The damage management industry has cleaned up its act and some players are doing business directly with insurers. Caroline Jordan reports
It's a dirty job, but someone's got to do it. The aftermath of fire, flood or spillages means plenty of work for the UK's disaster management industry as insurers try to keep their policyholders happy.
But, beneath the mops, buckets and sophisticated drying-out equipment, there is an industry undergoing change, which is cleaning up financially, while attempting to dust off a somewhat tarnished image.
In the past, some firms took on more business than they could handle, overcharged and did not properly vet staff. In 1999, a trade body was established to help brush up the industry's profile, launch a code of practice and provide professional qualifications.
The British Damage Management Association (BDMA) has attracted a number of key members with strong reputations including Belfor, Munters and Chem-Dry. Despite this, there are still plenty of operators who remain outside the BDMA.
Amey Vectra is one of those outside the association. Its business development manager Cathryn Taylor says many firms across the board are pulling out all the stops to satisfy insurers. "There have been some shysters out there - I've been told of companies charging £75 to clean a keyboard when a new one would have cost only £25."
Amey Vectra deals mainly in commercial claims as well as some high net worth. "We work mainly for adjusters, although I think more work for smaller commercial claims will start coming from insurers direct," Taylor says.
She says blinding adjusters and insurers with science is rarely necessary, adding that the work can be hard and dirty. What counts, she says, is reliability and thoroughness. "This is a largely blue-collar job. I took a call recently at 2am and had to help out myself with cleaning a nearby flooded office, so that staff could come in at 9am. This is what it is all about."
David Croston, group operations director of loss adjuster The Claims People, appoints a variety of damage management companies.
"They have an important role to play and, while there is the odd rogue out there, we find work is generally satisfactory; we monitor it closely as we do all our suppliers." He says that the BDMA is raising standards, but suggests the feeling in the market is that examinations are relatively basic.
While elbow grease is part of the picture, firms do employ specialist staff. Damage management companies are far from being a homogenous mass; there are plenty of niche firms out there. Harwell Drying, for instance, tends to specialise in document recovery, while Munters is geared towards large commercial claims.
Although Belfor has the biggest share of the market, there is plenty of competition. Winning work is not just about having the whizziest cleaning machines or the best UK coverage - it is about cultivating the right relationships.
While this is particularly relevant to loss adjusters, who appoint damage management companies in many commercial claims, insurers are increasingly providing work direct.
Belfor marketing manager Helen da Silva says this is the case with smaller personal lines claims, worth up to around £2,500.
"Insurers are increasingly cutting adjusters out of the loop and want to work with a national damage management company direct to create economies of scale."
Recently, Belfor was made an approved supplier for Churchill Insurance. "Where we are doing this, our service becomes practically seamless. The policyholder calls the insurer's claims people, who tend tocome through to our call centre. We have agreed service levels and arrange immediately for someone to be sent out to the homeowner."
Da Silva claims that Belfor is already one big step ahead of its competitors, as it has recently set up a building repair network.
Although it might appear that commercial claims are more valuable - and these certainly can be higher value - many damage management companies want to do more in personal lines.
A growing number of businesses are taking higher deductibles to make their cover more affordable and so make their own arrangements to sort out any mess themselves.
Winning personal lines business is, therefore, increasingly attractive, particularly when exclusive arrangements can be made with an insurer.
Chem-Dry is understood to have a deal with Norwich Union (NU) to handle many of its residential claims.
This company, along with ISS Rainbow, operates on a franchise basis, a model that is controversial.
According to da Silva, one of Belfor's major advantages is that it employs its own people. "If you're a franchise, you can't offer clients the same level of consistency. You are going to get different service standards and skills from the staff.
"It's crucial that we look after our people. We have a good name as an employer. We often get letters from people working from rival firms asking if they can join us."
Munters marketing manager Denice Honour agrees. "It's about consistency and knowing that we employ our own people. It means insurers feel more in control about what they can provide.
"It is also vital, in my view, to be able to offer a service that is available anywhere in the UK, including remote islands."
And Taylor of Amey Vectra adds that franchising leads to "patchy" service.
But, loss adjuster David Croston says he is not against franchising.
"Although it's easy to criticise the franchise model, these businesses are often run by good people. They may have staked their whole livelihood on running a branch. So they have even more of an incentive to get it right."
DRL, which deals mainly in the personal lines market, argues that franchising can mean expansion without compromising on service.
Managing director Brian Armstrong says: "We have recently made the move to operate a franchised network. And education and training will be fundamental to the award of a franchise. We will not compromise on this requirement, clearly stating that all field technicians must be adequately trained."
For large commercial claims, Munters is viewed as one of the experts. Honour says the firm manufactures much equipment itself and supplies rival firms. This includes industrial dehumidifiers and portable ones suitable for domestic claims. It also uses theromographic cameras to detect temperature change and acoustic listening devices to detect leaks.
It, too, is expanding more into personal lines, she says, and recently worked in Scotland for Moray Council following the Elgin floods, drying out nearly 300 local authority homes.
Honour calls for better communication between damage management companies, insurers and adjusters.
"One of the issues we raised directly with the ABI, is that it would make far more sense for damage management companies to provide block services.
"Currently, companies provide different service levels to homes that may be next door to each other. This annoys policyholders and can make an insurer look bad.
"It may be initially complex to sort out, but it is the way forward and would lead to a more consistent service."
This is an industry attracting foreign investment, with Danish giant ISS group recently purchasing commercial specialists Ark & General and Rainbow, a personal lines operator.
ISS Ark & General managing director Shaun Doherty says: "We're expanding fast and now have the backing of ISS, which employs over 250,000 people in 38 countries."
He believes there is much to learn from Europe where techniques used in damage management are more advanced.
"We're only scratching the surface and have a long way to go. Norway, for example, has a population of 3.5 million and has a £80m market in disaster recovery covering both domestic and commercial claims.
"In the UK a similar amount is spent on a population almost 20 times that size and the recent UK flooding saw us bring in 17 engineering experts from Holland, Denmark and Germany," says Doherty.
Can the damage management one-stop shop succeed?
Anyone with a claim - whether personal or commercial - wants it sorted out with as little hassle as possible. Many policyholders are irked when they have been asked to obtain quotes from contractors and where there are several types of damage (such as flooded carpets and replastering required). They may well have to approach a number of different companies and take time off work to make sure the workmen can get in to do the jobs.
Belfor is aiming to be, in that much-used phrase, a one-stop shop. It has recently set up its own building repair network, which it is understood to be piloting with Lloyds TSB's Insure Direct operation.
Belfor marketing manager Helen da Silva says the aim is to stop the revolving door of different suppliers and to do it all for the client.
"The network is going well and we thoroughly check out the firms we use. We have estimated we can save insurers at least 5% on the cost of a claim if they use us for both damage management and for building repairs, as it removes an administrative burden."
But, there are fears that a building repair network could lead to a conflict of interest - would the damage management company claim there were unnecessary jobs to be done for example?
Alan Souter, managing director of repairer network Property Solutions, which is owned by loss adjuster Cunningham Lindsey, says that cleaning and construction are separate fields and he says there are no real benefits in bringing the two together.
"It is essential to use first-rate people for the job, who will make the claimant's life as easy as possible. We are totally focused on the firms we send out and insurers value our claims expertise, combined with highly competent contractors. Damage management is largely about cleaning so we go in after the cleaners have finished. They should focus on making sure any carpets and other flooded items are properly dried out so we can start."
He adds that while he is aware that Belfor has a network, he believes his firm and Sergon, owned by GAB Robins, are way ahead in the field.