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As we get ready for the International Restoration Convention and Industry Expo, Blueprint for the Future, ATI President Jeff Moore explores what that future may look like by the end of the decade.
After sharing my 2022 predictions in February, many of you reached out to share your own predictions for our industry. While none of us can predict the future with any certainty, I think you’ll agree that anticipating changes we’re likely to experience helps us draft a blueprint for profitable growth. In anticipation of the RIA convention in April, here are my top predictions as I look out toward the end of this decade…
The restoration industry will continue to consolidate and mature, resulting in fewer than 10,000 companies by the end of the decade, down from roughly 15,000 today. Local companies will grow their service offerings and geography as they expand regionally. Meanwhile, leading regional players will seek a national footprint. The BIG 8, including our very own ATI Restoration, will continue our acquisition activity. Not even these larger restorers will be immune to consolidation. The BIG 8 will become the BIG 5 as some of the largest non-franchise restoration companies join forces.
TPAs (aka Managed Repair, aka Program Work) represent approximately 25% of today’s restoration industry. This model is predominantly used by residential insurance carriers who award claims to a third party, who then assigns them to contractors on a rotational basis. Like medical insurance, you can go in-network or out-of-network. Several TPAs are working hard to evolve their residential business model and apply it to the commercial claims business. The company with the leading technology, top network of restoration service providers, and noble claims ethics will control the lion’s share of the commercial claim volume.
Both sides of the claim have developed a disdain for O&P. It reminds me of daylight savings time – it made sense at some point, but in 2022 it’s a nonsensical encumbrance. I predict the Xactimate product team will build a dynamic pricing utility that takes into account O&P while thoughtfully balancing economies of scale. This flexibility will allow for realistic O&P on typical projects while adjusting margins to account for economies of scale and purchasing power on mega losses. We restorers will finally earn a reasonable margin on small repair projects while simultaneously enabling Xactimate to be used in a large loss environment without meeting resistance from carriers and their large loss consultants.
We’ve long struggled to get mortgage companies to promptly release insurance proceeds. A company called Sureti is doing exactly that and quickly becoming the de-facto intermediary between property owners, insurance carriers, mortgage companies and contractors. Companies like Sureti are creating a pathway to help us solve for mortgage company endorsees and collect our full payment more quickly.
The Restoration Industry Association will focus on its strength: being the premier trade association for restoration contractors. Membership will soar to over 3,000 member companies. The hundreds who gather in Reno for the annual conference next month will balloon to thousands within the next decade. The RIA budget will be larger than any of us can imagine.
RIA’s focus and determination to make an impact for restorers when it comes to pricing and advocacy will help shape membership, engagement and leadership for decades to come.
As always, we look forward to hearing your predictions.
You can contact us anytime at Mergers@ATIrestoration.com.