12/12/2025
How TPA’s have managed to decimate the Insurance Restoration industry in 10 short years (originally written around 2018 unknown author)
A Third Party Administrator is an unnecessary middle company between the policyholder and contractor.
TPAs have contributed to the decimation of our industry. They serve no purpose to the contractor or the policy holder, they only serve the insurance companies by providing a veil for carrier's to be able to price fix and set sub-par service guidelines for our industry in order to keep their costs down.
1) TPAs limit the ability of the Restoration Contractor to perform a proper scopes for repairs through "Estimating Guidelines".
2) TPAs charge the policyholders, who have just suffered a devastating loss, out of money they are owed from the policies they have already paid for.
3) TPAs force Contractors into a Conflict of Interest by accepting volumes of claims in exchange for lower priced payouts. This may be the most damaging.
4) TPAs Charge their fee to the Contractor for the service they provide to the insurance carrier.
5) TPAs Delay the process aiding and abetting the Carriers Delay Tactics. (Money held is Interest Earned) its all about the bottom line.
6) TPA’s do not follow our Industry Standards, set by IICRC or RIA, thus forcing the vendor to take shortcuts. It’s impossible not too.
The insurance company says we will bring in an independent third party (TPA) to oversee the claim process. This will make it fair because it's not us, the insurance company, determining the scope or price of repairs.
What they don't tell the policyholder is that this third party is far from independent. In fact, they have a back-door contract with the insurance company that tells them exactly what they can and cannot do for the insured.
On top of that, the TPA also has a back-door contract in place with their "preferred(lol)" contractors which limits the contractor's ability to properly restore the property, and limits their ability to properly bill for the work they did. Through “Estimating Guidelines” you basically are doing a discervice to all of us.
In addition to keeping the cost as low as possible to the carrier (at the expense of the policyholder), the TPA skims a percentage of the contractors money right off the top!
So the policyholder and the contractor are paying the TPA to keep the cost to the insurer at a minimum. DOES THIS MAKE ANY SENSE TO ANYBODY?
ONE MORE TIME: The TPA does not add their fee to the top of a claim and charge the insurance company for their "service". THEY TAKE THEIR FEE OUT OF THE MONEY THAT WAS SUPPOSED TO BE USED BY THE CONTRACTOR TO RESTORE THE PROPERTY! That’s Theft !
TPA says:
1. One coat of paint on existing drywall there should be 2 for full coverage. You can eventually get that second coat, but only after two weeks of back and forth
2. They say “Try to clean that carpet and replace the pad”’lol
3. Dry every structure in 3 days, even if it's not dry, a one size dry plan fits all. And if not provide a detailed moisture map that takes hours of overhead if done properly
4. Those water damaged cabinet faces can be saved, build new custom boxes and sand stain and finish the remining cabs in place. Just use 2x4 to support the quartz
5. You only need to replace the drip edge on the eaves not the rakes
6. Jack pipes, flashing, drip edge, valley metal etc. is included in tear off shingles.
7. No air scrubbers during demolition.
8. We don't pay for masking.
9. Final cleaning is included in each trade.
10. We don’t pay for Supervisory hours required by law.
11. That’s the cost of doing business.
THEN YOU PAY THE TPA 5%-7% OF THE CLAIM TOTAL
Are you serious Mr TPA’s?
ATTN: , We don’t use TPA’s, we actually take care of our clients. The insurance company pays us to do ALL these extra steps that they won't pay a program contractor for because we don't have a back-door contract limiting our ability to do so. Our claim average is 30-40% higher and sometimes more.
Nobody takes a percentage off the top of what we do except for the bonuses we give out.
The reason program contractors are a problem is because without program contractors the programs would go away, and the industry would be better FOR THE POLICYHOLDER and you the CONTRACTOR.
THE POLICYHOLDER IS YOUR CLIENT, THIS IS WHO YOU SHOULD BE WORKING FOR, NOT THE INSURANCE COMPANY OR THE TPA
As it stands now, I don't know how many times every week I hear from an adjuster "that's not how our preferred vendor does it" or "let me get one of my vendors over here to see what they think"...lol
No kidding that's not how they do it, because they are doing it incorrectly.🤣
Unfortunately for adjusters that work our jobs, our customers are educated from the very beginning about insurance tactics and why they should NEVER let the carrier bring their shadow puppet contractors onto our jobsites. IT ONLY BENEFITS THE CARRIER.
Insurance companies know if they get enough of the industry moving in one direction, they can start calling it "standard". They are trying to make their estimating guidelines "standard" so the rest of us must lower our standards. They are trying to standardize pricing so the rest of us must lower our prices! As a program contractor you are complicit in helping them to achieve this goal. STOP IT!
As a program contractor you are selling, and signing a contract with, your client, the policyholder, to restore their property properly and professionally, when in fact you have a pre-existing contract in place with your TPA that fundamentally limits your ability to do so. That is a conflict of interest THAT YOU PUT YOURSELF RIGHT IN THE MIDDLE OF and unfortunately the TPA/carrier wins every time.
In effect, you are signing a contract with the policyholder, promising them a world class restoration, and then screwing them out of what they are owed, by law, through their policy with their insurance company, by agreeing to shortcuts and shortcomings you, sometimes unknowingly, signed up for when you agreed to restore based on a carrier's "guidelines" rather than restore properly to industry standards. Or you are screwing yourselves because you havea conscience
THERE ARE ONLY 2 TYPES OF PROGRAM CONTRACTORS:
1. Those that do not realize the above points. Now that you have read this, you have no excuse
2. Those that get it, but don't care because they are too lazy to go out and generate their own business. These guys would wither away them
If you are on a program, you should be working towards an expedited exit strategy.
If you are not on a program, you should not consider joining.
IMAGINE, if every program contractor quit the programs today, programs would not exist tomorrow and the industry would be better for it.
Congrats, you made it to the end...
