Hey, Paul. How’s it going today? It’s going good. How are you doing, Leah? I’m great. So nice to talk to you today. You went to the RIA show last week, so it’s sort of top of mind right now, I wanna hear all about it. So walk me through what the energy was like on the show floor this year. What were people talking to you about? Yeah. First of all, Savannah is a beautiful city, so we had a great time there and meeting with all the restorers. It was just really good conversation simply because the claim volumes have come back, so people are feeling better that, you know, hey. We’re back on track with our businesses. But, wow, the AI noise was palpable. I mean, everybody was asking us, you know, what’s real, what’s not, who’s really innovating, who’s not. You know, we see, you know, a a Claude out there, you know, from Encircle. We see ChatGPT. We’re just seeing a lot of noise. What can help us in our business truly? And so really good conversations around that. So what is it, Paul, about AI that you think restorers are really wrestling with right now? Well, one thing they love is the fact that, hey, this could take a lot of administrative overhead away from me. So it looks like an easy button to them. And I don’t blame them. I mean, restorers have to wear so many hats. It’s a chaotic business to be in. And, you know, when you’re managing, you know, peaks and valleys and the demands of the carriers, it’s a lot. So anything that seems like a gift or an easy button, like, it just looks really good. And to me, I mean, we all use Claude Cowork and ChatGPT in our business, and we get benefit of it. But you really have to choose where those value points are and to and ensure that the value is real and not just a mirage. So that’s what a lot of the discussions were about. You mentioned you mentioned something about carriers. And so talk to me, what are restorers thinking around carriers use of AI right now? Yeah. Well, I think they all know that carriers are investing in AI. And what do carriers, the insurance companies care about? Well, they wanna reduce cycle time. They want to manage and control claim costs, and they wanna reduce overhead. So how do they do it? Well, AI plays a part in that in how they review the contractor’s files and how they work with the contractor. So, you know, I think all of the restorers were aware of that, but not particularly clear on how to counter it. And so a lot of my discussions were around, hey. You have to make sure that you have the counterargument to their argument with that is more substantiated with facts because only the facts will win you the revenue and profit margins that you deserve. Alright. So talk talk to me more about about that right now. Are contractors, were they talking to you about using AI actively for for for those purposes to to, you know, combat the the carrier’s use of AI? Or what is what are they what are they actually doing with AI right now? Yeah. Well, a lot of them that I talk to are actually using the ability to, you you know, record themselves talking about the scope, the cause of loss, the resulting damages, the work that needs to be done, and then throwing, putting that into a large language model, such as Claude, and coming out with an estimate, a very rational estimate that has exact to make line items, not pricing, but line items in it. So already a lot of that is happening and they can input the contractor rules into that. They may even be putting carrier rules, which I think is offside with what carriers will allow. But I think they’re putting a lot into the LLMs to get an output that looks rational. But rational doesn’t mean defensible. And when it comes to to comparing an estimate from the contractor and an estimate written by the adjuster, which, by the way, in all of the you know, when I was at PLRB, most of the carrier folks I talked to really highlighted that they’re going to be writing estimates using AI as well to fact check and validate that the estimate from the contractor is real. Now that’s two failure points because if it’s all based on just voice input without verifiable details into an LLM that isn’t structured specifically for restoration work or insurance work, then you’re gonna get an output. But that output may not be aligned with IAC or C standards, OSHA standards, building codes. It may miss a whole bunch of verified line items that the contractor could bill for. And then again, you both could be putting into different LMs and getting different answers. So we need everything based on the facts. So what I said to the contractors is that it doesn’t negate the need for really good field documentation. And that’s sort of where we went at it from the scope perspective. But at the end of the day, all of us can put information into an LLM and get what looks like a rational output. But man, when when you dig into it, it’s definitely not worthy of passing on to, you know, to try and get paid from it without a lot of verification. So you you mentioned rational. These LLMs, that’s what that’s what they’re designed to do is produce a rational, good sounding output. But that doesn’t mean that that scope is gonna be accurate and defensible. Talk to me a little bit more about what that means and and the connection to documentation there. Yeah. So, you know, without the verifiable information, you can both sides can argue their point of view on what this job is worth and the work that needs to be done on it. Versus if you’ve got the verifiable facts, photos, videos, notes, floor plan, moisture readings from a moisture map, and of course, all of the different elements that are in the reports and forms that you get from the policy holders, such as their health conditions that may have had an impact on how the job had to be done. Just a lot of factors in there, including abatement, where you have asbestos or hazardous materials. There’s a lot of considerations that need to be attributed to the file and backed up with evidence to ensure a full payment. Because across the board, what what our contractor is struggling with, getting their estimates out in a timely way with all of the defensible information to ensure they get paid in full. Got it. So it sounds like what what people were talking to you about what what they’re really wanting AI to do is streamline that scoping and estimating workflow. But I wanna pivot a little bit. Can documentation be shortcutted or streamlined, with AI? Is there is there a shortcut around that documentation piece? No. But documentation can streamline