President’s Letter

John K. Smith, President & CEO

John K. Smith, President & CEO

During my career at PLM, I have made it routine to frequently review our accounts to ensure that we are continually providing the best products and services to our insureds. About six months ago, as I was reviewing some new accounts, I began to question whether we were spending enough time with our existing insureds. My concern was that our relationships, especially with our long-term customers, were growing a bit too distant. I also started to recognize patterns in our Underwriting files that suggested that if we were to physically visit every location that we insure throughout the United States, and do more loss control work with our customers, we could improve the quality of our insureds’ operations (and, as a byproduct, our results).

With the buy-in of our executive team, we made the decision to refocus our business development efforts for the first half of 2019, and to concentrate our energy on enhancing our loss control and risk management services for insureds, which has also granted us the opportunity to update and verify our underwriting information.

If you are a longtime insured, or you have received this publication for any length of time, you know that I frequently mention that the competitiveness and quality of your insurance program isn’t determined by the price you pay your insurance company, but rather the value that your hard earned premium payments produce. In other words, what are you getting in return for your premium dollars? Is it just coverage? All too often price is the only thing that many insureds consider and, to be honest, they don’t do a very good job in comparing coverages. Their insurance review turns into more of a price comparison based on the belief that the coverages and services (risk management, customer service and claims) from two competing insurance companies are similar in nature. Nothing could be further from the truth.

Even here at PLM, the small committee responsible for buying reinsurance coverage can spend better than $50 million dollars each year doing so. Do we look at price? Yes. Do we make a decision with whom to place our reinsurance based solely on price review? NO! We look at what services the reinsurance broker and companies provide, their financial viability, and whether or not they understand the lumber industry and YOU – our insureds. In short, we are looking at the entire deal and trying to create long-term, mutually beneficial relationships. You may think insurance is a commodity, but we disagree.

For nearly 125 years, Pennsylvania Lumbermens has always made it our priority to provide value well past what any simple premium comparison will show. We have always felt that it has been about our business development and loss control representatives’ ability to assist you in basic risk management techniques. It is our expertise in the niche and our understanding of you and your business that allow us to help you determine how you can choose to assume risk with which you’re comfortable, reduce risk with which you’re uncomfortable, or avoid risks that cannot be managed. Though this has always been our goal, we recognize the need to formalize this program and this process. If we are going to visit our insureds, we must ensure that we visit all of our insureds at each of their locations. With this concept in mind, the plan we call The Relationship Enhancement Program took root.

In January, we unveiled the program to our Underwriters, Business Development Representatives and Loss Control Representatives for implementation. We placed an added emphasis on general liability and auto risks that our insureds face. To date, we have surveyed more than 5,000 insured locations and over half our accounts. We have issued 2,500 loss control recommendations for improvement – most of which have been gratefully accepted and complied with by our insureds.

Feedback from our customers has been very positive regarding our efforts. As a result of these surveys, we have been able to identify areas where an insured’s coverages can be amended to fit their needs, risk management can improve safety on premises and on the road, and education can help support the goals of our valued customers. We have supported our insureds in their efforts to focus on improving their auto exposures by providing educational sessions on-site, assisting in the signup for MVR monitoring, and making other training tools available.

We are more than half-way through our Relationship Enhancement Program, which we are expecting to complete by July. While we love to help educate our insureds and offer them valuable resources, this is an opportunity for us as well, to meet with all of our customers on a personal level and let them know that our relationships are the most important part of this business. Following this program, we expect to ramp up the AmTrust renewal rights transfer that we recently announced. If you have not yet heard, we are picking up that company’s business as they make an orderly exit from the lumber niche. Should you have any questions about this matter, please do not hesitate to contact me accordingly.