Ep 177 - "Revenue Is Down? With Aaron Brunko and David Obert"

0:00 Well, bro, how are you? I'll let you have that one. I know. I saw that. I was like, wow, you really dragged your feet on that one. Yeah. I'm great, man. You are? Having a date night with my wife tonight. Okay. Boys are... Yeah, that's one beautiful thing about the summer is our kids are going every which direction. Yeah. Our youngest boy has a job. Oh. Farm job. Wow. 10 hours a day. Wow. 16 bucks an hour. Wow. Learning how to drive a tractor. 14. Isn't that cool? Yeah. Dude, when I was a kid trying to get the farming job, I think I made like two or three bucks an hour. Yeah. It's crazy, right? Yeah, that's bonkers. Yeah, that's good. He comes home exhausted. Oh, I bet. Just absolutely exhausted. And then he goes, he starts the day at 530. Oh, wow.

0:40 So Kara's been getting up and driving him to work. But tonight, he's sleeping over at a friend's house who's also working at that same job. Oh, yeah. So then the other mom is going to take him in the morning. And so we get a free night. It's great. Dude, that's awesome. Yeah. That's awesome. I know. He's a farm, too. That's great. That's going to teach you a good work ethic. That's right. Freaking great, dude. Yeah. Yeah. Okay. We have an interesting show. You know, it's funny. I feel like there's kind of this ongoing balance that we try to strike between, okay, what's going on around us? Yeah. What are we just silly, you're like interested in? And then just balancing that and kind of like, honestly, more time sensitive things that are being discussed or talked about as a group and trying to just balance like who we have on and what kind of topics we're getting into.

1:22 And, you know, it's fun. So David Obert, Aaron Brunko, you know, these guys are really intelligent men. I like them a lot. I mean, they're super strategic. We've had several interactions with David. He's kind of an AI tech nerd at heart. And so it's always fun to talk future with him and things like that. But I think what was interesting about this conversation is we're trying to find some more substantiated or reliable information and perspective on what is it that as contractors we're feeling this year. We felt it quite a bit last year, just this idea or dialogue around downed claim volume. And I actually found, this is not tongue in cheek, I actually found as we were dialoguing it back and forth, I don't think any one of us said, it's this thing and we're just absolutely bullish on it.

2:11 But it was like this ongoing discussion that kept pulling things to the surface, that when you talk about it, it's like that makes total sense that that's at play. Right. And I think one of the things that Aaron brought up, which hasn't been on the tip of my tongue, and it's kind of been the, maybe at some point I remember talking about this or hearing about this, but besides what could be driving that perceived or that felt reduction in claims, this comes up later and then we can... move on to the show. Yeah. But it was just the fact that we've also seen a lot of new players coming into the market. Yeah. Since COVID. Yeah. A lot of people coming into the industry, buying franchises, new franchises emerging in the last five years. Yeah. And I think often we're quick to forget that maybe, and I think the data showed that we're going to get into this in the show, that yes, maybe there is reduction claim volume and maybe there's more players taking the claims.

2:58 That's right. Yeah. Yeah. eating off the same pie. Yeah. That's something important for us to remember. But of course, what do you do with that? Well, I think then you just realize, well, I actually got to compete. I'm not going to get jobs handed to me. That's right. I got to compete for them. So, I mean, we ultimately identified, I think, five or six factors. Factors that I think all of us, as you hear them, can go, I can see that. And I understand why that's reasonable. And so it's the old death by paper cut. There's a handful of things that are likely at play right now that in conjunction with one another, it's creating an experience that we're currently going through. So anyways, I think it was a really fruitful conversation. Those guys are super smart and they were able to pull some data that they have access to that us as the average restorer don't.

3:41 So I thought that was pretty rad. And then of course we we did not skirt the fact that AI is at play. We've got some things changing and coming at us very quickly. And what does that mean for our people power? All in all, really robust show. I think it's a keeper for sure. And of course, I just like having discussions with those two guys because it's good. Well, they're bald and they have facial hair. And so it makes me feel better about myself. That's exactly right. So there's that too. Hey, enjoy the show. It's a good one. Let's go. Wow. How many of you have listened to the Head Harden Boots podcast? I can't tell you that reaction, how much that means to us. Welcome back to the Head, Heart & Boots podcast. I'm Chris. And I'm Brennan. Join us as we wrestle with what it takes to transform ourselves and the businesses we lead.

4:23 This new camera angle makes my arms look smaller than yours. I'm noticing that and I really appreciate it. I thought you did that on purpose. No, I don't. I didn't. And I am not happy with it. Aaron, David, welcome to the show, guys. It's fun to have you back. It's good to chat with you guys again. Well, wait a minute. For those of you that are maybe not just listening, but maybe you're watching, you probably noticed something that's a little weird. We are all hair challenged, clearly. At least on top side. There's some great facial hair going on. That's right. Some great facial hair. That's the poor of yours. Yes. But this is Bald Bros, for sure, in terms of guest haircut. It's pretty epic. You don't get to see that every time. Yeah, we call it Bib. B-I-B.

5:04 Bald is beautiful. There we go. I am feeling bored. There we go. That's great. That's good. I'm feeling bored. Well, guys, listen, we wanted to have you on to talk about, there's a lot of stuff happening in the industry right now. I feel like that's a phrase that people have been using, especially for the last couple of years. There's been lots of talk publicly around the reduction in claim volume. I think a lot of people rolled into this year thinking optimistically about, oh, claim volume is going to return. We're going to have a great storm season. We're going to refill the bank accounts. And of course, up to this point this year, it's been a pretty tepid weather market. It's been... claim volume has continued to be lower than people's certainly desire. And we figured you guys are industry insiders and sort of have a broad perspective with the work you guys do, both hearing from contractors and all of this that maybe you can help bring some perspective to us.

5:54 But that's where we thought we'd kind of maybe kick off the conversation and then see what other trends are afoot that contractors need to be aware of. But I'm just curious to have you guys comment on this whole thing of, God, claims volume is down. There's a lot of people asking why. We have our opinions. Wayne recently posted kind of what became a viral post on LinkedIn about this of, you know, clearly deductibles are having an effect on this. 12 years ago when I was parting waves with State Farm and moving into our industry, State Farm was rolling out a mandatory 1% deductible. And this was all the way back in 2012. Now that may have been just a... a Northwest underwriting decision originally. But my understanding is they've expanded that across all new policyholders that most homeowners contracts now have a minimum of a 1% deductible for their dwelling coverage.

6:40 And so inevitably, when we've been accustomed to, let's say $3,500 to $7,500 average job size on the water side, somebody's got a $3,000 or $4,000 homeowners deductible, there's a lot less people that are going to go ahead and file that claim, right? And they'll pay for it out of pocket or they'll figure out a workaround From your guys' perspective, how much of the claim volume is being driven by that? And what are some of the other factors that you guys are aware of that are really driving this? I'm going to jump in really quick and then Dave, feel free to augment it. You touched on a really important point in terms of just the economic situation related to deductibles, nearly doubling since COVID. The other thing is the incurred but not yet reported situation.

