as the quality of service delivered to the end users of projects. Being aware of these cracks allows businesses to better prepare and take advantage of potential opportunities that these deficiencies offer up. Causes of growth equals causes of concern.

Climate influenced growth

While climate change is the most influential driver of growth in the restoration industry, it is also a potential cause for many issues that companies face in growing or even staying in business.

As climate change increases the prevalence of flooding, severe weather events, and wildfire outbreaks, it also affects the capabilities of restoration providers and related tangential operators in these areas. For example, according to USAFacts.org, the population of Florida “increased 12 out of the 12 years between year 2010 and year 2022.”

Couple this increase in population with the fact that according to the Insurance Information Institute “13% of homeowners in Florida” are completely uninsured. This is nearly twice the national average and poses a serious issue for both property owners affected by disasters, as well as restorers’ ability to provide services to those in need who are without any financial recourse.

Many of these homeowners will be unable to pay for restoring their properties after a disaster, and according to the National Centers for Environmental Information, Florida’s billion-dollar natural disasters have increased by 92% during the past 20 years. This leaves a huge swath of the population without any means of restoring their home after a catastrophe, and leaves restorers fewer potential customers for which to work.

Additionally, it reduces the contribution pool for insurers, which raises policy rates, increases policy drops or non-renewals, and compounds an already vicious cycle even further—and this is just Florida!

Aging population and infrastructure

According to the Economic Innovation Group’s analysis titled An Aging U.S. Population Isn’t Going to Help U.S. Workers by Adam Ozimek, America’s population is aging faster than ever before in history. As people age into their winter years of life, they tend to spend less time on the maintenance of their properties. This vast demographic of older Americans failing to do regular upkeep on their properties, in concert with an aging infrastructure, is a recipe for ever-increasing disasters.

According to the U.S. Environmental Protection Agency (EPA), American “drinking and wastewater systems will require at least US$744 billion in additional investment over the next decade.” This means that the confluence of an older American population, in conjunction with an overtaxed and underprepared water infrastructure system, will undoubtedly be the cause of many incidents related to water intrusion.

Worse still, with the demographic stagnation of the American population, not as many skilled and capable tradespeople are available who can solve the increase in restoration incidents anyway. This translates to more catastrophes, less options to pay for them, and fewer people capable of doing the needed repairs.

Overall, fewer insurance and service providers, coupled with an increase in demand, will absolutely have an adverse impact on the costs for these offerings as well as their availability going forward.

This increased potential for elevated disasters with little recourse means burgeoning opportunities for restoration experts savvy enough to take advantage of them and prepared enough to capitalize when they strike.

Growth of anxiety industries

Mold, lead, asbestos, and other environmental contaminants are serious concerns and should be treated as such. Avoiding exposure to these contaminants is the best way to prevent the adverse health effects they can cause.

Illustrating this to the public through ongoing successful education and influence campaigns has helped advance reducing or eliminating these substances from home construction materials. At the same time, it has also inspired many property owners to feel unsafe in their own homes due to a lack of understanding about these contaminants. All of this means a significant compound annual growth rate (CAGR) of at least “3.9% from 2023—2030” which translates to profound opportunity within the mold remediation service market.

As awareness and education about these contaminants spread, coupled with the ongoing transfer of properties between generations, the growth of anxiety over these hazards expands as well.

For restorers, this is a double-edged sword. On the one hand, these contaminants cause a project to become more expensive to complete safely, which means more on the bottom line. On the other hand, these expenses can be so extreme that people opt to use unlicensed or under-bonded contractors or choose not to renovate at all when facing these added costs.

Moreover, these contaminants are hazardous, and this increased level of danger requires additional certifications and licensing. These extra certifications and licenses aren’t cheap, which can push many players out of the space, increasing the amount of business for those companies and corporations that can afford it but not for the middle or bottom end of the restoration spectrum. And all of this is at the expense of increased business costs for the same projects.

Growing pains

As with all growth industries, mergers and acquisitions, collaborations, conglomeration, agglomeration, and outright closures are inevitable. The more an industry grows, the more likely these activities will occur. For example, ATI Restoration recently acquired Venturi Restoration, strengthening ATI’s position as the fourth largest non-franchise restoration company, by number of offices, in the U.S.

