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Competition & Insurance

Discussion in 'Business Fundamentals' started by Dogplow Dodge, Oct 28, 2013.

  1. Dogplow Dodge

    Dogplow Dodge 2000 Club Member
    from NJ
    Messages: 2,918

    Been reading a lot about existing companies "exiting" the snow removal business. From what I can tell, some of it is caused by either extraordinarily high insurance premiums, or local competition underbidding the norm for the service provided. Is it possible that this isn't an issue, but actually a reflection of increased operating costs (beyond insurance), or a more cost-conscious customer? Secondarily, it also appears that there are a lot of "new" companies out there working to get into this industry, that have either little, or no experience in actually running a snow contracting business. Do you attribute to this trend to be actually a reflection of what is considered to be a normal influx, or departure ?


    Based upon the premise that a large majority of snow contractors, HERE, who visit this site, are well established, with longstanding presence in this industry, how would you best make the prediction, or assumption, of what will transpire over the next few years, to both the snow contracting industry, and / or, your local markets, specifically the questions below being the topic(s) at hand?


    1. Does the insurance industry (currently) negatively affect your business ?

    2. What do you think would happen if the insurers decided to ALL pull out of the market for your area ? How, or would you cope with this issue?, other than maybe start selling off your equipment ? What is your prediction of how the industry would rebound from such a calamity if there was no longer a provider available where your markets are situated ? Would it be even possible ?

    3. Do you see your area competition, increasing (entering), or decreasing (leaving) in your market ? Do you think we are in a natural cycle of entrances and exits of the industry?

    4. Do lower pricing companies damage, or hurt your specific markets? or are you unaffected by their presence? If so, how have you altered your company operations to deal with this ?....

     
  2. BC Handyman

    BC Handyman PlowSite.com Addict
    Messages: 1,847

    1) yes and no, all I can say is some require insurance(mostly commercial) other believe they would be better off without me having it(mostly older folks) so negitive....hard to say cause I'd be richer if I didnt have to pay into it, I've never had a claim but knowing I could get sued I'm glad I have it, I just hope it helps having it if I ever need it.

    2) if all pulled out? first thought is I'd be screwed, but I guess if all pulled out the local busnesses/people would have to deal with it cause nobody could be covered. I'd just have to be extra carefull & use more salt ;)

    3) they come as fast as they go it seems to me, yes there is more, but there is also more people to service.

    4) we are all affected in some form by the "lowballing uninsured beer $" plowing guy, but I do got to say there is a place for these types of weekend plowers, I like to think thier place is the ultra demanding or impossable jobs so they fail or get serious. But hey, it takes all kinds to make the world go round. How to deal with it? I'd suggest trying to make it clear & obvious that you are more serious & prepared about snow then the other guy, you got the right equipment, right knowledge, right insurance. If the other guy has all this, then you got to take a good look at the way your running things & try to stay competitive.
     
  3. RLM

    RLM PlowSite.com Addict
    Messages: 1,270

    1. Does the insurance industry (currently) negatively affect your business ?'It can & has: I turned away about 10K worth the work last season because my insurance company refused to insure us. Then I was "non-renewed" anyway just recently no accidents or anything, just the company didn't like the amount of snow we pushed. The amount of stress caused in not knowing "if" I could find coverage, etc. it delayed me in sending out contracts & soliciting new work.

    2. What do you think would happen if the insurers decided to ALL pull out of the market for your area ? How, or would you cope with this issue?, other than maybe start selling off your equipment ? What is your prediction of how the industry would rebound from such a calamity if there was no longer a provider available where your markets are situated ? Would it be even possible ? Snowremoval in my market (100 inches) is not an optional services, it is a necessary evil. What would happen, I don't know, but the first time people cant get to the grocery store or work all hell would break loose. Look at the hits the economies of cities take when a snowstorm shuts them down....now do that on a state level.

    3. Do you see your area competition, increasing (entering), or decreasing (leaving) in your market ? Do you think we are in a natural cycle of entrances and exits of the industry? Increasing

    4. Do lower pricing companies damage, or hurt your specific markets? or are you unaffected by their presence? If so, how have you altered your company operations to deal with this ?....They have devastated our market, I can see it in bids the price diffentrial from the old time construction companies to the newer "snowplowing & landscape" companies is HUGE bids are roughly 3X (yes 300%) in pricing differencial.
     
  4. Dogplow Dodge

    Dogplow Dodge 2000 Club Member
    from NJ
    Messages: 2,918

    Thanks for the insight, guys. This thought process came about, as just by visiting this site daily, and talking to other local guys who I know plow. I can see more and more companies going out of business due to insurance and / or competition. Just tonight alone on this website, there were 3 Insurance questions in the NJ / NY market for guys looking to find and insurer. I have the distinct feeling that I will be one of those guys come January when my policy renews. I've sent an email back to my rep and hopefully she can do a little research in the meantime, as it's almost November and that gives me all of 3 months to gear up for the unknown... At this point, I don't know whether or not I'm getting another 30% increase this year from last, as in the previous year.... (again like others have said, with no claims), I'm getting dumped, or I'll be renewed at the same rate. Lord knows it's not going to be less than last year, right ?;)


    I find it interesting that the insurers are pulling out of NJ (from what I'm told) and it has to do with the number of claims against the companies. If it comes down to the possibility of NO policies being written, I'm just curious as to how, or what would be the outcome for those who still had policies, and couldn't handle the overload of calls from customers, as there would be no (insured) subs to hire ? I guess in theory they could take on the responsibility of their own policies covering subs, but that gets insane cost wise, and from a personal standpoint, I wouldn't do something as inane as covering the liability of another contractor, unless of course I was doing meth that week.;).

    For me, I would be in the middle of the season, and find myself "uninsured". My customers wouldn't like it, as I'd be sending them letters, or calling them, telling them they'd have to look elsewhere for the service I've been providing them for years. I assume they'd have a hard time finding replacements, but I guess that's where the "low baller / beer $$ dudes" would be reaping the rewards... as folks would be freaking out that they can't get out of their drives, or their stores are all plowed in.
     
    Last edited: Oct 28, 2013
  5. Antlerart06

    Antlerart06 PlowSite Veteran
    Messages: 3,437

    1. Does the insurance industry (currently) negatively affect your business ?
    No I have to have it during warm months
    2. What do you think would happen if the insurers decided to ALL pull out of the market for your area ? How, or would you cope with this issue?, other than maybe start selling off your equipment ? What is your prediction of how the industry would rebound from such a calamity if there was no longer a provider available where your markets are situated ? Would it be even possible ?
    :help::help:
    3. Do you see your area competition, increasing (entering), or decreasing (leaving) in your market ? Do you think we are in a natural cycle of entrances and exits of the industry?
    Was decreasing from a bigger company cutting people throats now people are finding out what type service they do They trying to get away from them
    4. Do lower pricing companies damage, or hurt your specific markets? or are you unaffected by their presence? If so, how have you altered your company operations to deal with this ?....
    I do a year contacts so mine are lock in each spring time From snow to cutting the grass I do it all. I found out customers like it where one company does it all.
    Since last year the big plowing company has start mowing. That's a joke to watch
     
  6. fendt716

    fendt716 Member
    from nw nj
    Messages: 37

    dogplow dodge talk to your agent and get a backup plan in place before renew no matter what your current co or agent says. at 90 days out co. said our rate may go up or down. 1 week to renewal they tell us they are not going to insure us because of our snowplowing and they are out of the snow market. all our insurance was with them we where so screwed. insurance is killing us that problem cost us about $80.000 in work and 5 very loyal custs. the problem with insurance is the co. and national service providers dumped it all on us so we are the only one paying in now.and them settling claims no matter how wrong or right it is. more people leaving now.low prices are killing this market. trying to sell on better service etc. but prices is all that matters here. made more net profit 30 years ago then now.
     
  7. Dogplow Dodge

    Dogplow Dodge 2000 Club Member
    from NJ
    Messages: 2,918

    I sent her the request yesterday to get me hooked up for Feb 1st. We'll see what happens.

    Your story above is precisely what I've been hearing /seeing here as well.
     
    Last edited: Oct 29, 2013