7:20 How many people are afraid of getting dropped by their insurance company? Oh, man. So if I file a claim, I'm seeing the tension, the pressures, I'm seeing different endorsements show up, maybe around roofing in particular, but am I worried about getting dropped? And so maybe I'll just eat that smaller water claim. And I'm speaking primarily on the homeowner residential side. I'm curious along those lines, are you seeing from your guys' seat any kind of intentional language potentially being leveraged by carriers or messaging around this idea of, I'm not sure... what the real phrase is. But the idea is that they're playing the politics, playing the proactive financial kind of stewardship and trying to use some language to prevent or slow people down from filing or processing claims.

8:10 Or is that too malicious intent on my part to consider? I mean, loss avoidance is still a thing, right? The best claim from an insurance company's perspective is one that never happened. And so you see the water shutoff valves, you'll see different companies talk about how they're progressing in the commercial side of businesses, where if, let's say you have a large office like we have here and you have everybody gone for two weeks at a time, if you have a water incident and it goes for a week, that would be probably pretty damaging. Whereas if you have a shutoff valve in a larger commercial building, that's something that I think companies have further incentivized their policyholders to leverage.

8:51 But on the homeowner side, I don't think the shutoff valves have been very meaningful. So I do know that there's been a little bit of movement on some of the remote sensing stuff. You have flood sensors or your refrigerator has a sensor on it if it shuts off or whatever, and they'll get a notification on your phone. I have seen with some carriers, I happen to have one that has done this, where if I have those sensors, they'll actually give me a little bit of a break on my premium. If I can illustrate that I have a security system that has these features built into the security system, as a for instance, a company just down the road, they actually will provide kind of a detailed readout that you can provide your insurance carrier if you ask for it, that you can kind of slide it across the table and say, hey, but I've got all these sensors in my house that's going to be a security system.

9:36 for theft, as an example, right? That's an easy one. That's not even a hard one. But you start thinking about some of those other flood sensors, the carbon monoxide, the fire sensors that are all tapped into these security systems. If I provide that to my insurance carrier, I actually get a reduction, kind of like, you know, the little plugs that you stick in your car. And you got it that you drive around on and don't buy a Tesla just for that reason, because they track all that crap nonstop. And your policy changes every single month. But don't worry about that. But they do, they have some quote unquote forgiveness of your policy if you have some of those sensing features within your house, which is useful, I think. Sure. And helps, you know, to Aaron's point on the commercial side, you know, having a water shutoff valve, auto water shutoff valve when a flood's detected or something like that.

10:22 Don't have anything quite that extreme for your house, but even just those minor things that can detect some of those things. are beneficial, certainly, and can help. I kind of jumped into the depth of that a little bit. I want to make sure that we kind of hear from your guys' perspective some of these other elements that you guys see or can identify or maybe communicate, what is impacting claim volume right now? Like, what is going on? Do we have substantial answers to point towards or what's going on? And that's where I was going to ask the question, what have been the events that have taken place this year? Right. Is this event driven or are we talking about daily normal claims that occur or damages that occur? And are we isolating to any particular peril?

11:04 Right. So are your listeners primarily focused on like water mid and then reconstruction post water mid and then maybe your fire smoke damage claims? Or is it also roofing as an example? Because the two, depending upon, you know, when we talk to our typical restorers, they perhaps don't do a ton of roofing, right? You have a lot of roofing companies that are out there. And so maybe roofers are doing really well right now, but the water mist side might be struggling. And so when we look at like overall assignments, you have to kind of cut it up and segment it to be able to answer the question. And what are you guys seeing on your end? Can you speak to that? It's kind of on the spot, but what are you guys seeing from that perspective? Yeah, well, and to Aaron's point, it does vary substantially, like from a roof claims perspective versus from a mitigation perspective.

11:47 But overall volume, I mean, we anticipated coming off of the end of last year because we had two large hurricanes that hit Florida, right? And the Panhandle area and up through North and South Carolina. The expectation was we would have a long tail from that. So we thought that we would see a lot of claims volume coming in in January, even into February, given historical data and what we saw in previous storms. Often there's a pretty decent sized tail on the backside of that. And I will say from a claims volume perspective, we actually didn't see that. it dropped off pretty quick in December. So we saw this massive influx in November, October, November, and then December started going quiet. And then by the end of December, a lot of that volume was through and was settled.

12:29 And so, and that's good for the policyholder. No question, right? Like that's really good for the policyholder. If I'm a policyholder, I want my claim closed as quickly as possible. I want to get made whole so I can get rebuilding and start moving things along. But from a volume, you have this flash in the pan and then it's just kind of gone. And so I think a lot of restorers felt that. Where we went into January and February, it was quiet. It was really quiet. We didn't have a lot of freezes. We didn't have a lot of things going on. We did start seeing some spikes in more hail volume come March and April, where we actually saw an increase, substantial increase over January and February. where just those storms between, and this was more hail damage specifically, but just those storms coming through in March and April actually almost offset the lower amount of claims volume in January and February.

13:17 So if you're on the roofing side and we're doing more roofing type jobs, you're doing pretty well in those two months specifically. It's quieted down a little bit. We've seen a bit of a dip, though we're not substantially below what we saw last year in May and June. But we are a little bit down. I would say we're probably five-ish percent down year over year, just from a volume perspective. But certainly March and April, I mean, March and April were well above what we saw last year. And last year wasn't a small hell year either. There were a few storms that went through Colorado that really hit hard and resulted in a lot of claim volume. Again, this is hell. You know, we're talking hell season here. And if you're on the roofing side, you're seeing a lot of that. Now mitigation, are we seeing lots of floods and things like that?

14:00 Mitigation, not so much. And even though there's a lot more people going to work now and all that type of stuff, there's still a lot of people that are staying home. So people are catching flood type of activity a lot sooner than they perhaps have in the past. we're seeing a decrease in mitigation just overall, but we've seen that trend since COVID. That's not a new trend. Yeah. Okay. So I don't know if the average person listening right now, maybe they are, maybe they're more keyed in, but I'm not sure many of us have retained that perspective or fully understand that the at-home workforce shift that was clearly present during COVID-19 We all know that thousands, millions of square feet of commercial space is not still being used.

14:41 So clearly the entire American workforce is not back at work. Is that realistically a contributor to what we're seeing in terms of volume being down? Is that viable? Is that data-backed that that's a contributor? I certainly think there is data to support that. Is that the only contributor? No, I don't think so. But I definitely think it is part of the story. I think there's more to the story than that. But I certainly think, given the percentage of the workforce that is back in office, it's a large percentage, no doubt. But there is still a substantial, compared to pre-COVID, There's still a substantial amount of people that are home. I mean, to your point, to your point, Brandon, there's still a number of folks that are sitting at their house and they are working from home.

15:23 I mean, we still have a substantial workforce that is remote now. I'm not even at home, but there are just remote employees that we've hired in. Sandusky, Ohio versus here in Lehigh, Utah at our office. And so we still have a substantial amount of that. They can catch that stuff earlier than perhaps they would have been able to in the past. Aaron, I know you got more data there. Well, no, I'm just so, you know, my first question was, okay, so what have we seen this year? Right. And so I quickly jump into our PCS CAT reporting. Yeah. and just look at the total for what's been reported year to date of 63 billion, right? And if you look at that 63 billion of estimated losses, what were the big drivers? The two big cat events is going to be the Palisades and Eaton Fire.