Capital interests aim to scoop up the middle of the industry with franchise operations and regional consolidators that ultimately capture the lion’s share of available work and secure their portion of the market irrevocably.

As they do, the providers at the bottom and middle of the field get squeezed into niches that define their business models and limit their growth to within local markets specifically.

Mergers and acquisitions do allow for a greater degree of price control over certain aspects of the industry, especially on a regional and national level. Still, they also raise the bar for those at the bottom looking to get into the business. This means that the business model of a mom-and-pop shop or a Chuck-with-a-truck approach will be much harder to get off the ground or keep running.

On one hand, this ensures that the providers remaining in the industry are the ones who can truly do any work that comes down the pipe. On the other hand, for the markets that aren’t serviced by major providers, or even regional ones, these offerings will be much harder to find and secure for the consumer. Even when they do, the costs might well be more than what they would have been if the middle and bottom providers of the industry weren’t decimated by its consolidation.

For example, if a homeowner with a restoration project goes live right now, there will likely be a local or semi-local provider to service them, even if they are an extreme distance from the service location. As the industry consolidates, the lesser players who serviced these geographically far-flung locales as their entire operation model will be pushed out of the business.

This may mean more business for the regional provider, but it also means that they will have to spend significantly more on transportation, labor, logistics, planning, and every other aspect of their operation to get to this project. If serviced by a local provider, then this could have presented an opportunity for collaboration, referral partnerships, and the spreading of both the wealth and the logistical challenges around.

Growth cracks conclusions

CoreLogic predicts that “the restoration industry is currently projected to be worth upwards of $210 billion, and this number is only expected to climb,” meaning that all these transitions will only become more solidified going forward. With a forecast of profound growth on the horizon, restorers can rely on the continued consolidation and tightening of the competition, but also a likely reduction in lead generation costs, partnership referral fees, and agglomerated services in metropolitan markets.

As demand increases for restoration services, but the quantity of capable providers gets ever smaller, the bar for entry gets higher. The cost of doing business also gets lower with further consolidation.

The ever-increasing frequency of climate change disaster events, a constantly aging infrastructure and population, and the rise and expansion of anxiety industries guarantee massive growth industry-wide. On the other hand, taking advantage of this growth will require proper capitalization, strategically aligned partnerships, and ideal geographical placement within marketplaces.

Finally, for those at the bottom and middle of the field, consolidation doesn’t necessarily mean being permanently relegated to one end of the spectrum. The guarantee of industry-wide growth is as much an opportunity as it is a danger. For restoration companies, knowing how to optimally position their operations for this transition period is the best survival tactic and the best means for increasing business growth during this turbulent time.

Alexander Ruggie is the marketing and business development director for ASAP Restoration LLC. He has a proven record for growing businesses, both large and small, with strategic planning and targeted content that delivers results.

ĚýJoshua Rudin owns ASAP Restoration LLC and is a certified restorer. Before opening the doors in 2008, Rudin had been a successful entrepreneur in the restaurant industry, owning and running several thriving locations for over two decades. To reach Rudin, visit AsapRestoration247.com, call 602-515-7918, or email jrudin@asaprestoration247.com.

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Fortunately for restorers, these intransigent companies have an uncompromising bureaucratic nature, leaving them with an overworked staff and an antiquated system that can be circumnavigated with the right skills and knowledge.

Yet, the same dated system portals that TPAs use to wrench profits away from vendors can be used against them to recover those profits.

Understanding TPA portals

TPA portals serve as centralized platforms for managing insurance claims and providing access to critical information and resources for all the pertinent parties involved in the claim.

Each TPA portal is a different beast, but they all tend to follow the same principles and rules. The first step in getting the most out of every TPA is to familiarize yourself with your TPA portal’s layout, features, and functionalities. It truly helps to get the most out of each TPA.

Every TPA portal has a staff member on the other side who has never stepped foot on a jobsite and has no idea what the difference is between Durock® cement board and drywall. This means that they won’t know what they are doing or talking about most of the time. On the other hand, they will have a spreadsheet that dictates what they can say on any given estimate.

If you learn what they know, what they are looking for, and what they don’t understand because of having never been to a job site, you can start finding ways to make a project work.

