President’s Letter

It is truly with a heavy heart that I must open this edition by informing you of the passing of Kathleen Christine Dalton, PLM’s Assistant Vice President of Operations. While there is an article focused on Kathleen, it is noteworthy to say that she was a key member of our leadership team here at PLM. Her unexpected passing has been difficult for my colleagues and me to absorb. She was a good friend with whom I worked closely with for many years, a colleague who had my complete faith and confidence, and someone who excelled in working with customers and brokers alike. She was a talented and extraordinary insurance professional who understood the wood business and was taken from us much too young. Our thoughts and prayers are with her family.

As we move on to review the first quarter’s results, I must say to be honest, they are indeed mixed. After experiencing robust premium growth in 2020, we saw a slowing down in our production results. While revenue grew slightly on a year-over-year basis, we did not achieve the new business objectives that we set for ourselves in January or February. Somewhat cautiously and optimistically, March new business was very strong, and it appears that we had a very good April 1st, which bodes well for April production results. Renewal retention remains very strong, which we take as an indication of the value our customers perceive in a PLM relationship.

Profitability was negatively impacted by the Arctic weather that business owners in many states throughout the country endured. At the end of the day, this will be a major event for the insurance industry and has had a negative impact on our first quarter profitability.

Policyholder surplus remained flat for the most part, over a year-end basis, but was up dramatically on a first quarter basis.

We continue to be concerned about commercial auto losses, particularly in the retail/wholesale building material dealer class where we have not seen the significant improvements in terms of risk mitigation that we are witnessing in the light and heavy manufacturing classes. Heavy and extra heavy trucks are the root cause of the problem which has only been exacerbated for those accounts located in metropolitan areas, and/or in less than favorable judicial environments.

While we are busy implementing and working on a significant variety of risk management and loss control programs focused on auto, these programs are not yielding the positive change that we would like to see at this stage. The reality is, it is becoming clear that management and ownership involvement at the customer level is the key to fixing this problem. Management and ownership must take an active role and be committed to improving the operating environment for their auto fleets. Without that key ingredient, all the loss control programs and premium increases in the world will not have the effect needed to bring profitability into this line of business.

Clearly, we are not alone in this. The entire insurance industry is reacting to the lack of profitability in the auto, general liability and umbrella classes, and the subsequent rate increases and the restrictions in coverage and capacity are becoming more problematic as the new year wears on.

The new program that we launched to insure Wood-Mizer equipment, and other types of portable sawmills is catching on and we are seeing a steady flow of this business, as noted in the following article in this edition.

I wanted to close my commentary with a few quick but important points.

• Copper thefts have risen dramatically due to the rising price of copper. If your clients have facilities that are currently unoccupied or that they are rarely using, please recommend that they secure their operations tightly and think about installing some type of motion detectors on the property to alleviate this concern.
• If your clients are operating a facility that has been shut down, please suggest that they follow the machinery and equipment manufacturers’ start-up procedures. If this equipment has been idle for any length of time, they should not simply turn on the switch and walk away expecting everything to work normally! It is a quick way to a devastating loss.
• As we all know, property values are soaring. A recent insurance trade journal article indicated that 70% of businesses are underinsuring their properties today. You and your clients should think about the soaring prices of building materials, and then consider whether or not the business has enough coverage. The answer is likely no. We suggest that business owners reach out to our loss control and business development representatives for a conversation regarding this very topic. The last thing your clients will want is be caught short after a loss from a property coverage standpoint.
• We have seen an increase in wood burning stove losses. If this exposure exists in your client’s operation, we encourage them to review the risk management resources on our website on the proper insulation of wood burning stoves and our position on burn barrels. As always, our loss control and business development representatives are available for a conversation regarding this topic.
• Producers can also remind their clients of the importance of cyber training. We are doing it at PLM almost every quarter. Unfortunately, we learned the hard way that this type of commitment was necessary. We recently heard of two or three lumber dealers who were forced to pay ransoms to get back control of their systems. Don’t let your client be the next one. If your client would like some advice regarding the different types of cyber training available please have them reach out to Erin Selfe, our Vice President of IT, at eselfe@plmins.com. She can point them in the right direction to get them started with a smart cyber training program.
• After several years of profitability, we are seeing an increase in our EPLI claims (see accompanying article). The political environment, COVID-19, and the “Me Too” movement has heightened people’s awareness and is driving activity. When your clients purchase EPLI coverage from PLM, they get more than just an insurance policy; there are a host of tools available to help them understand what needs to be done to control EPLI exposure in their business. It is always someone else’s business that has the problem in this area until it is not.
• Our commitment to professional education continues to be strong. We are delighted to see one of our younger underwriters achieve her CPCU designation, the insurance industry’s premier designation. Marlaina Hahn, who has a Risk Management degree from Temple University and has been with us a short two years, recently completed her last exam to earn her CPCU. We are extremely pleased to have her on the PLM team.

I covered a lot of material in this commentary, and I hope you came away with an idea or two that can help you and your clients move your business forward. Should you like to chat, please do not hesitate to reach out to me at jsmith@plmins.com or at 267-825-9246.