16:07 Just from a quantum perspective, right, that's the big things that have happened. Beyond that, you have maybe a couple of smaller winter storms, and then everything is wind and hail, wind and hail, wind and hail, wind and hail. And so, you know, you really didn't get the big freezes. We've seen some pretty big freezes in the last couple of years, right? Everybody remembers the big Dallas freeze, right? Yeah. I think the exterior damage, right, Dave, when you talk about, you know, the 5% differential, some of that being the rollover from the hurricanes. But then again, I think it's just random variation in the system. You're still going to continue to see more severe convective storms, right? I believe, but maybe the interior water damage, maybe you'll see less of that because of, I would say, a multitude of variables.

16:51 It could be, Dave, to your point, related to some of folks that are working from home still. And so you're catching those things. And so you're mitigating it up to maybe what the deductible threshold, which did increase. Right. It might be compounded with the fact that I may not want to file a claim because I'm worried about getting dropped. And maybe my kid just had an auto accident and I have a bundled umbrella policy. There's so many different variables that go into this. I think it would be a pretty interesting research project to maybe double click into that and spend the time to go through it to evaluate each of the variables and know what's a net positive contributor or a net negative contributor. Well, and it's curious too, because I'm just kind of like chewing on our current book right now in terms of how many of them are active storm chasers, how many of them are in more storm prone or environments that there's some kind of annual kick due to weather events.

17:46 We're based here in the Northwest. And to be honest, I feel like everything is kind of the same all the time. We certainly have some winter that affects us, more so in central or the eastern side of both Washington and Oregon. But in general, the weather's kind of never too bad in one direction or the other. And yet teams here are still talking about some reduction in claim volume or claim friction or something that's having a negative impact. on their overall revenue for the year. And so I think there's a pretty diverse mix of folks that are listening in terms of how much of their business is affected by annual weather event based in their market, or if they're doing any kind of storm chasing or anything like that, versus not.

18:28 And I think that that's kind of where we get a big of a question mark is, Yes, if you're in Florida and you're used to having a storm every year to two years, that certainly can have a profound implication on your P&L. But for those teams that aren't storm chasing or they're not even necessarily living in a real storm prone environment, they're still on the residential side at minimum, like this down claim volume, at least perception. What's affecting that? I don't know. Specifically, what are your guys' thoughts around some of the continued consolidation on the carrier side? We've seen a reduction in field staff. Not saying that implies there's a reduction in caring about the client, but there's clearly not the same field staff numbers that we've seen in the past, or maybe the length of time and grade out in the field?

19:15 Does any of that have a factor on what's happening potentially in claim volume? Is it TPA related? Is there any other things or signs that you guys are seeing that's potentially creating some of this downside? Again, it goes back to, I want to look at it year over year, right? I want to look at the last five-year trend. We heard this at the beginning of last year that people felt like they were down. I don't know if that normalized over the entire year, right? So we heard that for the first half of last year. It'd be interesting how many folks are down from last year, but then is that up from the year prior? So like, what does that five year compound annual growth rate look like? Is it positive? Is it negative? When you look at it over a longer horizon, and that might be where it's variation.

19:59 The other thing is how many more new entrants are in a given market, right? Are you now competing with other firms that perhaps weren't in your market before? And when you start to look at the aggregation, I'm going to go to the other side of it with private equity. When you have private equity that's consolidating more and more companies, to what extent does that have on perhaps another company's economics in a given local area? So, yeah. Again, I think there's a ton of factors that at least you would build a hypothesis around and then try to dig through the data to see if you can support the hypothesis without it. I mean, you can manipulate data to tell about whatever story you want, but you know how that goes.

20:41 I also think it's something that we often talk to insurance carriers about. They're experiencing three major challenges and have for a while at this point from their perspective. And this does translate into the way that they interact with the restorers, too. It's severity and frequency of storms. It's... turnover in the market. They're experiencing insane amounts of turnover. We're seeing the tenure of the average adjuster dropping substantially. I was talking with a head of claims not too long ago, and I put these up on a slide and I said, do these speak to you? And her oh my gosh, you have no idea. And she went straight to the turnover within the industry.

21:22 And she said, it's very, very difficult for us to train up a claim rep and then just keep them for more than a couple of years because they bounce out and it's infuriating. So as the claim reps out in the field are interfacing with the individual restores, there's frustration there. And from my perspective, and based on what I've heard from restorers, There's more tension there than there ever has been. And part of that is their old claim rep that they've been working with for the last 15 years, who they know and they understand, they know how they work together, they understand the way that they create their estimates, they understand how they make the policyholder whole, how they interface with the policyholder as part of the entire workflow. That's no longer there. They don't have that person that they can interface with.

22:04 So there's a new frustration. There's always been some level of tension, and probably proper tension, candidly, but at the end of the day, now it's actually increased because there's this new frustration. This claim rep is brand new, doesn't understand what they're doing, just came out of claims you or whatever, and is now out in the field and telling me that they're not going to prove this estimate. This is not out of the norm. This is what I need to get the policy holder whole, but they're not tracking with me. And it becomes this new frustration for the restorer. So that is directly impacting. That said, I will say there is some light at the end of the tunnel. To Aaron's point, if you do look over the last five years from a severity and frequency perspective of storm activity and just weather activity, it is increasing.

22:49 Hurricanes are increasing generally. There's no question. The data supports it. Now, whether or not it's shifting right or whether or not it's impacting areas that exist from a In 2024 compared to 2023, 2024 seemed like a relatively quiet hail year, but the reality was it wasn't. There was the same amount of hail that fell, and our weather data supports that, substantiates that, but it didn't hit in as highly and densely populated areas. So still the same amount of storms that went through, it just happened to not hit Dallas-Fort Worth area. It just happened to not go through Oklahoma City or those types of things. And so it's not that they didn't happen. It's just that they didn't impact quite as much of the population.

23:31 And with population consolidation that's happening where you've got a migration into some of these metropolises that didn't exist before, especially in the Florida area now. The Texas area, we're seeing massive influxes of people moving from other states that see storms less. California, we've seen a mass migration into Texas and specifically the Austin area. I was just down there yesterday and Austin has blown up. It's crazy. But we're seeing this migration. So when those hailstorms do hit, we see more impact than we've seen in the past. just by virtue of the population expansion. Yeah. So a good data point on this. So I'm looking at an industry report. I'm not going to say who they are, but it's, I'm looking at the last three years of direct losses paid for homeowners multi-parallel.

24:17 2022 was 78.4, 78.5 if you round up, 100.2 for 2023, and then 2024 is 94.1. And so when you look at that, yeah, 2023 was higher than 2022 and also higher than 2024 on all direct losses incurred and also direct losses paid. And then if you extrapolate that to a combined ratio, which is basically the success of insurance companies overall, they were at close to 100% combined ratio for 2022 and 2023. Some over, some less, but in 2022, it was greater than 100%. which means that every premium dollar you took in relative to what you paid out in claims, you took a loss.

