While many remodelers had to scale down or even pause operations last year in response to the COVID-19 pandemic, companies who take on insurance restoration work found themselves in a more favorable position. They specialize in emergency services, so their organizations were able to provide clients with similar resources and, in some cases, even expand the solutions they offer.
“Because of the type of work we do, we were able to extend our services to perform cleaning and fogging disinfection for a lot of our existing clients,” says Eric Lueck, co-president of the Florida Catastrophe Corporation in Orlando. “Doing biohazard work, mold remediation and cleaning and disinfecting, it was similar to the type of services that are needed to sanitize and clean buildings.”
Florida Catastrophe disinfected the state’s attorney and public defender offices daily and nightly, he adds. The company also has contracts with school districts in two different counties, where it performed a similar service. Although this type of work peaked last year, the organization added new commercial clients because of the relationships it developed after getting its foot in the door.
Disaster Response picked up COVID-19 cleaning as an additional revenue source as well, which helped offset the drop in demand among residential clients. “We’d respond for a water mitigation or emergency service cleanup, but then they wouldn’t want us to come in [afterwards] and do the repairs,” notes Beau Value, CEO. “They’d say, ‘Let’s just wait,’ so we did have a lot of stuff pushed off.”
The company generated more revenue than 2019 nevertheless and remains on track to hit its goal of $10 million for 2021, he adds. Finding additional people to help produce the backlog of work, however, continues to be a challenge as Disaster Response hires for both management and labor positions.
“I’ve actually had better luck on some of our management positions,” says Value, who estimates the company has retained about 70 percent of recent hires. “I think that’s due to Idaho being a state that people are wanting to move to right now. The general labor, that’s been tougher.”
J.C. Restoration tried to ease the tension and anxiety of its employees at the onset of the COVID-19 pandemic by ensuring they had proper PPE and allowing office staff to work from home. The company had to add to its waiting lists because projects took longer to complete, but clients were happy to wait, explains Warner Cruz, president and owner. “On our bigger rebuilds, homeowners were very patient; I think it had to do with them knowing that they weren’t constrained by time.”
With more people working from home and taking care of smaller insurance projects, the average sale for J.C. Restoration climbed to $18,000 in 2020, he adds. Larger commercial jobs drove the increase and, as the company works on the final steps to receive GSA approval, it intends to use the opportunity to obtain bigger governmental projects and open an office in downtown Chicago soon.
“We’re focusing on scaling up right now,” Cruz says. “Our company has become a commercial, larger-loss type of company. We service clients quicker on a larger scale. We’ll still handle any loss that comes through our doors, but we’re getting the reputation of handling the larger ones.”
As qualified labor becomes even harder to secure, J.C. Restoration has concentrated on installing technology that fills in the gaps. Systems that can produce a virtual graphing of a space, such as Matterport, and automatically create an estimate help reduce the burden, Cruz adds. “We focus on getting technology to work harder for us as opposed to having to find more and more labor.”
Technology cannot physically deliver a product to the jobsite, though, which makes it difficult to complete projects given current supply-chain issues. Insurance restoration companies often must locate a specific product to replace one that sustained damage in a fire or flood, so any delay can push timelines further out and risk upsetting customers who have already been through a mishap.
“We have to match products and find the same types of things, and we’re not able to source them right now,” says Value, who cites flooring as a main one. “Stuff has been out for long periods of time. We can’t get [their home put] back together because the cabinets are 16 weeks out, or the shipping date for the matching carpet is two-to-eight weeks out. It’s definitely been a problem.”
As a result, Disaster Response will try to expand its verticals and bring more manufacturing and trade capabilities in-house, he adds. The company is starting a cabinet shop, for example, to ship product to all its jobsites and has been hiring people for that enterprise. Plumbers have not been as reliable in servicing work, so the organization is in the process of hiring an in-house plumber.
“I’ve got jobs that we just can’t close out because we’re waiting on the crucial component to the job, whether it’s cabinets, windows, sliding doors or things like that,” says Lueck, who has a full-time production assistant review projects in Xactimate and confirm the accuracy of each material price too. “We’re going through it to make sure what exactly is included for materials is current.
“If it’s something little, we’ll [usually] live with it. But if it’s something major, we’re highlighting those items and going back to the carrier with documentation to show them that there has been a significant increase Xactimate didn’t account for,” he adds. “We’re trying to protect our margins.
“Material [prices] have definitely gone up a lot faster than normal inflationary causes. We see it after a hurricane sometimes—you’ll see shingles or plywood goes up, but that doesn’t necessarily impact all the materials. And COVID has certainly impacted [prices] almost across the board.”
If the company cannot close out a job because of product delays or price discrepancies, it cannot collect final payment from the client and could negatively affect cashflow, Lueck notes. “We’re doing a lot more interim draws than we used to, which is a good business practice [regardless].” QR