Restoration Industry Association -- Educational Programs and Events

What Goes Around Comes Around

Seems we struck a nerve.

RIA’s recent survey concerning insurer practices that thwart the property damage repair process generated more than a 25% response rate. And this from an audience that normally will return between 5% and 10% on surveys. While we have much more number crunching to do, we can report that every abusive activity mentioned was selected by survey respondents. The “winner” with the highest frequency score is steering of policy holders to a particular vendor. Almost as surprising, 73% of respondents participate in at least one preferred vendor program, which partially explains why certain insurers scored well as both best insurance companies to work for and worst to work for.

Restorers are not alone in their opinions of P&C insurers. Washington state voters on November 6 approved Referendum 67, a measure that confirmed a bill known as ESSB 5726 (“The Insurance Fair Conduct Act”) passed earlier in the year by the state senate. Lobbied by the trial lawyers’ bar (not ordinarily a group we would fondly embrace) R67/ESSB 5726 allows treble damages to successful plaintiffs proving insurer bad faith in claims handling (the law does not apply to health insurers). It passed by a margin of 56.9% to 43.1%.

Insurers raised $184,723 trying to defeat R67 through a coalition called “Consumers Against Higher Insurance Rates” and have vowed to overturn it. The coalition of “Consumers” includes (1) the American Insurance Association, (2) the National Association of Mutual Insurance Companies, and (3) just about every insurer that you ever heard of that sells auto and P&C in Washington state and any other state where this might be introduced.

R67 has a strong flavor of justice. While the McCarran-Ferguson Act gives insurers a limited shield from anti-trust liabilities and the treble damages attached to A-T violations, R67 now in one state subjects those insurers to treble damages for acting in bad faith. This seems fair.

Will the risk of triple damages cause insurance rates to rise? Yes, increased rates will be an effect of the law (one virtually struggles not to say, “Well, duh!”). Remember, this is an industry that turned its Katrina claims into the insurance industry’s most profitable year! Perhaps the better question to ask is if the risk of triple damages will encourage insurers to treat policy holders more fairly? The answer to that is that it depends on the size of the risk. Therefore, Washington state policy holders should not expect much improvement where the claim is small. And remember, the auto and P&C industry anted up almost $200,000 to fight this and had another $450,000 on pledge. They will not only lobby for repeal, they will likely invite lawsuits to test the limits of “bad faith.”

Don Manger

Executive Director

P.S. Interested in becoming more involved in RIA? Then consider joining a task force. Visit our website for more info: http://www.restorationindustry.org/.

ISSA/INTERCLEAN – A Huge Success

ISSA, the worldwide cleaning industry association, opened Cleaning Industry Management Standard (CIMS) certification to the industry at-large at ISSA/INTERCLEAN North America 2007 in Orlando on October 23-26. The launch followed a successful case study program where the majority of applicants achieve certification. For more information on CIMS, please visit http://email.blueoxmailbox.com/c.html?rtr=on&s=dn1,v3mu,27e3,a4n,bq8p,jz0i,9n6h.

Allstate Corp. Earnings Drop for 2007

Third-quarter net income dropped 15.5 percent for the Allstate Corporation. The drop was due to a decline in catastrophe losses and a lack of favorable loss development, both of which were higher in the 2006 third-quarter.

Katrina Lawsuit Dismissed

An $8 billion lawsuit that accused insurers of defrauding the National Flood Insurance Program was tossed out by Judge Beer in mid October. Insurers had been charged with having their adjusters inappropriately attribute Katrina damage to flooding instead of wind damage. Flooding was covered by the federal program, whereas private policies were responsible for wind.

Allstate Subpoenaed

Allstate Corp., the largest publicly traded U.S. insurer, was subpoenaed October 16 by Florida regulators in an ongoing probe into possible industry collusion to thwart state efforts to slash homeowner insurance rates. The state is ordering Allstate Floridian, Florida's second largest private property insurer, and its parent, Allstate Corp., to turn over documents related to reinsurance activity and communications with modeling firms, rating agencies and trade associations. According to Florida Gov. Charlie Crist (R), the investigation will provide insight to its Florida customers, as well as show where Allstate was unsuccessful.