25:02 You had an underwriting loss in your business. And 99.26 is 2023. And then it drops down to 90.55 in 2024. So insurers have needed a little bit of a relief from what we've seen with a lot of inflation, a lot of variability in storms. And it looks like they sought for all intents and purposes in 2024. I think they also got pretty tight in terms of very focused on expenses. Right. They want to make sure that they are paying what's owed based upon the policy contract language. And so there is a little bit of a rub from that standpoint, I think, with the policyholder, also with the restorer. But at the end of the day, I mean, that is not a sustainable or resilient industry if you're paying in excess of 100 percent combined ratio.

25:45 Yeah. And so. Right. I think that's part of the pressures that the industry has spelled. And that ends up hitting the policyholder and the contractor because insurers have to do something different in order to survive. It's kind of the age old death by a million paper cuts, right? Like there is no one thing necessarily that we point to. But I think in general, you guys are highlighting pieces of information that the average listener is not getting access to, right? That's not their world. We're such on the contractor side versus more data analytics. and global perspective on insurance in general. You guys both keyed in on this idea of new entries though into the space. And I want to hang on that for a minute because I'm wondering how much of that really could be at effect here.

26:30 Because in general, I think that when PE... And I'm talking slightly outside of my neck, so this is not certainly my specialty by any stretch. But when PE comes into a market... there is a lot of attention that tends to get vacuumed in behind that movement. So the forward thinking, the strategists are seeing the opportunity. They begin to move into that space and then they bring a plethora of people to help with due diligence. They bring new kinds of investors and folks that are now thinking about an industry that maybe they weren't. And one of the things that I think Chris and I have both witnessed over the last, probably most in the last 24 months, is a major change in the profile of individual that's coming in and either joining a franchise or spinning up or buying a smaller restoration company with the intent to scale it.

27:20 And so it's like, I can't, it's crazy how many people with MBAs, financial backgrounds, like I don't believe I've ever seen the number of people coming in with the level of, Backing, professional degrees. Yeah. Professional degrees. Professional degrees. Yeah. And so then I kind of hearing what you guys say, and I'm like, that makes sense. Like if I've been an operator in a market for the last two decades, and now all of a sudden I got two new operations that potentially pop up, and these are ran by people with a sophisticated financial background and know how to scale something... I'd imagine that's going to create some tension in my market that maybe I had no exposure to in prior years. Do you guys see anything that would validate that or add some perspective to that idea?

28:04 I haven't looked at the data in that context. I don't know if you have, Obert, just in terms of digging into it. And it's going to be a little bit tough in the data, too, because sometimes when a company gets rolled up, the strategy is to keep their brand independent. So that they can continue to service in that market and perform as their brand had done before in the past with perhaps more sophistication, if you will, from a financial point of view. At the same token, if you were your primary sole equity owner of your restoration firm for the last 10 years... You had up years and down years, but you didn't really feel as much pressure on that as perhaps you do now when you have a private equity sophisticated company who looks at this and says, what is my ROIC in the last quarter or the last six months?

28:53 Right. First half, second half. You're going to be feeling a lot more pressure and asking a lot more questions than perhaps you would have beforehand. Yeah, yeah, it makes sense. I mean, from a consolidation perspective, I mean, it is tough to understand how that consolidation is happening, though, I mean, we hear about it all the time. And I'm sure the restorers that are listening in, they feel that, right? They feel that consolidation. And some of them, they want that too, right? They're looking for that support, that backing or an exit. There's a number of folks that do want out and they're looking for that consolidation, right? But that said, when you have the capital to back, it's incredible what you can do and how much market share you can gain. So there is that push just by virtue of I'm mom and dad's electronics shop and I'm going up against Best Buy and Amazon.

29:38 I mean, it's doable, but it's hard because they have all of the benefits to their size and that capital that can help them expand. And so they have marketing abilities that you don't have. They have millions of dollars that they could invest into something as simple as I'm going to put some things on TV, right? In my local market. I can't do that. I don't have the kind of money to be able to put something on TV or even make the commercial in the first place. So how am I differentiating myself from them? You know, Google reviews or Yelp or whatever, like those are all important things. But when somebody goes to reach for their phone, who are they going to call? It's the one that's in their head. Or whatever. And so there are these economies of scale that exist that make it more difficult for the individual restorer.

30:22 So while volume may not actually be down at a specific time of the year, you know, an individual restorer may still be filling that just by virtue of some of those consolidation factors. Yeah. You caused me to think about also other cyclical or let's call it vacillations within the market, which might be before it was you'd vacillate between MRP and then getting off of the MRPs. And then you'd have a couple of carriers who do their own direct repair programs. You know, the other thing that you're seeing is, you know, some of the bigs who do their direct carrier relationships. Right. And so as those become more established and more formalized, then you end up with kind of your point, David, where you also get a different economy of scale with some of the larger firms that maybe have a direct relationship.

31:06 And so it's no longer the same distribution model because of some of those cyclical natures and or new things that change within a market. And AnswerForce. We tend not to give the attention to our call intake that I think we really ought to have as restorers. And of course, one of the biggest challenges we have with our call intake, whether it's an in-house receptionist or a service like AnswerForce, is what do you do when your receptionist goes out to lunch? Well, AnswerForce makes that very easy to solve for, right? They're 24-7. You have a receptionist or a call intake person that's out for maternity leave, out on vacation, etc., etc. AnswerForce has a solution to all of those things. And I think, too, it also solves for us having a very consistent, repeatable call intake process.

31:48 We all know how important that is. 100%. And the cool thing is actually we just hung out with these guys and they let us know, let us in on some big feature updates that have recently been pushed through the system. So first, verified contacts, right? So verified contacts, basically it allows the system to understand that this is a repeat caller. And then it allows them to auto capture and fill those details as part of the intake process. So smoother, more professional intake. Much easier to kind of give that client that impression that this isn't the first time you've called. Right? Yeah. And we'll listen to the rest of these sets because I think they're super applicable to our commercial opportunities. So specialized scripting. Okay. This is great because this is everything from holiday shifts, after hour shifts.

32:28 I mean, you name it. There's different reasons, right? Or different layers of the cake, if you will, just based on what's going on in terms of call volume, what's going on time of day. And so with specialized scripting, the script then will match that. And so it's shifting live, if you will, along with that kind of richer context of what's actually happening in the business. Then this other thing, I thought this was super cool, is dedicated phone numbers. So going back to that repeat client or that key client or customer, we now can associate a specific phone number to them. And so what happens is they get received very uniquely, right? So I can imagine creating a custom script for that client.

33:08 We now can recognize a repeat caller and autofill and speed up their intake. And then on top of that. There's a specialized number that's dedicated to them. So you really get to marry up that professional service offering, right? That we're promising, if you will, during the prospect. And right from the jump, if you've got a commercial client with specific needs or specific expectations, build that into the script at call intake. Wow, that's beautiful, man. Yeah, it's super powerful, super powerful. Another one is just access to information wherever you are. So I don't know how many of you are already currently using AnswerForce. You should take it seriously in terms of getting a demo and checking them out. But if and when you shift over to them as a partner, the cool thing is now is that you've got access to all this data, all this information on the go from anywhere on your mobile device.

