With summer behind us, we are looking towards the end of the year and the inevitable crush of last-minute efforts and outcomes to various plans and challenges that we have been pursuing all year long here at PLM. I am sure you’re doing much the same in your business as well.
Let me start with a financial update: We are indeed excited about where we find ourselves today with the potential to post a very solid year if we can finish the year strongly. Through nine months of 2019, the extensive efforts we have made towards recovering our footing on profitability have paid off, and we are on the cusp of an underwriting profit! Plus, policyholder surplus growth has been strong. While production and premium volume is a little weaker than we would like at this juncture, we feel comfortable that we will, by the end of the year, be back on track and achieve our production objectives as well.
After 2018’s disappointing results, I recognize and applaud the PLM team for the hard work and difficult decisions that they have made this year on behalf of the company and our policyholders. As a mutual insurance company, our responsibility is to manage the company in the best interest of our policyholders as a whole and, sometimes, the decisions seem to be at odds with that challenge on an individual policyholder basis. With regret, we had to separate ourselves from some of our accounts, and some of those were long-term accounts. We did so only after considering our options, reviewing our position and discussing with the client and their broker. We have had to take rate increases as well. There have been more loss control recommendations made during our visits and better follow up regarding compliance with those loss control recommendations. We have raised deductibles, and, in some cases, we have applied other coverage limitations.
Yet, today, 85 percent of our customers stay with us upon renewal. That is a bit lower than last year, but it’s above the industry average. We appreciate the loyalty, faith, and confidence that so many of you have demonstrated in PLM. We think that it speaks volumes to the value of a PLM relationship. We know your business better than any other insurance carrier in America today. Our flat organizational structure gives you access to our entire team in an instant. The professional expertise of our staff and their deep wood expertise (and our commitment to teaching some of our younger people who are still learning) ensures you are dealing with both a wood and insurance pro, which is particularly comforting during a loss.
Currently, profitability is fairly good in the property line of business and is acceptable in the general liability line. Unfortunately, like the rest of the insurance industry and in spite of improvements, we are still losing money (and a lot of it) in the commercial auto line of business. We will need to take further remedial actions, including more difficult decisions about renewing auto policies and at what price. Insureds will be held even more accountable for compliance with loss control recommendations in the auto line more than ever before. Simply put, both the insurance industry as a whole and PLM in particular, are not making enough money in this line of business to support the growing claims activity and haven’t for a number of years. This is not a wood or lumber problem; it’s a problem for American business and the industry that insures it.
On the other hand, it is nice to have a lot of the remedial actions behind us and more of a focus on growing our organization into the future. While we turned the focus of our Business Development Representatives towards these actions in the first half of the year, the group has returned their efforts towards actively pursuing new business. New business has picked up and we have noted improvement in renewal retention the last couple of months, particularly in the heavy manufacturing arena. This suggests a positive trend.
Feedback gathered at trade shows has been positive regarding changes we have made, particularly in claims. Our new Vice President of Claims, John Kennealy, has settled in and is strengthening our claims operation and its policies, procedures, and people. He can be reached at firstname.lastname@example.org or 267-825-9398.
Our renewal rights arrangement with AmTrust Financial took hold during the month of September, when we actually began transferring that company’s business to PLM. We are pleased to find that so many of their insureds were actually “coming home” to PLM. The pickup rate on our offers of continued coverage for AmTrust clients has met and, in some cases, exceeded our expectations. With the transfer of the renewal business, came a host of new brokers that we spent the summer educating on PLM’s appetite and interest for wood related business. We are also pleased with the underwriting team in Boca Raton that has joined PLM.
In February of next year (2020), PLM will be celebrating its 125th anniversary. Started by lumbermen in 1895, the lumber mutual concept grew to a string of six or seven independent insurance companies, most of which enjoyed the “mutual” form of ownership! Today, PLM is the only remaining lumber mutual organization in the United States. Few companies survive 125 years and we are pleased to be one of them!
Yet, with any anniversary like this upon us, we are contemplating what the next century will look like for our customers and our company. With that said, several of us spent a couple of days offsite in an effort to organize and coalesce the strategic planning process that is built around the core strengths of remaining focused on lumber and building material dealers, light wood manufacturers and heavy wood manufacturers.
The questions we asked included: how do we expand upon that niche in which we operate profitably? How can we be more beneficial to our policyholders? How do we provide elevated and broader services to our clients? How do we more efficiently run our company? How do we address and improve customer experience? What do we need to do to improve the quality of the staff that services our policyholders? How do we provide the coverage that policyholders need today and tomorrow, next year, and the year after that on into the future? How do we do that on a cost-effective basis that allows us to provide a competitive risk management solution for your property casualty insurance needs?
A lot of great ideas and concepts surfaced. We will take the next several months to vet them accordingly.
These are indeed exciting times! Let me hear from you — send your comments and thoughts to email@example.com or 267-825-9246.