RIA Briefs

The Benefits of Conference and Convention Participation

With the success of last month’s RIA Fall Conference in Garden Grove, CA, one of the most important benefits of being a member was highlighted - Networking! RIA’s annual conferences and conventions offer a chance for cleaning and restoration professionals to network with others, find the best business practices, form lasting professional relationships, and create unity within the industry.

In addition, RIA members are offered reduced hotel rates and primary selection for booth spaces at these networking events, and are given the opportunity to participate in education classes and lectures from some of the most knowledgeable experts in the industry.

SAVE THE DATE: The next major networking event will happen at the 63rd Annual Convention & Exhibition in Grapevine, Texas, on March 11-15, 2008. Just six minutes from Dallas-Fort Worth International Airport (DFW), the Gaylord Texan Resort and Convention Center will be home to all of RIA’s educational sessions, networking events and exhibition. More details to come! Stay tuned to our website, http://www.restorationindustry.org/, for more information, or contact RIA directly at 443-878-1000.

Advances to RIA Website Heighten Security

The RIA website will activate its online sales features in less than two weeks. This addition of electronic commerce functionality to the website will permit RIA members to place orders and pay for them in a secure environment on the Association’s website. This new feature will:

Confirm the order to the member.
Notify RIA headquarters of the order.
Update the member record (both for the member company and for the individual executing the transaction) with a record of the transaction.

This feature marks a major step in the valuation of member services that will give us accurate readings on member preferences, trends within the industry as reflected in member usage patterns, and allow more time to concentrate on refining RIA’s service delivery to the industry.

Businesses Required to Fill Out U.S. Census Forms

This December the U.S. Census Bureau will issue the 2007 Economic Census forms to more than 4 million American businesses, including 130,000 construction businesses. Business responses are required by law (Title 13, U.S. Code) and must be returned by February 12, 2008. For more information, visit http://www.census.gov/econ/census07/.

Crestwell and Leong Join RIA Staff

Kamala Crestwell joined the RIA staff full-time last month as the assistant to the executive director. Crestwell’s responsibilities primarily focus around special assignments and projects that are being developed for the transformation of RIA. Previously, Crestwell, worked with the Retail Bakery Association for three years in the areas of accounting, membership, database management, and customer service. She also attends the University of Maryland, Baltimore County ,where she studies biology.

Khyle Leong joined RIA this September as the Customer Service Representative and assistant to the Accountant. Leong’s duties are centered on monitoring all incoming activity, reconciling various financial matters, processing payments, and working with the accountant on numerous projects. Leong formerly worked for Bank of America where he performed transactions, handled and balanced currency, and resolved customer service queries. Currently, he attends Howard Community College and will transfer to the University of Baltimore to continue his education in finance and business administration.

It’s That Time of Year Again - Phoenix Award Entries Due

Applications for the 2008 Phoenix Awards are due on December 15, 2007. These prestigious awards are given each year to recognize two projects from a host of outstanding candidates.

The Phoenix Award for Innovation in Restoration will be awarded to any RIA member contractor for a restoration project, personal property or building, which does not include billing reconstruction.
The Phoenix Award for Innovation in Reconstruction will be awarded to an RIA member contractor for a project in building reconstruction, either residential or commercial.

An application and additional information can be downloaded at http://www.restorationindustry.org/pdf/PhoenixAwardCall4EntriesLowRes.pdf
LowRes.pdf.

All entries must be sent to the attention of Patti Harman by Dec. 15, 2007.

Free Technical Advisory Referrals for RIA Members

RIA members are given two free technical advisory referrals per calendar year by top experts Martin King, CR, ASA, and Steve Spivak, Ph.D., to help increase business performance and aid in any problematic issues.

About the Advisors

Spivak is the chair of the Cleaning Industry Research Institute’s (CIRI) Science Advisory Committee and writer of the "Technical Topics" column in Cleaning & Restoration magazine for more than 25 years.

