The new TPA's infecting the restoration industry

Alacrity. Sedgwick. Contractor Connection. All names I am sure many of you have heard of before. Their popularity with insurance carriers gained traction as the major institutions were looking to defer the management of claims as well as a lot of the liability associated. As a contractor about 70% of the work I did came from these Third-Party Administration Groups. You have to pay them 5% of the job and they provide in return absolutely nothing. Less than nothing, they cut your estimates to pieces, hold you to unrealistic standards and generally have no clue what any part of the job entails.

As we watch their participation dwindle, it appears that a new entity is taking its place. The “Affiliates Programs”. What are they? Groups that promise to provide you with qualified leads and resources in exchange for money. How much money? You won't know unless you sign up, and the goal post of what you owe is constantly in flux. At least with a TPA, they had the dignity of letting you know how much of your revenue they were going to steal before they did it.

I remember sitting in a meeting with The CORE Group, one of the most popular affiliates programs in this industry. As I sat their listening to the salesman pitch their services, I kept thinking to myself this sounds like he is the newest cast member on 'Impractical Jokers' and there has to be three guys in a room somewhere directing him on what to say. Things like:

“Now I know we meet all 3 legal definitions of a franchise but we aren't one”

“You will have to change your name if you join”

The way he spoke of the organizations founder was if his boss was some type of messiah come down to save us from mitigation purgatory. It was bizarre.

The more you learn about these types of companies, the more of a scam you realize they are. The practice amounts to "you give us money and we make no promises of what we provide in return".

Kind of sounds like homeowners insurance.

When asked about their practices, pricing or how their structure is formatted they become defensive and obtuse. You don't have to listen to much of this interview Michelle Blevins of C&R magazine did with Tim Fuller of "Restoration Partners" to realize how shady these organizations are. At minute 29 when asked what his service provides to contractors, Mr. Fuller touts their ability to Google search "plumbers near me" as well as a junk mail campaign that I am sure promotes his company and is not tailored to the vendors in the program.

Companies join them for the same reason your aunt has 500 Lularoe yoga pants in her basement, the promise of greater financial stability. It’s tempting, but ultimately the only people that profit are the people that aren't doing any of the work. Call me old fashioned, but I’d rather go chase fires or pay a plumber or a roofer a referral fee, at least they aren't just sitting back and taking my revenue.