Bulletin One – February 2020
As presented at the RIA Australian Conference in June 2019 the local council are committed to establishing an advocacy voice in Australasia to promote our industry, its professionalism and its value.
So what is advocacy? “ public support for an idea, plan, or way of doing something “– Cambridge Dictionary .
Creating an independent advocacy position and then funding this will be an expensive exercise and therefore we are pleased to announce that RIA Australia and RIA USA have agreed that all profits from local activities will remain in Australia to assist with funding of the advocacy movement. In addition, part of annual membership fees will also be dedicated to this cause.
Restoration companies must unite, and deliver through our advocacy initiatives claims practices that are professional, financially sustainable for the providers whilst maintaining professional standards and practices. Without the unification of the restoration industry there will be a continued reduction in quality to match the ever decreasing remuneration being offered for restoration services. The Australian Restoration Industry has been active since the early 1980 where a handful of builders and cleaning/restoration companies serviced a small proportion of insurance claims. Over the following four decades more and more players entered the “restoration market” and competed to gain market share through technology improvements, improved services based on facts not fiction, and competitive tension. Regrettably often just on lower pricing.
In parallel with the expansion of service providers there was major consolidation of the insurance market where we saw several hundred insurance companies in a relatively short period of time dwindle to around 40! This consolidation came about through natural decline of some insurers but predominately through acquisitions. Banks became a large part of the industry and their desire to gain more and more market share led to this consolidation process accelerating faster than most of the restoration industry predicted.
As with any acquisition the motivation the insures wanted was to secure more market share, amortise and reduce their overheard across high revenue streams, and look for efficiencies and competitive advantage over smaller insurance players thereby providing hopefully a better outcome for their shareholders.
Two major dominant players evolved over this period through acquisitions whilst retaining the various market brands that they acquired in the hope of keeping customer loyalty and therefore premiums for their respective brands.
Fast forward to today and we have four major insurers dominating the domestic insurance market and then smaller specialist insurers and overseas insurers underwriting the balance.
How has this impacted the Restoration Industry?
The dominance of four major insurers and their background inevitably led to procurement departments looking at their National spend in various claims departments.
Starting with the car claims, then building and then eventually the restoration of building and contents these insurers then started to enforce their acceptable pricing practices onto the service providers through a “take it or leave it” attitude knowing that those that relied on the workloads from these same insurers needed the volumes to survive in an ever increasingly competitive market.
This was exacerbated by the fragmentation of the restoration market with no singular entity representing the restoration industry.
The insurers therefore were (and are still today) able to leverage this lack of market unity and respect to continue to drive margins and service levels down.
So why hasn’t to date RIA Australia been able to start progress towards independent advocacy?
In short, a lack of time, of money, and the inability of any RIA council member to take this role or lead through the threat of personnel business decline if insurers were to see any individual or group of companies disrupt their agendas.
RIA Australia will now create an independent advocacy budget using funding from the profits from local events and part of membership fees.
These funds will be used to employ an independent advocacy person to represent our industry, as a whole, under the RIA banner.
The selected candidate will deliver:
- Insurance lobbying
- Insurance training
- Restoration market feedback from insurers to RIA
- Attending industry events as the RIA ambassador and presenter
The advocacy initiatives will take time, but RIA must start somewhere, and we need your support.
We ask that you actively promote RIA wherever you can, encourage other restoration providers to become members of RIA and equally participate in events be they national conference or local chapter/training events.
The restoration industry must unite to survive and be respected.
Bulletin Two – May 2020
As previously advised the Restoration Industry Association USA (RIA) and our local chapter agree to maintain local funding towards the advocacy role in Australia.
This is excellent news for RIA Australasia members as this will enable a return on your membership fees, the local RIA advocate once engaged working for the legal and financial interests of all member restorers.
With sufficient support from our members through membership fees and attendance at local events, RIA will provide advocacy for restoration professionals across the country and seek to influence legislation and/or reform as needed.