King is the author of the RIA Guidelines for Fire and Smoke Damage Repair, as well as writer of the "Restoration Corner" column in Cleaning & Restoration magazine.

If you wish to have a referral, the following terms will apply.

A deposit will be required for all consultations.
RIA will refund the deposit within two business days for the two free consultations after confirming that the company is a member and has not exceeded their two free referrals.
Any additional consultations will cost $350 for members and $495 for non-members.
Referrals will not be accepted unless the caller has a work authorization number from the RIA office.

Educational classes

Visit http://www.restorationindustry.org/omnisam/calendar/calendar.cfm?
calendar_id=2. for the latest information on upcoming RIA courses or call (443) 878-1000.

According to the California Department of Insurance, 40 percent of homeowners do not have enough insurance to cover the costs of rebuilding their homes. Previous fires and other disasters forced the department to encourage homeowners to review their insurance policies to ensure they were covered for replacement costs, but full replacement policies are rare in the state. However, some insurers do offer inflation riders or extension policies to cover additional repair costs. Insurance carriers indicate homeowners are partially to blame for the lack of insurance coverage because they do not apprise insurers of renovations, reduce their premiums by lowering coverage limits, or update their policies periodically. RAND Corp.'s recent study also illustrated that 50 percent of homeowners in flood-risk zones incorrectly believe their policies cover flood damages. California Lieutenant Gov. John Garamendi notes insurance carriers often use obtuse language, and insurance agents provide homeowners with poor data regarding what their policies actually cover--charges the industry denies. While insurance companies continue to improve their modeling techniques, many fail to inform policyholders that they should review or change their older policies to meet the latest risks facing their properties.
(Web Link)
Return to Headlines

The U.S. House passed a bill proposed by Reps. Ron Klein (D-Fla.) and Tim Mahoney (D-Fla.) creating a federal disaster insurance program that would provide federal loans to states to cover home and business damage. States would qualify for federal loans when disaster costs rise higher than 1.5 times premium collections for the prior year. The bill, supported by the National Association of Realtors, also would allow states to follow in Florida's footsteps by selling catastrophe bonds to raise capital to cover disaster losses. The Office of Management and Budget opposes the bill, along with many insurance companies, due to concerns that federal subsidies would put a damper on the private market and require all taxpayers to shoulder losses incurred by those living in disaster-prone locales. The bill, now up for consideration in the Senate, likely would be vetoed by the Bush administration.
(Web Link)
Return to Headlines

Once popular only with oil producers, radioactive waste depositories, and chemical firms, environmental liability insurance has some new customers, ranging from developers and apartment complexes to municipalities. Environmental liability was withdrawn from general liability insurance in the 1980s, forcing firms to purchase the coverage separately at higher costs. The Insurance Information Institute (III) estimates the capacity of the environmental liability coverage market at about $3 billion, up from $500 million in 1993. III Vice President for Global Issues Claire Wilkinson says, "It is also strategic. We've increased regulation in the area, increasing demand for disclosure and transparency, and there's more development of brownfields, so there are emerging areas that have come to the fore, creating more opportunity for coverage." Businesses outside the energy, chemical, and radioactive waste sectors often purchase pollution liability coverage to protect investors' assets from unknown risk exposures. Even the Fort Worth, Texas-based Zoological Association purchased a pollution liability policy because land it acquired may be polluted due to previous owners' activities. Generally, these policies can cover cleanup costs and legal costs should the owner be the subject of future litigation.
(Web Link)
Return to Headlines

Carpet cleaning professionals frequently are asked how long it will take for carpets to dry after cleaning, as mold and other microbes may begin to grow in carpets that stay wet for more than 24 hours. Many factors impact the drying process, including the cleaning method, the technician's expertise, the size of the area to be cleaned, and ventilation. Low moisture cleaning can involve the use of less water than other cleaning methods, but it also refers to how much moisture remains after cleaning, regardless of the amount of water used. Physics plays an important role in how fast carpets dry, and they tend to dry faster when carpets in only a couple of rooms--rather than an entire home or commercial building--are cleaned. Evaporation occurs more quickly when moisture in the air is moved away so that moisture from the carpet can take its place. The evaporation process can be quickened by opening doors and windows, but this only works if the outside air has a lower specific humidity to permit an air exchange. When the outside humidity is not conducive to evaporation, cleaning professionals should rely on HVAC systems or air movers to speed up the drying process.
(Web Link)
Return to Headlines

