After a tumultuous 2025, I expect to see a return to more normal restoration business conditions in 2026. Last year, the biggest issue for many restoration companies was the lower volume of claims, both from a catastrophe basis and in everyday claims volume. I would expect to see similar issues impacting the industry this year, although in a more normal way. Insurance companies had a strong year from a financial perspective with a very favorable loss-ratio, yet they are struggling with pricing models due to unpredictable catastrophic losses and uncertain inflation. These items will impact property owners, municipalities and insurance companies alike, which will have downstream effects on the restoration industry. The real item that will impact all businesses this year will be how technology is leveraged in the property ownership pipeline and then the cumulative impact from these changes. I feel that this year will provide challenges and extraordinary opportunities for companies that anticipate and leverage these changes. I also want to state that my focus for this article is the short term, rather than mid or long-range trends, that will be relevant for your business.
Trend #1 Speed
The most obvious trend for the upcoming year is technology. That being said, there are nuances to the idea of technology that require some exploration. At first, I was going to place AI as my top trend for the industry; then I contemplated the idea of technology as the main trend. After analyzing these ideas and exploring these concepts with leaders in the industry, I have settled on the top trend for this year to be SPEED. This idea incorporates the results, benefits and purpose behind the pursuit of technological solutions.
Before unpacking this concept, I want to clarify why AI is not my top trend. The first reason is that the concept of AI is very broad and when discussed with a restoration company you may hear how they are using generative AI to refine marketing or data analytics and if you talked with technology companies you may learn of their pursuit of integration, predictive modeling or resource allocation. AI is a technological tool that will dramatically impact all levels in business, but it means something different for everyone, based on your position or role in the industry. AI will be transformative and is a tool for savvy businesses to embrace, yet it needs to incorporate a strategic approach. Companies not leveraging AI will be at a disadvantage now and in the future may become obsolete. Speed is the result of strategically applying technology and AI.
The concept of speed encompasses speed of change, speed of data, speed of job cycle time, speed of success and speed of failure. I realize that this is nuanced, yet I don’t want the influence purely on AI because it is quite likely that many AI solutions will fail through a process of creative destruction. A classic case of this lies in corporations that are focused on pure AI plays that have very little chance of financial success. I liken this to the creative destruction that followed the dot com revolution. I read an article this year that discussed the problems with AI implementation in the insurance industry. The author concluded that many of the AI developments sped up processes, but when inserted into an existing workflow, created many funnels and inefficiencies that resulted in very little progression. The conclusion to the article was that implementation of AI requires a complete assessment and rework of the process lifecycle with AI inserted into or even driving this new reality. This new workflow reality will allow AI to be leveraged which allows the benefits to be fully realized. With this limiting factor, I feel that the short-term benefits of AI will be restricted by the structure it is placed in. The long-term benefits will be incalculable. The short-term AI activity in your company should focus on redundant items that are easily completed by AI resources. And your real effort should start with a deep assessment of your entire job process with an eye on how AI can transform every function in your company from business management, to job production and completion, all the way to billing and collections. In this regard AI is essential.
Technology on the other hand is the convergence of AI, software, hardware, and systems. The encompassing idea of technology is important and requires restorers to strategically think about how systems and equipment connect and then fit into a workflow. This involves much more than strict implementation of AI. The alignment of technology will be transformative for restorers in 2026.
Recommendations for assessing and utilizing technology in your company to increase speed and success in your business.
Most companies are not properly staffed or structured to assess the most current technology, software, tools, and integrations. My suggestion is that you either hire for this position or locate an outsource for it. Someone who will help you navigate your assessment, implementation, use, and integration of technology. This will prevent your business from accumulating stacks of resources that either don’t work together or have become obsolete.
- Most companies are using some form of AI in their operations today. My recommendation for 2026 is to take a deliberate step back and consider the entire framework of how jobs flow through your company. Determine how you can remove people and redundant steps, from this process. After you better understand this flow, then take direct action to locate and implement the best solutions to transform your business and substantially reduce cycle times.
- Identify solutions that democratize information. For example, you can use wearable technology to bring the very best resources in the world direct to your jobsite to advise and direct the best solutions, either using AI or even direct third-party observation. This trend is being refined now and will be available by the end of 2026. This process will equip your current team to handle much more advanced jobs, or just scale production efficiently.
- Look for ways to use technology to enhance the output of your existing staff. An example is using your jobsite resources to seamlessly and automatically document jobsite conditions and populate your billing statements.
- I like the recommendation from Dean Mercado – CEO Online Marketing Muscle, from his interview with Jeff Cross on the Straight Talk podcast. Dean suggests that you treat AI as a person for every position that it fills. Create job descriptions and expectations. This process will help you clarify both process and deliverables that will then fit into your organizational structure.
- Identify resources based on the convergence of technology from estimating solutions, IOT, project management tools, jobsite equipment and tools, 3D imaging, “wearables”, and financial management and data analytics, that will work together to streamline jobs and disrupt current job cycle times. Estimating, dimensioning, moisture tracking, asset utilization and more are set to be transformed by enhancing your existing resource and by locating new and better technology.
- More with less – leveraging technology to improve capacity and output from nearly every position. As you grow, look for resources that will allow you to add capacity without inserting more people into the process. Identify ways to use technology to increase output from all positions in your company and remove layers for data input, billing, collection, job review, marketing, data analytics, and more.
- One limitation for growth has been available labor. Labor is now a global solution not just locally sourced. Review your processes and determine which resources and people need to be in your local market and which can be performed virtually. This staffing adjustment can lead to much greater efficiency and lower overhead.