33:53 And so you can literally check inbound, outbound calls. You can listen to recordings. So... actively coach the team kind of like midstream, right? And so again, just a ton of efficiency, a ton of automation, and just higher levels of customization coming out of AnswerForce. And it is so stinking affordable. This isn't just for big multi-million dollar companies. This is for you that's still working out of your home shop, your garage. And it's also for you that are running a $25 million operation with four locations. It's just, it's pretty extraordinary. They work with some of the biggest companies in our industry and many of the smallest ones as well. So, okay. Actionable. So guys, we have talked about our friendship and relationship to these guys for a long time.

34:35 Many of you know, in the recent probably year and over the last several months, just this hyper focus on the efficiency and quality. of our estimating, right? Like at the end of the day, our cash flow is heavily impacted by our team's skill and competency around writing a really comprehensive sheet and really making sure that the scope is accurate. And one of the powerful things that Actionable has is their actual Xactimate profile. And this profile is a live AI tool that's monitoring you as you write the estimate. And as you're implementing specific line items, it's helping you be sure that you've really taken into full account all the individual elements and line items associated with this element of the scope that you're trying to accomplish.

35:21 And I'm not going to highlight any specific teams, but we have heard robust numbers from teams using this. We're hearing anything from 5%, 6%, even 8% top line growth, specifically from the quality of their estimates increasingly. I remember when they rolled this out to you that one of the use cases or part of the value that they were trying to hit on is the ability for us to bring up a new estimator quickly up to the standard and competency and the results ultimately of the more experienced estimators on the team, right? So this is an incredible onboarding and training tool to get somebody up to where they're very, very competent and producing quality estimates just that much faster.

36:01 Way faster. And just one last thing I kind of want to hyperindex on is they have just an absolute boatload of white papers and F9 supporting notes. And so this is something that you could participate in being a member with Actionable Insights. But guys, we all know that getting our estimates approved in that negotiation phase is hard right now. It just feels like every carrier is significantly understaffed. They're fighting for error. We're fighting for error. And anything we can do to reduce that friction is better. And so the better we are at providing really good support for what we're calling out in our scope and why we're calling for it, the better. And so these white papers, these F9 support notes are super powerful.

36:42 Man, it's been a little while, but we've been kind of refueling the relationship with CNR quite a bit lately. And that's been good, man. I think both teams got so dang busy. We had a tough time kind of locking in and getting some face time together. But the team over at CNR has been great for our industry, you guys. You know, we've often referred to Michelle as a friend of the industry. She really is keyed in on giving us what we need in terms of tools, communication, intel on the industry. And so we just continue to encourage you guys, participate, make sure that you're receiving your quarterly copies and that you're getting all the online content that just comes in boatloads from their team. So CNR Magazine, guys, pay attention, make sure that you're participating and getting your intel from that team as well.

37:26 Liftify, bro. Yeah. Liftify, you know, it's interesting. Yesterday, I was just seeing one of our clients was getting awarded their 750 Google Review trophy. And they were already talking about hitting 1,000. 1,000. That's right. Which somebody has done. Yes. One of our clients has done. It's remarkable. And I think the most remarkable thing that people are discovering, and we're seeing this every single day with our clients, is that when you start upping the volume of Google reviews you're getting consistently week after week, the recency, when you're getting the recency dialed in and just meaning every week you're adding Google reviews to your profile, dramatic jumps in organic...

38:07 phone calls and lead gen. And of course, who doesn't want that? Every single one of us, including Floodlight, we want that. And that's why we've indexed on, we use Liftify to build up our Google reviews. So it's a simple turnkey service. They've really created a process for capturing the most quality Google reviews from the jobs that you're already getting. So if you want to get more work... grow your revenue just off of the existing work you're already getting. Liftify is a big part of how to do that. And it's simple. It's very, very cost effective. From our experience with Liftify and what we've seen with our clients, significantly better value and better results than many of the other platforms that some of you might already be trying.

38:47 So if you're not happy with the number of Google reviews you're getting, you need to reach out to Liftify. And I think as a point of reference, it's worth us saying. Liftify expects 20% to 25% conversion. So think about that within your own numbers. If you're doing 1,000 jobs a year, you should be adding 200 to 250 Google reviews to your profile every single year. If you're performing under that, You owe it to yourself to reach out to liftify.com forward slash floodlight. You know, one last thing to add to that as part of their kind of more recent integration of AI or advancing that integration of AI. One of the big focuses for their team is gathering more live project data and analytics for you guys. And so really what this is focused on is equipping all of us to create better customer experiences.

39:32 so not only are they keyed in and driving google uh reviews for us but now they've actually turned the corner and began developing toolkits for us that use liftify to actually be getting information that can help us modify our service delivery to create better client experiences super powerful midstream we're talking mid-job yeah wow super powerful all right liftify.com all right guys thanks for hanging out with us let's get back to the show Well, I think, have you noticed, like, it seems like in the earlier days of TPA, like, what do I mean by that? Let's say six to 10 years ago, it seemed like the carriers chose a TPA.

40:14 Like, I'm on X, and that's where we deliver all our claim plan. Now I get the impression, in my experience, has been they're going to be on several simultaneously. And so I just wonder also what happens when you begin to water down even the carrier channels that they're distributing claims through where you might have really worked your face off to become... all dialed in with alacrity or whatever the case may be. And now they're only getting a third or maybe a fourth of the claim volume that TPA was seeing originally because now that carrier's on two or three other TPA programs simultaneously or have a national direct-to-vendor relationship. Is that true? Is that me telling a story?

40:55 Yeah, there's more TPAs that are involved in the mix now. There's greater competition in that regard. And then, yes, we've seen that more carriers take a diversification approach from both a mitigation and also a restore perspective. And we're also starting to see that shape up in roofing, too. Right. So you really kind of have those three different elements that some companies will have a more formal mitigation program and they'll have multiple riders. And then other companies will go all the way in. So it just depends upon the carrier's model and how that changes over a period of time. And they're different. Every carrier is a little bit different in how they approach it. And I think that makes sense too, because if you're, like Aaron was talking about earlier, if your combined ratio is upside down, What are you going to do?

41:39 You're looking for cost savings. How do you create a cost savings environment? You create competition. So if I bring in more, what does that ultimately do? That should benefit me as an insurance carrier to drive that price down because now they're competing with each other so that I get a better price. I mean, there's some economics that are at play there. If I'm sitting in the insurance carrier seat, it makes sense. It's pendulum swings, right? Because what goes down is price goes down. Yeah. It's really crazy. Quality, right? And then somebody goes, okay, we're going to have to really focus on the policyholder experience and really competing from that standpoint. Because claims and restoration is where the policy contract, the actual product exists, right? Like somebody told me a story about a USAA general.