Estimator tools

Each portal will have different requirements for the kind of estimate format that they are willing to accept. That said, most TPAs will mandate that estimates be submitted in either Symbility or Xactimate formats. If the TPA accepts one, they likely won’t accept the other.Ěý In turn, make sure to write your estimates in the program that the TPA dictates, or you will be wasting time and resources redoing the same work.

Regardless of the TPA’s estimator format, you can learn all the specifics involved in each program to ensure you are not shortchanged on your project totals. This is where skills with estimator programs and macros scripts come into play. The more tricks you know with these programs, the more money you will be able to save.

Working with TPA agents

TPA agents play a significant role in facilitating communication and collaboration between homeowners, contractors, and insurance carriers. Their decisions can be received either favorably or unfavorably.

When you have a good relationship with your TPA agent, it is easier to deal with the expense. But, it is also easier to find ways that they won’t realize you’ve put money into your pocket, too. The likelihood that your TPA agent has never stepped foot in the field will be evident in these conversations. And it’s in these conversations that you can learn everything your agent is looking out for and simultaneously all the things they will likely miss, too.

Submissions and supplements

One of the most critical aspects of getting paid from a TPA provider is to ensure all your ducks are in a row before making any submissions or supplements. The agent will never tell you that you’ve missed something, so if you don’t catch your mistakes, you will pay for them later.

On the mitigation side of TPA work, you won’t be paid until after all the work is done.Ěý While doing the work, you will also likely encounter a healthy amount of pushback on any line items you have that the agent doesn’t readily understand. You may even have pushbacks on completely necessary things that make total sense, but because they have never extracted a drop of water themselves, they think they can check you on it for a few bucks.

Stand your ground as often as you can tolerate doing so. TPAs will always try to reduce the amount they have to pay out, but they can’t do so at the cost of reasonable care for the client they are serving. If you can frame your argument in a light that shows their customer needs what you are asking for, they will be much more likely to find a way to pay for it.

The same rules apply to supplements, but even more so because they will be scrutinized with a higher degree of attention. Additionally, it’s critical to remember to reapply your overhead and profit margins to the total.

Supplements, such as initial estimates, require a healthy understanding of the terminology used to get the most out of a project. Suppose you are reconstructing a wall; you know that shifting the terminology of your description around (in deference to the TPA agent) will get the job done without being shortchanged for the total distance of the drywall. In that case, this is a terminology alteration that you can take full advantage of.

Pick for profit

When it comes to TPA work, you don’t get to pick your battles, but you do get to choose what kind of war you want to fight. Each TPA is different. Some of them will be much easier to work with than others. Pick your TPA based on your capacity rather than trying to make your capacity work for the TPA. This means more than just staffing appropriations. Choosing a TPA is half the battle. Read reviews and ask other people in the industry what they think.

Picking your TPA is a critical step in ensuring you get the most value out of the work. Not all of them are built equally, and finding the right niche to exploit might just be how you get the most value out of the prospect. At the end of the day, while TPA work feels like indentured servitude, it’s still a vastly cheaper source of leads than many other means of accruing them.

In the competitive and often convoluted world of insurance restoration claims, TPAs wield significant influence that can regularly disadvantage restoration companies and customers alike. Unfortunately, this can lead to compromised timelines, inadequate budgets, and substandard workmanship—ultimately impacting property owners the most while trying to save a buck.

However, amidst the bureaucratic chaos caused by TPAs lies an opportunity for restoration providers to assert themselves. By navigating TPA portals with precision, understanding the intricacies of estimator software, fostering effective relationships with TPA agents, and mastering the submission and supplement process, restoration companies can reclaim control over their projects and secure fair compensation for their services.

In essence, by fully understanding and leveraging the systems designed to curtail their profits, restoration providers can ensure that they emerge from the chaos profitably, ethically intact, and as advocates for the property owners they serve with quality work.

Alexander Ruggie is the marketing and business development director for ASAP Restoration LLC. He has a proven record for growing businesses, both large and small, with strategic planning and targeted content that delivers results.

ĚýJoshua Rudin owns ASAP Restoration LLC and is a certified restorer. Before opening the doors in 2008, Rudin had been a successful entrepreneur in the restaurant industry, owning and running several thriving locations for over two decades. To reach Rudin, visit AsapRestoration247.com, call 602-515-7918, or email jrudin@asaprestoration247.com.

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