RIA USA Advocacy is quoted as saying:
“With growing frequency, restorers report frustration and exasperation with price-slashing, administrative burdens, and Monday-morning quarterbacking by third-party administrators (TPAs), insurance adjusters, and third-party claims consultants. Restorers suffer from stagnant or declining prices in standardized pricing/scoping platforms that do not reflect real world increases in labor and operating costs. They also struggle to comply with laws that fail to take into account the unique challenges faced by emergency service contractors…..The net effect of these problems is far-reaching. Some of the best and the brightest contractors are withdrawing from insurance company preferred vendor programs, or greatly limiting the geographic areas they will serve, in order to minimize travel expenses. Others are getting out of the business altogether. This attrition gradually forces insurers to assign work to contractors with less training, efficiency, and expertise, which lowers the quality of service received by insureds. When lower quality service is provided, the insurance companies’ liability exposure increases because when customers take legal action for substandard work performed by a preferred vendor, they usually sue the insurance company as well. When insurance companies are sued, they raise premiums to offset the loss––and the insured suffers again. Obviously, when jobs are assigned to less efficient contractors, it delays the resolution of claims, which increases the insurance companies’ expenditures for additional living expenses. This tarnishes the reputation of the restoration industry and decreases the confidence of the public and the insurance companies in the restoration industry”
Sounds very familiar to most local restorers?
For the betterment of the industry and all its stakeholders’ matters must change to avoid harm to restorers, their customers, insurers, and the industry.
RIA USA are well down the path of advocacy and there is evidence that the industry is listening. We here in Australasia are not as advanced yet, but the securing of the financial backing should place us in a position to start to recruit for an advocacy representative early in the new financial year.
The RIA wants to now unite the restoration industry and voice our issues through advocating for the best interests of restoration contractors. We will develop strategies to help create and maintain equity between restorers and insurers and their partners. RIA will advocate for the financial and legal interests of our restoration members while working collaboratively and fairly with insurers and the other stakeholders in the restoration process.
So Where to Now?
- Establish and advocacy sub-committee – Done
- Get member feedback on your issues and needs
- From your feedback agree and formalise position statements for our industry
- Recruit a restoration advocate
- Inform and Update Membership on progress
- Maintain advocacy momentum
Our aim is to raise locally in excess of $100,000 to enable RIA locally to have the confidence to recruit a suitable candidate knowing that we have the financial resources to sustain their efforts longer term.
We are well on the way to having this financial stability thanks to your ongoing membership and support of local activities, especially the annual conference. Regrettably 2020 has seen this year’s conference postponed (due to Covid -19 restrictions) and therefore the associated additional funding for the advocacy from this event has also been temporarily lost.
Once RIA locally have secured adequate financial resource for this advocacy, we will hire a Restoration Advocate. Not volunteer speaking for RIA in their spare time, the Restoration Advocate will be a paid professional with specific goals. To ensure there are no conflicts of interest and fears of retaliation, we have decided that the successful candidate will not be currently engaged in the restoration industry. But the candidate will have industry experience and understand its history.
The candidate wont be easy to find, so please get the word out that RIA are interested in potential candidates and can be contacted initially at email@example.com for more information.
We Need Your Help
- Through your ongoing membership of RIA.
- Spreading the word to other restorers, that are not current RIA members, to get on board and support the advocacy cause.
- Consider a donation to RIA Australasia to support the advocacy movement.
- Look out for and nominate any potential candidates for the upcoming advocacy position.
Please ensure that when discussing the RIA advocacy with anyone you make it clear this is not a war of “us against them” but rather a need for restorers and insurers (and their stakeholders) to have a clear and fair working position that allows for the sustainability of our industry with experienced and qualified providers.
We look forward to updating you as matter progress and seeking you individual input into the needs as you see them ,so that we can get consensus on what need addressing as a priority for our members.