The numbers are in for July, and we are quite pleased. Premiums surged to $28 million, and it looks like we will produce a much needed underwriting profit for the month. Investment income and unrealized equity gains will further enhance our policyholder surplus to a record level north of $176 million. This solid performance has had a positive impact on our year-to-date results by reducing over $1 million of negative premium variance, reducing our underwriting loss by more than $1 million, and by pushing our surplus to record heights. Thanks to timely payments from our policyholders, we also saw an improvement in cash flow.
July did also bring with it some sad news. W. A. Bissette, one of our long-time board members who had only retired from the PLM Board last April, passed away. You can read the article on this remarkable individual in this edition of the Lumber Memo.
Embracing Mutuality and Growth Through More Diversification
I rarely speak about our Board of Directors, but I thought I would take a moment to do so. A company that treasures its mutual form of ownership like PLM thrives on a diverse group of board members from a variety of backgrounds. We have always prided ourselves on the fact that we have had several wood industry-related clients on the board. They are complemented with members who have investment, accounting, insurance, and legal expertise, representing a wide variety of viewpoints. We are in the process of shrinking our current board from 13 down to nine or ten members over the next several years, which is more in line with where PLM’s board has traditionally operated. We plan to use this change to diversify the board in other ways as well over the next 24 to 36 months. Diversification in our minds is a critical process to strengthening our governance and our future as an organization.
On the Road Again
We are back in the “show business”, as we see a surge in trade shows hosted by the various wood-related associations and groups, as well as the insurance agent and broker organizations. It seems like everyone is looking to get back together face-to-face with record attendance touted by various association executives at the trade shows I have recently attended. It is great to be back out again amongst customers.
These in-person events also allow me to better gauge where we are all headed from an economic viewpoint. The insurance business, like the wood business, has been and always will be a people and relationship business. While we can “Zoom”, “WebEx”, and “Teams” with the best of them, we like to be out shaking hands and chatting face-to-face with those who we insure and those we would like to insure, as well as stakeholders of all kinds.
Managing Fluctuations in Lumber Pricing
I have also started one-on-one meetings again with insureds. One of the things that has come to my attention is that we could do a better job with our insureds when it comes to helping them value their business property (building, contents, equipment, and stock). We are all aware of the increasing cost of lumber and building materials. It makes it very difficult to value your stock when prices are bouncing around as much as they are, but value it you must. We continue to offer a “monthly reporting form” to assist us in providing you adequate coverage during these times of instability. We are fully aware that this form is not ideal, but it is probably the best tool available to keep your stock properly insured during wild variations. Your PLM business development rep or underwriter should be able to work with you in designing a coverage platform that meets your needs.
This form alone, however, is not enough. The monthly reporting reform neglects to recognize values you are carrying on your building and your other contents including equipment. If we all agree the prices on lumber and building materials are soaring, think about what it is going to cost to rebuild your building!
Forget the idea that one of your contractors is going to give you a great deal (they won’t). Too often, those conversations end when the dust settles after a loss and/or contractors have more work than they know what to do with (like now). If you have not looked at the cost to rebuild, now is time to do so. Again, PLM can help you here with several different tools. Reach out to your loss control or business development rep to start that process.
Equipment and contents coverage should be another topic of discussion. Probably more difficult than anything is to try to establish the value of the equipment that you have. After a loss, no one wants the same equipment. They want the updated, newer, and greater model. Also contributing to the problem, people often leave certain equipment off their policies for one reason or another. You need to look at the equipment you have and the coverage you have on it. It is much better to find out that you forgot to add a piece of new equipment to your policy before a loss occurs rather than after.
The Competitive Landscape
We have become aware that another carrier has decided to leave the sawmill and pallet market paving the way for continued turmoil in the heavy manufacturing marketplace. We are also hearing about changes in light wood manufacturing with a carrier or two no longer willing to write wood business. Many wood insureds are receiving cancellations or non-renewal notices because of this continuing upheaval. We, at PLM continue to remain committed to providing as much market stability and the best value for your insurance premium dollar that can be afforded by any insurance carrier in America.
Are there cheaper prices out there? Absolutely. There are also insurers with inferior customer service and less understanding of your business, which is important from a risk management viewpoint – particularly in the event of a loss. We don’t aim to be the cheapest, we aim to be the best value to our policyholders, to serve you in your time of need, and to provide consistent value for your hard-earned dollars.
A New Option for Workers’ Comp
In closing, I would like to highlight the great job that the ABM Agency has been doing in the workers’ comp arena. ABM (a division of PLM) commenced operations just over a year ago. We have the capability through ABM to provide PLM clients with competitive workers’ comp quotes from a group of hand-selected carriers – carriers that can provide the same value to you that you have come to expect from us. These are carriers that have taken the time to learn the wood business from us.
So, with that said, on your next renewal, please ask your broker to provide us with the information necessary to offer a workers’ comp quote to accompany your PLM renewal. If you would like to speak more about the workers’ compensation capabilities of ABM, please reach out to Genevieve Ventiere at email@example.com or at 267-825-9254.
As always, I look forward to conversations and your comments. Please do not hesitate to reach out to me at firstname.lastname@example.org or at 609-513-0928.
Lumber Memo: Issue 4 – 2021
IN THIS ISSUE: