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A Look at the Future

By Greg Crosslin


As a backdrop, I believe that in the last two years and for the next couple of years, we will continue to see the number of claims filed by homeowners against pest control companies decrease.

 

Depending on whom you talk to, there are a variety of factors which affect this. I believe that from the fipronil molecule has had some effect. I also believe that claims adjusters for the few remaining insurance companies have gotten much better at adjusting termite and pest control claims than they have been in the past. I also believe that associations within the industry, risk management trainers (like Lloyd Smigel) and others have had an impact on risk management and business training. I believe a combination of these factors have helped to drop down claims.

 

As a side observation, as claims decrease, insurance premiums should, hopefully, decrease as well. Concurrently, as claims decrease and insurers profitability increases, more carriers will return to the arena to offer policies which provide different levels of coverage to pest control operators and also provide different cost points, which surely helps the small operator.

 

With this backdrop, I believe there will be a conflagration of other aspects that affect the pest control industry as we approach the end of the decade. Some are positive, some are negative.

 

On the positive side, I believe that we’re going to increase in the number of imydichlorpid generics and various products which will increase overall efficacy in a various set of circumstances and conditions for PCOs. I also believe that we’re going to see a decrease, if not the total withdrawal, of pyretheroids from the marketplace in the next few years which will also impact PCOs.

 

As the new technology changes and products come and go, it is absolutely imperative that pest control operators maintain proper training modules and risk management plans to ensure their employees understand the new requirements for products (so they properly price themselves, have proper business models, and take advantage of new products, changes in price points and cost efficiencies as well as design strategies) to be competitive in the marketplace, keep claims down and avoid law suits.

 

As the marketplace becomes more profitable (claims and insurance premiums decrease, etc), you can expect more people to get in the pest control industry. We have seen this several times and this can lead to negatives, some of which are exacerbated by the increase of PCOs in different markets.

 

Additionally, there is a general belief in Florida that the majority of pre-treatments now being done are being done with borates. As a general statement, there’s nothing wrong at all with a borate pretreatment. In fact, I believe that Timbor and Boracare are an important part of the marketplace as evidenced by their efficacy data and the few number of claims nationwide relative to either product. Unfortunately, less than scrupulous PCOs have been involved lately in pre-treating with borate products which are not properly labeled for home pretreatment. I believe there’s a growing concern amongst pest control operators as well as the regulators that borates designed for other industries are being used in an inappropriate manner to keep costs down, and this will, ultimately, lead to serious issues for PCOs, home owners and developers/contractors.

 

While suits and claims have, overall, decreased, if a product such as a borate pretreatment is not properly implemented by the industry, and it takes such a market share as has been recently identified in Florida, and if a large percentage of these are not utilizing properly labeled material in a way to prevent termite infestation, the pendulum will swing and this could cause repercussions throughout the industry. I believe we’re already beginning to see concerns about improper borate use.

 

I have heard regulators recently speaking about concerns with regard to PCOs in the same breaths as those charging 10 cents/square ft. for pretreatment. While we know this happens in Florida, the use of borates is somewhat a new issue, and I’m concerned that we only now are getting to the tip of the iceberg with regard to this potential problem.

 

Overall, however, for the honest PCO who is in business utilizing a proper model for the long run, times are good to be a PCO. Insurance rates are decreasing, claims are dropping, the marketplace is more responsive to PCOs than ever before. The opportunities to provide a higher level of service at lower costs exists which should mean increased profits for PCOs.

 

With this stated, it is imperative, that PCOs maintain a commitment to risk management philosophies, maintain adherence to a proper business model that includes adequate resources for training, retraining, and constantly refocusing on the technological advances as they develop. Now is not the time to cut training dollars or to avoid our commitment to our technicians and personnel.