42:21 Somebody's like, are you so happy I just cut you this check? And the general held it up at the damage and goes, nope, that doesn't fix it. I need somebody to come in and fix the hole in my ceiling, right? Not pay me a check. Right. Right. And so there's that element as well, where it's like, I don't want the money. I want to be restored whole as if it never happened again. And that's what this, you know, restoration community really brings, especially in somebody's kind of worst day, if you will, where their home, their greatest asset has just been either demolished or something happens. Right. It's a very personal thing. I think when we get into the psychology of a homeowner, when they have damages. Yeah. Yeah. And that's a differentiation for carriers too, right?

43:03 I can provide better service to my policy holder, which reinforces the goodwill equity of my brand when I have a great restoration. Yeah. That's a whole nother show, my friend. A whole nother show. Do you guys mind if we pivot the conversation to estimating a bit? Because COVID has come up a lot. And obviously, that was a real transformative, I think, just in our culture overall, business-wise. But over the last five years, we've seen a huge proliferation in remote estimating. Some of the big companies are centralizing their estimating, and a bulk of their estimates are coming out of some centralized site. They have a West Coast estimating team. And even smaller companies, multi-site surf pros and puro cleans and independent companies are centralizing their estimating services and people are in some back office generating estimates or the field teams are sending them data and so forth.

43:54 I'm just curious, as centralized and remote estimating continues, I think most of us assume it's going to continue taking over What are some of the challenges or problems or opportunities that you're hearing from contractors in terms of tools, technology, maybe business process? What have been some of the things that have kind of floated up to your guys' level with regard to this whole remote estimating trend? Go for it, Aaron. Go ahead, Dave. No, go for it. Aaron's got one lock and load. I can tell. Well, no, I'm just, so when you talk about remote estimating, I think about it in terms of not just restoration. I think about it in terms of the total estimating strategy that we see across the market, right? And there's insurers that have back office processes that perhaps don't happen here in the U.S. for estimating, right?

44:39 Where certain information is shared to their own employees in certain regions across the world. And then those estimates get written and they're ready to go for the next day, as an example. You have other companies and you have companies like DocuSketch who offers estimating services. We've seen it with Planner, right, with Andy and team. So you start to see some of those things kind of come up. And then you have other restoration firms that really try to economize around the estimating function. And really, it's specialization versus generalization. If you have one estimator that handles X amount of estimates per week, if you can specialize that into an office and remove the windshield time, what is your differential in terms of unit economics that you can pump through for that estimate?

45:26 And then what are also your fixed costs that are associated with it? And I don't want to say this, but I'm going to say it, Xactimate licenses, right? So what are your other mechanisms that essentially shrink in terms of your expense when you specialize versus generalize? But you also have to evaluate what you're giving up to, right? What about lost context? How many additional corrections are you going to have? How do you show up on a score with a TPA now? Right. There's a ton of variables that you have to think through. So, Dave, that's what was rambling in my head. Go ahead. No, it's good. It's good. That's good. I mean, I think, listen, I think that the future of estimating is going to shift. I really do believe that. I think there's going to be far more automation.

46:08 I think there's going to be far more data intelligence around what an estimate looks like. I think there's going to be a lot more that will be done on your behalf, and it will be more of a validation step and verification step in the future. I don't think it will be as manually process-driven as it is today in the future. I really don't. I don't think it's that far out. I mean, I'm sitting here with my crystal ball, and that's what it's telling me for as much as that's worth. But the reality is, I think that's where we're headed. And everybody's trying to solve this to some degree or another. If you think about what you do on the roofing side compared to what it used to be, I mean, getting up on roofs was a thing all the time. You're out there measuring, you're out there doing all that stuff, climbing up there, ladder assist all over the place.

46:51 And I mean, that was the workflow. That doesn't exist so much today. It still happens, certainly, but it's more often there's nuance as opposed to every single time. And so Things have shifted and changed through the introduction of companies like Eagle View and Nirmav and Hover. These are differences that we experience today that we didn't have 20 years ago, 15 years ago even, that have fundamentally changed the way that we do even just roof estimates. What's that going to look like for interiors? What's that going to look like for mitigation? What's that going to look like for siding and fencing and all of those different things? I think we have the capabilities that we've never had before through the introduction of generative AI, through a number of different ways, machine learning models and so on, that will fundamentally shift the way that we estimate specifically.

47:40 And certainly, we're going to look at the capabilities of the AI. We're at the forefront of that, as we should be. And Berisk is all in on working through that in coordination with our partners, in coordination with the market, obviously restores, carriers. And we're working with all of these different entities to help usher this new world that I think is coming sooner rather than later. Now, is it tomorrow? No, I'm not worried about tomorrow. But I think in the next three to five years, we're going to see a different way in the way that we estimate, certainly. Yeah. So I'd like to poke at that timeframe a little bit because I'm with you. This has been something, Chris and I have been bullish about centralized estimating practices for quite some time because we just, I won't mention any company names.

48:20 I'm not sure if I'm supposed to or I'm, anyways, there's teams that some of us are aware of that have been working on the very front edge of bringing some of this tech to our space. Obviously, when things like Matterport and DocuSketch and all these different tools became so readily available and we can put them in our hands for fairly low cost, really, at the end of the day. I'm like, it's coming. Really, the data entry to create a robust estimate, those days are numbered. It's going to come down to how good are you at gathering scope data to make sure that that estimate can be as accurate as possible. In my mind, I keep thinking, we're 18 months. We're maybe 24 months where a solid amount of the estimating is completely AI-driven.

49:02 Yeah. What? And you're saying three to five years. I'm trying to not scare everybody, Brandon. That's what I'm trying to do. I mean, but what's your gut telling you? Blooting ourselves. I mean, the gut is, you're right. I mean, I certainly, at least from an augmentation standpoint at minimum, like will it be doing, you know, one of our stated goals is that 80% of the estimate is completed. And then that last 20% is the validation step where you're going in and making sure that what the system has decided is correct. And we have a number of different initiatives that we're working on, both organically and with partners where we're pushing down that road and we're really excited about it.

49:42 Now, I don't want to say too much because I don't want to get it out there because I don't want to sell something that is not available yet. But the reality is we are investing heavily in that approach and we're all very excited with the future and the outcomes. We have insane amounts of data to drive this. We have like previous claims history. We have, I mean, all of this data that can help build what could be a model. You tell us you've got a flood in one we likely already have the sketch. And not only that, if you tell us which room it is, we could probably identify the room and the size, and there you go. You think about roof damage, we know from a hill perspective, we know the direction, we know the impact energy. We have that data at our fingertips, and we can model that and say, only phase one, two, and three of this property was impacted by the hill, Here's what the likely damage is.

50:30 You don't need to replace the entire roof. It's a repair. And here's the faces impacted. Here's the material. And here's what we estimate the damage to be. Think about that. That's not that difficult anymore. And so that's what we're really excited about. Go ahead, Aaron. So you touched on something that I think is an important concept, which is, so we're talking about scoping, right? Scoping is what you have to drill into was, was really, I think your comment. Well, scoping is just context. So if you're going to have Gen.ai write a letter for you, as an example, or to do a task or whatever, what's going to be the context for that? You're going to provide it some bit of information, some system parameters to be able to get the quality outcome that you want without hallucinations.