your use of AI. And I’ll give you an example of this is AI is not free. So if you’re using any of these LLMs, you’re paying for tokens. And those tokens add up depending on how much information you’re asking it to process. And that’s not even, you know, having an LLM that has a deep knowledge of the industry you serve. So put it all together, there’s a high cost to pay by taking what feels like a good path, but really is a shortcut. So if you get down the path of really good documentation, take a couple extra minutes on the photos, the videos, the notes, and then the human element. The the you know, what? Tell me in the file the things you’re dealing with, like in a video note. Tell me, here’s why I’ve assessed it this way. Here are the conditions we’re dealing with. That now applies into a very structured custom built with an Encircle custom built framework, even before it gets to the LLM, to hone that out with all your IACRC standards and relevant data to ensure it’s accurate, defensible. And then also to make sure that, hey, if you’ve missed anything, maybe you wanna look at this. See, that’s what an LLM, just a standard LLM is not gonna do. It’s not gonna tell you what you’ve missed. You should go look at this, get more photos to defend and get paid. That’s So, no, there is Long way of saying there is no shortcut for good defensible documentation because that’s what will stand up to the scrutiny of the carrier. Right. So people there are our our audience are restorers. They don’t need we’re AI is not replacing fieldwork. In fact, it’s it’s really gonna highlight those good operators, the ones that where their field processes, their documentation processes are sacred. That’s right. And that’s not just day one. That’s day one, day two, day three, day four, day five, however long the mitigation processes are rebuilt. And that’s why at Encircle, we want the contractor building a scope every day so they know what you know, how the how the job is progressing, but also what’s missing each day to substantiate that file for full payment. Because the difference is thousands of dollars. We’re not talking a little bit. This is, you know, this is ten to twenty percent increase to profit margins on every job. Yeah. That’s interesting. Yeah. You’ve you’ve you’ve shared that with me before that there’s data suggesting that contractors that have that documentation dialed in and their scope dialed in, they’re capturing, you know, at least ten percent more on their their final invoice. So that tracks with what you were hearing at at RIA as well. Oh, absolutely. And one and even more. Once you layer on additional equipment revenue and all of the other benefits that come with being able to, you know, write a really good day one estimate, which is truly an estimate, and then having that your day three, day five final estimate lineup, it it’s a game changer. And then all of the scoping details that have been captured every day throughout it, it’s very hard to refute that even if the carrier or engineering company. So we heard a lot about engineering companies there as well reviewing files. This is the only way to beat that. And by the way, it’s also good business practice internally because how do you audit the files of your PMs if they’re lacking documentation? And all they did was push their their own personal assessment through an LLM. See, that’s way too much subjectivity. We need to take the subjectivity out of the process and base it all on the facts. So if you haven’t captured the facts with timestamps, geolocates, and who captured the information, then you’re kind of left exposed. Right. And I I’ve been at Encircle for almost five years, and we’ve said the facts come from the field. Right? Yeah. Great. Alright. Wrapping up, looking ahead, Paul, RIA twenty twenty six has come to a close over the next year. What do you think is gonna happen? What do you think we’re gonna be talking about at post RIA twenty twenty seven? Well, I hope everybody’s talking about Encircle’s scoping and estimating tools. I think the way we’re implementing AI really serves the restoration contractor and their needs, but it also serves to educate everybody in within that restoration organization on what good documentation looks like, how do we get paid in full. And so now you’re really managing the operations of your business, which is something a lot of restorers struggle with. And if we can improve margins, then restorers are just gonna be able to weather the cyclicality of this industry like we saw last year in a much better way. Right. Alright. Last last question. Where based on your conversations from RA, where should a contractor who’s serious about investing and implementing AI into their business, where should they be investing that energy right now? Well, number one, if if you can improve your field documentation processes, it’s just gonna help you across the board. There are gonna be some there’s there’s going to be so many tools, AI generating tools that can leverage that data that you know, that that’s gonna be the big win because that’s gonna strip out a lot of administrative overhead, and that will come from the ability to schedule jobs. So think about if you can build really good scopes, you can produce really good work orders. Those work orders can automatically generate into scheduling and other functions within your organizations that have a high administrative overhead that are gonna get automated over the next, I’m telling you, max, twelve to eighteen months. But it will all be based on the field data. So think that field data will drive CRM, will drive job management, job scheduling. Like, will be driven from the field based on that data captured. And the efficiency gains will be profound, and so will the pro retained profit margins. If Great. You know? I can’t point everybody where to look other than Encircle, but work on your field documentation. And I guarantee you, Encircle and others are going to help you leverage that data to drive profitability in your business. That’s right. And that’s the thing that that AI can’t replace is the the restorer in the field doing the dirty work, standing in the flooded basement at at three in the morning. Claude’s not gonna do that for you. It is not. There’s a lot of good job security in that industry. Excellent. Thank you so much, Paul. Appreciate your perspective. And we’ll do this again for sure next year, but I’m sure we’ll talk to you again soon. Wonderful. Good talking with you, Leah. Take care. Thanks, Paul.