Drought conditions presently plague one-third of the United States, and many areas are under water restrictions because these conditions likely will not change anytime soon, according to the U.S. National Weather Service's Climate Prediction Center. There are new machines available to floor cleaning professionals that effectively clean floors using water more efficiently. The newest carpet extractors feature multistage vacuum motors and brushes that apply cleaning solution and agitate the carpet fibers to facilitate dirt and soil removal using less water. Top-of-the-line extractors heat the cleaning solution to 212 degrees to boost effectiveness and allow cleaning professionals to regulate water usage. Cleaning professionals also have access to automatic scrubbing floor machines for large spaces that do not leave a lot of water behind when navigating corners and doorways, as well as cylindrical floor machines that feature counter-rotating brushes on each end as an alternative to the central rotating pad in traditional rotary machines.
(Web Link)
Return to Headlines

Insured damages related to the wildfires in Southern California could reach $1.6 billion, according to estimates from Risk Management Solutions Inc. (RMS). Meanwhile EQECAT Inc. estimates damages at $1 billion, and Beacon Economics says damages could reach between $1 billion and $2 billion. Catastrophe losses through September 2007 reached $4.7 billion, with the largest loss occurring in April along the east coast from a severe rainstorm. The losses are significantly lower than the $7.8 billion in catastrophe damages sustained in 2006.
(Web Link)
Return to Headlines

The U.S. Environmental Protection Agency (EPA), under pressure from state waste officials and brownfields developers to institute risk-based cleaning standards for methamphetamine-contaminated properties sooner than the agency's estimated draft release date of 2011, will issue best cleanup practices in 2008 with the help of the U.S. Drug Enforcement Administration. States are calling for federal cleanup guidelines to clear up uncertainties surrounding liability, especially now that the number of meth labs is decreasing. State lawmakers in Arizona, Arkansas, California, Colorado, Idaho, Minnesota, Montana, North Carolina, Oregon, and Tennessee imposed their own cleanup standards in the absence of federal cleanup guidelines; but there are concerns about the reliability of these standards because they are detection-based instead of risk-based. State officials say there is not enough money and other resources to conduct toxicology studies to determine acceptable levels of meth. These officials also are concerned about the lack of updates from the EPA regarding its research into meth risks, as well as stalled efforts by federal lawmakers to pass legislation that would provide funding for research by the EPA and the National Institute for Standards & Technology. When meth is manufactured, such chemicals as hydrochloric acid, phosphine, and iodine are produced and cover all surfaces within a property.
(Web Link)
Return to Headlines

In Chesterfield, N.H., Charles Perry of West Hartford, Conn.-based Environmental Assurance Group built a mold-resistant home with the help of the Partnership for Advanced Technology in Housing. Though Perry has not said how much the two-story, 3,000-square-foot dwelling cost, he insists that mold-prevention strategies are a sound investment. Perry notes that paperless drywall costs $1,250, or 0.5 percent of the cost of a $250,000 home. "I spent $2,500 on a commode and two light fixtures for one of the bathrooms," says Perry. "Is $1,250 too much to invest in an effort to get mold coverage put back into homeowners insurance policies?" Among the mold-resistant products included in Perry's home are paperless wallboard coated with an antimicrobial spray and installed with inorganic glues and tapes; a house and roof wrap installed prior to the exterior siding to move moisture vapor out and prevent air and moisture from getting in; insulation with a permeable vapor barrier; and a self-draining rain screen that eliminates moisture behind the siding.
(Web Link)
Return to Headlines

