How To Get Insurance Work WITHOUT TPA Insurance Programs

Andrew McCabe
Sep 2, 2015 · 5 min read
middleman
middleman

I recently received a question via email from a subscriber that hit on a topic that’s close to my heart. Since I’ve answered this question several times over the past year, in several ways, I thought I’d finally make a blog post about it. Here goes:

If an independent like ours is NOT on any insurance programs, how do we acquire insurance work? That’s been our biggest challenge.

Great question. And legitimate. This is a concern for all of us who have grown accustomed to that steady flow of “guaranteed” revenue we get from insurance programs and direct referral agreements. Let me hit you with some tough love.

You’ve got to take responsibility for your own marketing, promotion and relationship building.

Everything goes in cycles. Right now, we’re seeing the biggest swing toward TPA’s ever. But there will be a backlash, there always is. Carriers will realize that they are sacrificing customer satisfaction and not realizing the gains they were promised.

State Farm PSP is the perfect example. It was the next big thing. Now it’s all but gone. And their customer satisfaction scores are improving because of it.

You’ve got to take a long game approach. Short term gain (revenue) at the expense of profitability is not a good strategy. Nearly every job you do is going to be an insurance claim; that’s just the way it is. That means you’ve got an opportunity to build a relationship every time out.

LittleCultus2
LittleCultus2

There is a local company here in Bend, OR that does ZERO “program” work. None. Their business comes from commercial sources and good, local marketing. Insurance programs don’t play a part in their strategic planning.

I look at it this way: with program work, you are “paying” for the leads by accepting MUCH lower profits. Without program work, you still have to PAY for leads, but you’re in control.

Increase your local SEO, invest in your web site, start a blog. I started www.MassiveMedia.biz to create content and partner with www.EverbearingServices.com for SEO and website optimization. If you take a traditional business point of view, you just have to increase your marketing budget.

Look at 911 Restoration. They spend over $60k a MONTH on pay-per-click advertising nationwide. Why? Because it pays for itself 100X. Simple advertising and Local SEO. They are not dependent on another company for their revenues.

yellowpages
yellowpages

Remember when folks used to pay thousands of dollars for YellowPage advertising? What happened when the internet and Search came around? People stopped paying for YellowPages. Then the SMART folks kept their ad budgets at the same level and shifted their spending to Google Ads and SEO.

If you had a YellowPage budget before, what happened to it?

Where is that money going to come from? Let’s take a look at the numbers.

If you did $500k in “program” mitigation work in a given year, you’d likely be happy with a 20% Gross Profit of $100,000. Them’s the facts folks. High-profit mitigation is a thing of the past people, especially when there are multi-tiered TPAs involved.

If you did $500k in non-program work, you could expect a dramatic increase in profitability into the 35% range. That means additional $75k in pure profit because our costs remain the same. That’s an additional $6,250 a month straight to the bottom line.

How much of that would you be willing to spend on marketing? How much do you spend currently on other things like a full-time “marketing” rep? With a strategically applied budget of only $1,500 a month your company could be DOMINATING your local search market. For $2,500 a month you could start selling your leads to other restoration companies because you’re just too busy to take every call.

“What if I can’t reach $500k in revenue without the programs?” Well, with the help of higher margins, you only need $285k in revenues to get the same $100k in gross profits. How does that sound?

pickpocket
pickpocket

Who’s making the money that should be yours? The TPA. Insurance programs promise cost savings to carriers. They achieve those savings by taking money out of your pocket. Did you know that of the 15% equipment rental discount that Code Blue takes, only 5% of it gets passed on to the carrier?

That’s right. Code Blue bills the carrier for the full equipment rate minus 5%, then rakes another 10% for themselves before paying you. You’re literally paying for the privilege of doing the same work for less profit.

The bottom line is that in order to succeed in today’s markets we have to be willing to let go of yesterday’s ideas. You don’t need the programs as much as they tell you that you do. And with the new “Uber” economy, the consumer technology will do an end-run on the establishment before their big ships can hit the rudder.

Break free of the old style and “conventional” wisdom, and start controlling your own destiny. How about it?


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