51:14 So Dave, when you think about what is the system context that's going to drive those accurate estimates and results, it's going to be historical. So to your point... It'll be multimodal. So it'll be computer vision. It'll be some of the things that you tell it. And that's going to frame the context for the quality output that you can stand behind and have trust, just like you do today. Yeah. And that's an important aspect is you've got to be able to trust it. It has to be right. You know, this reminds me of a conversation we had with Watley, gosh, probably as much as two years ago when we were talking with him about impartial and what they were trying to do there with the machine learning and the visual computing and so forth. And the big thing that he kind of hung on in terms of like the current status of that technology was basically the software can detect virtually everything, but it can't differentiate between, say, 2CM granite versus 3CM granite.

52:05 And as I listen to you guys talk and I think about all of the data that you've accumulated, well, we may be at a point where that differentiation actually doesn't matter. There's so many other data points that the system can reference. For example, what's the average square footage of home size in that neighborhood around there? Is this likely a luxury home build that's more likely to have 3CM? Quality grade. Right. Maybe even some historical data. I don't even know. But it seems like you can suppose pretty effectively on whether that's 2CM or 3CM. And when you put that up against the cost savings of going out and visually inspecting to confirm that, there's maybe a world where... there's some kind of average. We get real close.

52:45 Maybe actual cost differential ends up being two and three quarter inch, three CM. And that's good enough given the cost savings of just pushing that estimate through using the tool. So the key word here, what does Xactimate produce? You said it just a second ago. An estimate. An estimate, yes. It's an estimate. That's another entire show's worth of comment. Yeah. You know. One of my favorite quotes that I won't say the entire quote, but it's from lovely Dr. Young. I actually really like Dr. Young. Have a lot of respect for her. She's over at CSAA. She says, Aaron, I don't need an Xactimate. I just need an estimate. She has an expletive in there. It's kind of fun.

53:26 But at the end of the day, we're creating an estimate. And we want to ensure that we're as tight as we possibly can. So it's a defendable estimate. It's reasonable, customary. So I'm going to use two words from Watley. That is where we're focused. And you want to get it right the first time. But you're not always going to get it right the first time. How many supplements do we see? There's endangers. There's conditions that we don't know about, so on and so forth. That's still going to happen. This isn't a certain vehicle that you can run a VIN on, and then you get exactly what the OEM parts are on it. It doesn't work for Obert because he customizes everything, but beyond that, you're generally okay. The Tesla truck with the wrap. Yeah, we do. That's right. Don't worry about that. Well, this is actually kind of interesting and it kind of synergizes with something that's coming up on our side.

54:11 So, you know, Core Collective is right around the corner. You guys obviously know that. The industry in general is probably hearing some buzz about it. Chris and I have an opportunity to participate in that. They're a great... a group that we are friendly with. And one of the things that we had planned to do is our talk, we're going to do a keynote there. And it's interesting because the theme of that event is the futures now. And as many things have been this year, there's a lot of focus around the tech and the introduction of tech in a more dramatic way. way into our businesses. And one of the things that we really felt strongly about doing was, if they have these great people and they have a great lineup that are going to talk about the introduction of tech and the way that tech should be considered influencing our businesses, we thought, well, one of the remaining questions that I feel like is really important is if our companies are strategically focused on adopting technology into our business.

55:03 So, Then there's this kind of trailing question of, well, what does that mean from a strategic perspective where we invest our time and energy in our people, right? Like, what does that mean then? What are we focused on? What kind of individual are we looking for three years down the road versus what we may be looking for today that we're looking for today because of the impact of that technology. And so we're really excited to dig into this. We need people to focus on people, right? Do the things that only humans have the capacity to provide in our business. And we believe there's going to be a premium placed on that. We're excited to talk about that. That being said, in this part of the conversation right now, we're talking about centralization, we're talking about technology coming in and playing a major role in how we create that scope and build an estimate.

55:47 What do you guys see then? When we're talking about these folks that are in our businesses that have been estimators, And part of the value that we've entrusted in them and created with them is their ability to negotiate that scope and get approvals and write comprehensive documentation or sheets because it's not quite that automated yet. If you had to give us advice or contractors advice from your guys' worldview, what would you say on that? What is your guys' perspective in relation to that particular tradecraft as technology has such a profound influence on it? I mean, from my perspective, I would say two things. Probably focus on your craft, right?

56:27 Do your craft well, but also focus on the relationships. That's something that technology will never be able to replace. That's something that I think carriers, restorers, IAs, whatever, all alike need to place more focus on. You're never going to have technology replace that human element. And that goes a long, long way, especially when you have somebody who has a loss and which is emotional and creates a whole different perspective from that person. And so if you can focus on those two things, I think you'll continue to be successful. Because as the technology does more of that back end work and does more of helping you manage and run your business, that's all goodness.

57:09 That is the expense stuff. That's not what makes you money. What makes you money is being out there with the policyholder, making them whole, working with them. to get them back up on their feet. That is ultimately what we're all here to do. Whether you're on the restoration side or you're on the carrier side, we're all here to help a person get back on their feet. Aaron's used, be our best. Our best when it matters most. Thank you, Aaron. And that's very much a truth. And that's what should be the tagline across the industry, is be our best when it matters most. And in every scenario where there's a loss, that's something that we need to really take to heart. So I don't know, Aaron. I was thinking about the question a little bit differently, but what you've said actually kind of repositions the way I was thinking about it.

57:55 I was thinking about it in terms of, okay, so who do you go after? What's your talent acquisition strategy? Yeah. And you need those people that are really good at that relationship. So Dave, you caused me to think a little bit differently and take a step back and go, yeah, you need people that can establish the relationships, that can take care of the customer. But you also need the technology that can augment the busy work, right? The stuff that's a pain in the ass that you don't want to have to do as a restore where you have to check all these boxes and make sure you do this exact process. If you're focusing on the relationship and making sure that somebody else's needs are being met, right? The policy holder, the person who's been impacted, and then you have multiple stakeholders in the loop. If the technology can step in and help facilitate checking the box properly.

58:38 Right. Ensuring the stakeholders are updated so that you can focus on those important relationship aspects. I think that that's the winning proposition. Yeah. But who do you go after for that? Right. It's people that do have at least a little bit of emotional intelligence to where they can connect with people. But then you also have to have people that are curious and are willing to try new things and leverage technology. And you probably have some of those people that work for you today that perhaps you haven't tapped into. So you're going to build some of those people. And then you're probably going to have to go to market talent acquisition and buy others. Yeah. So it's going to be a blend of both. Yeah, you're spot on. Yeah, it kind of matches what we've been starting to see in the industry with some of the bigs and with small independent restorers is they're starting to separate out the actual technical estimate prep, right?

59:26 And they're really starting to push these longtime estimators into more of a sales role, effectively. It's like they have enough understanding of the construction timeline, the scope of work, and everything else that they can evaluate and prepare the scope, but then hand that off as fast as possible to a centralized estimating unit along with the geospatial scanning and so forth. And they're now becoming primarily a relationship role, right? In order to both enhance the conversion rate of the job, but keep the job sort of online, keep the customer happy, right? They're more of a relationship role than a technical one. And we've seen, and I guess this speaks to those people that are listening that are estimators, We agree, and I feel like you guys are saying this, it is becoming a sales and customer experience role.

