1. More with Less While expectations increase, payments decrease Phillip Rosebrook JR, CR Business Mentors

2. Premise Insurance companies require more information and more documentation Our files are scrutinized and additional documentation required Billings challenged Price list inelasticity Clients higher expectations Connected world – no secrets

3. It Won’t Last Change is coming... You can't escape by pretending it's not coming. Go out and meet it - and make it work for you. - Larry Janesky

4. Always be Prepared

5. What in the World is going On? Global economic factors Interconnectedness Drive for efficiency Competitive world Entitlement Speed of change accelerating Immediate information and immediate communication Feeling the effects of a bad economy

6. 2011 Insurance Perspective 2011 Was the Highest Loss Year on Record for Economic Losses Globally o Extraordinary accumulation of severe natural catastrophe: Earthquakes, tsunami, floods and tornadoes are the primary causes of loss $380 Billion in Economic Losses Globally (New Record) o New record, exceeding the previous record of $270B in 2005 $105 Billion in Insured Losses Globally o 2011 losses were 2.5 times 2010 insured losses of $42B o Second only to 2005 on an inflation adjusted basis (new record on a unadjusted basis) o Over 5 times the 30-year average of $19B $72.8 Billion in Economic Losses in the US o Represents a 129% increase over the $11.8 billion amount through the first half of 2010 $35.9 Billion in Insured Losses in the US Arising from 171 CAT Events o Fifth highest year on record o Represents 51% increase over the $23.8 billion total in 2010

7. Losses Due to Natural Disasters in the US, 1980– 2011 (Overall & Insured Losses) 7 Overall losses (in 2011 values) Insured losses (in 2011 values) Source: MR NatCatSERVICE © 2011 Munich Re (2011 Dollars, $ Billions) 2011 Overall Losses: $72.8 Bill Insured Losses: $35.9 Bill 2011 was the 5 th most expensive year on record for insured catastrophe losses in the US. Approximately 50% of the overall cost of catastrophes in the US was covered by insurance in 2011

8. trends Severity is up – frequency down Increase in direct sales Increased tort costs Drive to achieve higher underwriting gains due to loss in investing income. Maintenance and repair inflation is over 7%

9. Additional Concerns Global weather changes Increase in building near high risk areas Complacency High degree of investing uncertainty Low yield on fixed investments P&C net income in 2011 – 1.9% 2011 ROE – 3.9% 2011 Combined ratio 107.5

10. Insurance World Hard market – Pricing is good Soft market – Pricing is bad Underwriting profits – profitable companies paid to hold investable cash Premiums today – claims tomorrow and Inflation impact Trend soft turning hard – kind of

11. Connecting the Dots Soft market leads to higher claims ratio – lower premiums – recent history Tough investing market – Lower investment returns Inflation in repair costs – Higher payouts tomorrow. RESULTS - Pricing pressures for restoration contractors

12. Non-Insurance Influences Property equity o No insurance o I want mine o Lien holders Excess supply restoration services Increasing deductible – especially high risk perils or high impact areas Mild weather across North America Increasing cash out Litigation

13. Unknown Future Interest rates – what happens when the world stops buying Gas prices Taxes Employment and Unemployment Regulation Increasing employment costs Election year Inflation/Deflation Future of US Petro dollars???

14. Predictions – Less Restoration’s safe haven will lead to more competition Insurance payments will continue to decrease – at least in relation to inflation Less compensation for after hours, service calls, etc. Lower margins on emergency service Higher deductibles Managed programs continue entrenchment Earlier involvement in management of claim

15. Predictions - More More monitoring and project management required Core restoration competency expected but not rewarded Open file days becomes very important - faster Customer service measured on every job Clients have higher expectations

16. Big Picture Create a company that is nimble Manage overhead Leave a margin for error Be strategic and in control Study the market and be aware of trends Don’t fight the trends

17. Strategies Comprehensive financial understanding Customer service Economies of Scale Capital preservation Lean operations Outsourcing Staff assessment Strategic marketing and broad work sources Know when to say “no” Team involvement & leadership throughout

18. Comprehensive Financial Knowledge Need to know Strong analysis Understand ROI Stop feeling start thinking Key benchmarks

19. Customer Service as a SCA Zen Training and orientation Reinforcement and reward Top down commitment When it becomes a system it ceases to be a problem

20. Economies of Scale Protecting margin by specialization Leveraging fixed costs through flexible shifts Targeted marketing efforts Specialization and partnerships

21. Capital Preservation Many companies are not prepared and will fail Living on the edge leaves little room for error Lifeline Access to opportunities Staying power

22. Lean Operations Take a serious look at overhead Each line item needs to be defended Each staff position needs to be defended Balance between job and overhead costs Look near highest margin areas Management staff needs to perform Involve your team in solutions Run and manage budgets Be deliberate – Not about being busy – rather efficient

23. Outsourcing Look at the complete cost of in-house staff and services – understand how much overhead comes with each position. Midas Manager o Burden o Support staff o Vehicles and assets What is the value Not emotional What do you do best Office, field, management, marketing all up for review

24. Staff Assessment Benchmarking Quantitative assessment Qualitative assessment There are great candidates in each market Not emotional Create group of leaders and “owners” committed to being the best Individual work V multiple

25. Marketing Implement defined business strategy Diversification in work sources Results today and tomorrow Everyone participates Measure results Owner needs to take the lead Budget & focus on results today Effective online presence

26. Say NO! There are good and bad customers Limited resources and time Understand opportunity costs Customers, jobs, programs, partnerships, purchases Cannot be all things to all people

27. TEAM Your plans will be fought, theirs – implemented Communicate reality and goals WIIFM Collaboration a new way to work

28. Summary The Business world is changing You need to be in control YOU do not have to solve all the problems Opportunities will be created Become exceptional Prepare for the new normal Need to be profitable at all levels in your business

29. Thank You! Phillip@businessmentors.net www.businessmentors.net