Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, November 21, 1993 TAG: 9311220290
SECTION: HOMES PAGE: E-2 EDITION: METRO
SOURCE: ROBERT McCABE FORT LAUDERDALE SUN-SENTINEL
DATELINE: FORT LAUDERDALE, FLA. LENGTH: Long
A pot of baby-bottle nipples she had left boiling on the stove had caught fire, scorching the oven area and sending soot circulating through the home's central air-conditioning system.
Within 24 hours, however, it was hard to tell there had been a fire, says Gilbert Cartier, the owner of the home.
Fifteen minutes after placing a call to his Prudential Insurance agent, Cartier was contacted by Davie, Fla.-based First General Services of South Florida, part of a nationwide network of insurance-repair contractors.
The next day, five First General employees came to Cartier's home and replaced the hood on the oven range, treated the kitchen cabinets with chemicals to remove the soot and cleaned the walls, carpets and all the contents of the house.
Though events such as the fire in Cartier's house may be disasters for home dwellers, they're the meat and potatoes of First General's business, says its president, Carl Locke Jr.
First General is an emerging player in a field of companies nationwide that have found a niche repairing damaged homes such as Cartier's for insurance companies. Along with competitors such as Paul W. Davis Systems of Jacksonville and Detroit-based Inrecon, First General markets itself to insurers as an elite, quick-response disaster team.
Capable of calming distraught homeowners by finding them temporary living quarters and doing quick, computerized damage estimates that make life easier for adjusters, these firms offer insurers a form of one-stop shopping.
They help companies cut down on the amount of time and money it takes to process claims from ordinary - and extraordinary - household disasters ranging from fires and flooding to hurricanes and tornados.
"We'll renovate the house," said Locke, whose uniformed employees undergo special training in such fine arts as ridding homes of smoke odor, water or mildew and discerning which scorched cabinets can be salvaged and which should be replaced.
Since Hurricane Andrew, Locke said his firm's revenues have doubled to about $15 million. He estimates that the insurance-repair industry in the United States is now worth about $50 billion a year.
Yet precisely because the pie is so big - and because there are so many fingers in it - others aren't so sure.
"This industry started out as a mom-and-pop-type industry, from the guy that buys a carpet-cleaning machine, to the person that installs a broken window, to the guy that is a general contractor who never had a fire [job] in his life and starts doing fire repair," said Sheldon Yellen, vice president of Inrecon.
"There are hundreds of thousands of these people throughout the country. There is no way to quantify it in dollars," he said.
Yellen, whose firm has eight offices nationwide and 235 employees, declined to give sales figures, but said Inrecon did well over $20 million last year in Florida alone after Andrew.
While insurers say policyholders have the final word on who will repair their home, some companies have drawn up lists of preferred contractors from which they make recommendations, said Paul Davis, who gets 95 percent of his business directly from insurers.
For years, even though they were losing millions of dollars on property losses, insurance companies told homeowners it was their responsibility to find someone to repair their homes. But not anymore, Davis said.
"Now, they are forming strategic alliances with contractors in order to have some modicum of control over the restoration process. That's the only way they're going to be able to control their costs," he said.
Davis, who began his business in 1966, said in the last 10 years his firm has grown from 18 franchises doing $10.5 million a year to 220 franchises in the United States, Canada and overseas that had 1992 sales of $112 million.
"It's an industry made up of small losses," Davis says. "Over 80 percent of all the property damage losses that make up this business are under $2,500," he said.
Davis estimates that the insurance-repair business is worth about $22 billion a year - that is, in years when hurricanes don't hit.
Insurance industry experts say no one is tracking the growth of insurance-repair firms as an industry.
Like health-maintenance organizations or pools of preferred auto-body repair shops, the concept of insurers recommending companies or "providers" to perform services isn't new, they say.
"Allstate has been doing that forever," said Dean Moffitt, vice president/personal lines of the Alliance of American Insurers.
Allstate does have a "quality vendor program," in which property owners filing claims are given names of recommended contractors whose work it guarantees, said Leslie Chapman, an Allstate spokeswoman.
State Farm, the country's largest property and casualty insurer, has not contracted with any insurance-repair firms nationally, but agents are free to arrive at such relationships on their own, said Jerry Parsons, a spokesman.
Davis, whose firm was recently put on Allstate's recommended list of contractors in Broward County, Fla., says insurance companies do a remarkable job of controlling repair expenses.
But they have no choice, he said, because of years of losses due, in part, to huge overhead expenses, lower than adequate premiums because of pressure to retain market share, and a steady onslaught of catastrophes.
by CNB