1:00:12 And yet I think a lot of estimators develop a lot of their personal pride and their ego and their identity and being able to write really profitable sheets. And that's going to become less and less of a differentiator amongst estimators. And I think at least the first layer before we stop calling them estimators altogether is that they're really going to become a relationship manager and a closer. Like they're the one that comes in, discusses the scope with the client, but very quickly shifts the conversation into, let me explain to you what this is going to be like and how this process is going to work. You know, I want you to be mentally prepared. This is an emotional process. It's difficult. There's a couple of things that are going to feel really awkward and frustrating for you.

1:00:53 As we go through, and they become more of a hand holder. And I mean that in the best possible way, right? Of these clients, you talk about as being this emotional experience. It seems like that is the next frontier for estimators. And some aren't going to want it. You know, some are not going to want that kind of bedside. They are not going to want to develop that bedside manner with the client. Yeah, they probably got into estimating because they like to estimate. Yeah, not necessarily because of that. So I feel like this has kind of taken a turn where almost both these conversation topics are starting to reconnect a little bit here. So give me a second. I'm going to kind of try to summarize where we've gone because I think you guys have said some things that I want to kind of draw some hyper attention to.

1:01:34 So as we were talking through this kind of claim volume, at least perception— Some of it, there's some elements of accuracy to it. There's a little bit of also emotion and story behind it as well. But there's a census that claim volume certainly feels down and that's probably relevant and real. And we talked about, we've got a more at home workforce. We've got just prolific 1% deductible adoption across carriers and across platforms. We've got maybe realistically claim volume. apprehension because of fear about being dropped and what does that mean to me financially. We've got new sophistication looking at the industry and drawing more attention. And so we have new incumbents, if you will, coming in and potentially taking some of that claim share.

1:02:19 And then we've got diversification because there's financial drivers for carriers to distribute their claim flow, get more competition. So we say all those things, right? And it's who knows the specific impact to anyone's business. But the fact is, is that most of those are probably having some role. Well, then I start asking myself the question, what does that all mean for me? If I'm a restorer and I can either sit in a corner and cry myself to death, or I can say, okay, it's time to nut up and do something about this, right? Can I use... I'm not sure. We probably just went into... Okay. We went with it. Yeah, why not? We're all in. So we lean into that. And I'm thinking to myself, well, what am I telling somebody?

1:02:59 It's how you make them feel in the process, right? So ladies and gentlemen, if you're listening to the show, this is not new language. This is stuff that Chris and I have talked about for a long time. We all use the same fans. We all drive similar vehicles. We all deploy similar tactics and techniques to drive your building. But how we make you feel in the process is the true differentiator. And I think what's interesting is that in the past and up till now, wildly or widely, we could kind of get away with murder. Like I'm not saying the industry is bad and that all of us as contractors are out to get people. But we aren't necessarily starting our businesses from the most sophisticated approach and it was still highly effective. We have big, massively profitable businesses in this industry that lack a lot of sophistication.

1:03:43 But it feels like this, these factors that you guys highlighted for us and have brought attention to, the fact that technology is coming in at just such a bullish and aggressive speed, it kind of keeps pointing back to something that's been true since the dawn of time. And that is how we make them feel in the process is the differentiator. And so I feel like, uh-oh. I think it's more than that, though. I want it, yeah. I want to leverage something that Chris stated, right? Which is how I set an expectation up front, right? So how you set the expectation, then how you make them feel throughout the process, right? So that's two. And then three, what are the results? Because the results at the end of the day can unwind how you made them feel and the expectation that you set from the beginning.

1:04:30 So those three things have to come together, in my view, in order for you to have that quality outcome. And I couldn't agree with that more. What are we teaching people then? It just kind of comes back to where is the focus on our people? And it's this interesting combination of you've got to be tech forward, you've got to be flexible enough to adopt and buy into these technology tools that we can use on our behalf to enhance our efficiency and the effectiveness. man, it's this heavy emphasis on people power. Even coming back to what you just said, Aaron, we don't stage set purely from technology. Now we can automate a lot of the toolkit to help us set that stage correctly.

1:05:10 But again, there's this heavy people element in that. Delivering the service, communicating through that service, heavy people element. The product, the end results, the quality of our subs and our partners and our people on our staff doing the work. The only reason I'm kind of hyper-indexing on this is that I think sometimes we start talking about down claim volume and we talk about technology coming in. And some of us are fearful of that or have anxiety around some of that. But it's like, hey, the winning playbook hasn't really changed all that much. Right. Some of the tools you're going to deploy are. But don't get overwhelmed. It's still people serving people. And if you hyper-index on the quality of your people, the coaching and training you give your people, and the standards you hold them to, you're probably going to still fail forward.

1:05:59 You got it. As you guys consider all these things and you're developing, you guys are leading the product development for Xactamid and the different tools and resources you provide contractors. How are you guys philosophically approaching these technology solutions and how are you trying to differentiate or empower contractors to live this kind of new service promise out? What are you guys doing differently with the software and the technology solutions versus maybe the direction other companies are taking in this space? From our perspective, we're putting a massive emphasis on the restore. We have a hefty amount of investment focused on the restore right now. Because we recognize that going back to our roots, we were founded by a restore.

1:06:40 That is where we started as an organization. That is built into our DNA. If you look at our pricing data services team, many of them are reformed restores. I put that in air quotes. But they are, and they understand better than anybody what it's like to be out there mucking a flooded basement. And they get that. And so from our perspective, we are investing heavily in how we can help streamline workflows for the restorers specifically. We've got some stuff coming out toward the end of this year that we're really excited about. I won't float too much out there. I think the restoration industry is going to be really excited about it. And we're really excited about it. So there's a lot that we're doing on behalf and building on behalf of specifically the Restore to help them streamline their business, to help them understand and have better insights around how they run their business and what they're doing.

1:07:30 So more to come on that front, but there's substantial investment on that front. That's awesome. Last word, Aaron? I would just say, you know, with that, what is it? Hippocratic oath? Yeah. Right. First, do no harm. Always do no harm. Right. Yeah. So that goes into it as well. Because you can go pretty wild on making changes and you kind of have to push the envelope. But at the same time, people have their jobs to be done. And we have to make sure that we're focused on that too. Right. And that's just your hygiene layer, I think. So guys, thanks a lot for hanging out with us. Thanks for talking shop with us. So last word, bald is beautiful. And that's right. You know, Brandon, I've been watching the flood, the double O's, right? It looks like Mickey Mouse. It looks like Mickey ears.

1:08:10 That's right. All right. Thank you, gentlemen. Always a pleasure. Take care. All right, everybody. Hey, thanks for joining us for another episode of Head, Heart, and Boots. And if you're enjoying the show, but you love this episode, please hit follow, formerly known as subscribe, write us a review, or share this episode with a friend. Share it on LinkedIn, share it via text, whatever. It all helps. Thanks for listening.