Cleaning professionals need to exercise caution when cleaning Chinese-sculpted rugs, particularly those manufactured in the past 50 years, because manufacturers subjected them to a chemical wash. Typically containing chlorine bleach, the chemical wash was intended to dissolve the wool fiber cuticles to make the wool softer and the colors muter and to create a silky appearance. The chemical wash severely damages the fibers in nearly all cases, making it important for cleaning professionals to examine the rugs closely before cleaning and to document and photograph existing stains to safeguard themselves against disgruntled clients. Chinese-sculpted rugs fade in the sun; and cleaning professionals would be wise to examine the back of the rug and the tops and bottoms of the fibers to determine how much fading has occurred, taking care to clean the rugs using low heat and dry them away from sunlight. Spotting solutions also can exacerbate color loss, so experts recommend a basic wash. As for the fringes of these rugs, they tend to yellow and rot over time, so cleaning professionals should simply pour hot water over the ends to remove soils and shampoo residue and recommend that the fringes be replaced. These rugs feature a "closed back" weave with a cotton foundation that obscures the fibers on the back, and this cotton foundation also tends to rot over time and leave nothing for the wool to cling to. In addition to documenting stains on the underside of the rug, cleaning professionals should dry them face down to avoid wicking.
(Web Link)
Return to Headlines

New rules mandating that property owners provide proof that contaminants from meth labs have been eliminated prior to renting or selling the structures have been okayed by the New Mexico Environmental Improvement Board. Under the rules, the department must be told each time law enforcement posts contamination notices on properties used to manufacture illegal drugs. The property would then be listed on the department's Web site, and the property owner--who has access to a list of certified cleanup firms provided by the department--would be contacted. Levels of contaminants on the property prior to and after cleaning would be measured by the cleanup firm. The rules are similar to those in place in Albuquerque and 14 other states, but some state lawmakers believe the department lacks the legal authority to implement them.
(Web Link)
Return to Headlines

Some experts believe wildfires like those that hit California last month could occur more often as a result of global warming. University of Wisconsin at Madison forest ecologist Volker Radeloff and his colleagues analyzed 2000 Census data, determining that 39 percent of the homes in the lower 48 states are located on the wildland-urban interface: the area where housing developments meet forests. Attention typically is placed on the Western states, but the study reveals a greater fire risk in the East and Southeast because these locales have more wildland-urban interface. As temperatures and the level of carbon dioxide rise, experts believe that growing seasons will be extended in these regions and that forests will dry out before trees go dormant for the winter, increasing the likelihood of wildfires. In light of decreasing firefighting resources, experts underscore the importance of building homes with fire-resistant roofs, windows, and landscaping; clearing the land around homes; and expanding streets to permit both fire trucks and evacuation traffic. Experts point out that wildfire risks change over time, so people need to look at adaptation as an ongoing process.
(Web Link)
Return to Headlines

Proponents of low-moisture carpet cleaning believe it is more environmentally friendly because it involves the use of less water and chemicals than other cleaning methods. Additionally, they think low-moisture cleaning offers health benefits because carpets are dry in four hours in some instances, minimizing the chances for mold growth. However, low-moisture carpet cleaning also is gaining popularity for its ability to maintain the appearance and performance of carpets over time. Cleaning professionals who apply too much water to carpets can hinder performance, resulting in browning, shrinkage, and loss of adhesion. Low-moisture cleaning, on the other hand, minimizes deterioration because less water and chemicals remain in the fibers after each cleaning.
(Web Link)
Return to Headlines

Oriental rugs are cleaned differently than carpets, and experts recommend that owners hire a professional to handle the process outside of the home. Such rugs should be cleaned when pulling up a corner and slapping the back of it unleashes a large amount of sand and other dry soils. Professional cleaning is necessary, as eliminating dry soils can take hours. Before applying any solutions to oriental rugs, cleaning professionals should test a portion of the rug with the solution for 12 to 24 hours. This test will enable cleaning professionals to choose whether steam cleaning, bonnet cleaning, or immersion would be the most effective. Many oriental rugs can be hung to dry, but braided rugs must be laid flat to dry to avoid damaging the braids.
(Web Link)
Return to Headlines