- The claims industry is using AI to analyze restoration data and flag files that don’t meet expectations or fit within their metrics. Since this is a reality, your systems should provide similar monitoring and identify line items and units that don’t comply with typical industry metrics, such as the S-500 or basic psychometric formulas. Your documentation should eliminate these items or provide needed support prior to submitting billing statements, invoices or estimates. This process will speed up job approval and payment times.
Trend #2 The Economy
Similar to last year, the restoration and insurance industry are resistant to recession, yet are still impacted by larger business cycles. It is my hope that I am incorrect on this issue, yet the foundational issues are very large. Top financial issues will impact the overall economic environment, which will influence the business functions of restorers. These trends will impact both the United States and Canada.
One contributing factor for the overall economy is that Inflation will be persistent. Higher prices for everyday living and running a business will be on pace with the current year and will not be limited to the 2% formal target. This will impact the cost of running our businesses and put pressure on insurance claims settlements.
The other limiting factor for the economy is the very high levels of debt. The big challenges that will drive most of this reality is based on massive levels of debt in government, corporate and at personal levels. This debt will weigh like a boat anchor on the economy, which will impact your business and potentially your employees. This debt will restrict the GDP growth, which may lead to lower short-term interest rates, yet the longer-term rates are more market based and will be limited by 10-year bond rates.
- I expect unemployment to be higher than in recent history, due to advancements in technology and fundamental changes in the labor market. The one persistent challenge will be with skilled trades. Immigration restrictions combined with an aging workforce will continue to put a premium on these positions. I believe that this will present an opportunity to attract top talent to your company. If you properly utilize technology, you can leverage a lack of restoration experience if you hire people with character that fit your culture.
- Although the 2025 4th Quarter GDP Growth has been exceptional, I predict that 2026 levels will be restrained with the example of – Home Depot predicting 2% growth in 2026.
Recommendations:
- Look for ways to scale using technology that will improve profitability and capital utilization in your business.
- Develop a solid strategic approach to your business, that is built around an operational and capital budget plan.
- Focus on cash. Many restorers claim that collections and cash is the biggest challenge in their business. I have seen many companies remove this pressure by disciplined billing, collection and cash management systems. Companies that focus on larger commercial losses may need different strategies, but typical restoration companies should be able to put policies and processes in place which will allow them to be cash-positive while maintaining an adequate line of credit for short term needs.
- Collect your deposits, progress payments and deductibles on all jobs. Pay attention to your larger commercial clients as their funds may be stretched. Also have discipline around your lien dates, since this may be your only leverage on some projects where the funds are not available or have been spent. Have discipline around your contracts and documentation, to protect your position and leverage them if needed. Use technology to provide documentation for pre-existing conditions, job activity, billing justification and liability protections.
Trend #3 Insurance Market Conditions
I expect to see some return to more familiar market conditions for the insurance industry. After 7 years, it looks as though the insurance industry is experiencing a soft market. This should result in lower, or at least stable premiums, new entrants into the market, more favorable underwriting and similar conditions. Some of the characteristics from the recent hard market will stubbornly be maintained, such as higher deductibles and claims management. The fear of large catastrophic losses will continue to hang over the market. After a substantial drop in insurance claims this past year, I expect a more consistent claims level in 2026.
One adjustment that I expect to develop as technology expands in the insurance market is a predict-and-prevent model. for commercial and residential policies. Insurance companies may use some of their excess reserves over the past year to invest in items that minimize future exposure while limiting premium increases.
Recommendations
- Take a strategic look at your marketing program. Consider the fickle nature of insurance coverages and the differences between carriers and other claims administrators. Make a long-term decision of where your potential partnerships align with your business and then take steps to associate your strengths with your strategy. If job volume increases, then this may be a good time to adjust your work sources.
- Review your virtual real estate. Make sure your reputation is intact and that you are properly positioned for a shift to generative AI searches rather than traditional search methods. Update your website and social pages as well as your video content.
- Proactively protect your profits. If you are not making at least 10 percent profit margins, then you will have challenges in creating and preserving the needed capital to support your future growth and stability.
The last several years have been challenging for restoration professionals. Adapting to technological changes will be difficult for many but worth the effort as you make investments in the future of your business. Restoration is essential and will be built by individuals using best-in-class solutions, technology, software and resources. Fortune favors the bold. The decisions you make will help you become a titan of the restoration industry in the future. Look at your business and then completely re-think your process to leverage your position today to stay relevant and then transform your business, your community and potentially your industry. During this transformation process, make sure you reinforce the personal touch that your company provides. As technology becomes ubiquitous and the process of restoration is democratized, you can truly stand out through care, attention to detail and empathy. Differentiate your company as a great place to work by building a deliberate culture that offers great opportunities for exceptional people to succeed in an uncertain world. The transition in our economy will be uncomfortable to many so work to be a comfortable, familiar and stable company during this transition.
Phillip Rosebrook Jr., CR
Phillip Rosebrook Jr., CR, is the president and managing partner in Business Mentors, and founding partner of RestorationTrainingOnline.com. He specializes in organizational change, building corporate infrastructure, defining marketing strategy, developing measurements for accountability and creating sustainable business plans. He is a frequent author for C&R, having earned the Golden Quill Award for an article on direction and vision. Phil is a RIA Certified Restorer (#179) and has held numerous IICRC Certifications. He has been active in the restoration industry for over 30 years and served as an industry advisor and consultant for over 20 years.
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