When hunting for new business in a soft economy, the preferred contractor programs run by many large insurance companies can be a good place to look, according to Sam Crunkleton, vendor consultant for Nationwide, the fourth-largest homeowner insurance provider in the nation. “The No.1 benefit to contractors is that insurance-related work is recession-resistant,” he says. Collections are easier and write-offs are much smaller, too.

FAST RESPONSE Contractors typically are vetted for insurance, workers' comp, and financial solvency before being accepted, explains Dave Thompson, Nationwide associate vice president of property technical claims. There's also a Service Level Agreement (SLA) that specifies matters such as how quickly the contractor will respond to customers and turn around an estimate. “A sense of urgency and providing fast response are the essence of our program,” Thompson says.

Insurers set the terms of service agreements, but often outsource administration to a “third-party administrator” (TPA). Service agreements generally are between the TPA and the contractor.

Nationwide and other insurers, for example, use Crawford Contractor Connection (www.contractorconnection.com). According to the company's online application, Crawford charges a fee of $250 to $350 to apply. Contractors also pay an “annual recertification fee” of up to $500, depending on sales through Contractor Connection, plus 3% per job sold, to a maximum of $1,500 per job.

CONTROL ISSUES Such programs can be a plus for some roofing contractors. But they didn't suit Joe Hall Roofing, in Arlington, Texas, says president Brett Hall, who discontinued his involvement in several programs more than a year ago.

“I liked the way they paid in 72 hours, but I didn't like the way they had us set up to respond to calls,” Hall says. He was expected to put program calls before all others, required to use “very extensive, difficult estimating software,” and to buy materials through a program purchasing network.

All in all, the programs wanted more control over his business than he was willing to concede, he says. “I felt I was being positioned to work for the insurance company, not the customer, and the reason I have my reputation is the customer,” Hall says. —Jay Holtzman is a freelance writer based in Jamestown, R.I.