With the nation grappling with COVID-19, we find ourselves in difficult times. Our economy is in upheaval. All of us are practicing, to one extent or another, social distancing. Some areas of the country are in quarantine, lockdown, shelter in place, or whatever your state or local authorities are calling it. In addition to all of this, we are dealing with the personal concern for the health of our families, colleagues and ourselves. If you are like me, your head is spinning a bit, and it’s tough to focus on business.
However, this is my attempt to do just that. I want to discuss where we find ourselves financially, and where many of our customers find themselves. We have shared quite a bit about COVID-19 through emails sent to insureds, producers and prospects, as well as on social media. There is also a COVID-19 Resource Center on our website where we have been regularly posting our communications and different resources for our stakeholders. We will continue to provide updates on that front as needed.
I am pleased to report that, when considered against our financial targets, we had fairly good results in the first quarter. Historically, the first quarter is usually difficult, due to winter weather. With many insurance companies exiting the wood niche and refocusing their efforts on businesses that produce more frequency than severity of loss (because frequency is more easily modeled), we saw strong renewal retention both in January and February. During the first quarter, more than 90 percent of our insureds renewed their coverage with us, a testament to their belief in the value they receive from PLM in exchange for their premium dollars.
Submissions of potential accounts continue to grow on a year-over-year basis. In spite of the current pandemic, our March submission levels were up from last year. While it may not be the best time to shop for your insurance, many insureds have come to us seeking better value for their premium dollars, which PLM is known to offer, or because they were left with fewer options due to a number of competitors exiting the niche.
In light of social distancing, we have modified our approach to our new business and renewal processes in an effort to protect your employees and ours. Our loss control and business development representatives have delayed visits or scheduled essential visits on mutually agreed upon times including after hours or on Saturdays. In some cases, we have used other options, such as video tours or photos provided by the customer.
We did not achieve an underwriting profit in either January or February, but did so in March. We did see a reduction in underwriting losses on a year-over-year basis, which is a positive trend.
Policyholder surplus took a hit as a result of the volatility in the equity marketplace. In late February, we commenced weekly Board of Director Investment Committee meetings, as we anticipated the downward surge in the equity market. We trimmed a number of equity positions midway through the quarter and again reduced our marked-to-market exposure toward the end of March, as we worked to strengthen our holdings and ride out the volatility in the investment marketplace.
The transition to a fully remote workforce was smooth. We activated our Business Continuity Program well before the City of Philadelphia issued any shutdown orders and built out the technology necessary for all of our employees to be able to work remotely. With our IT staff working virtually around the clock, we equipped our 90 Philadelphia employees with remote capabilities and sent them home.
To aid with this transition to work from home, we implemented a series of “video huddles” daily at the unit, department, and company leadership levels in an effort to continue our operation and provide the service excellence that many of you have come to expect. We also launched company-wide weekly “Zoom” town halls.
Over the last six months, we have noticed a downward trend in newly reported claims, as a result of the heightened loss control efforts we launched late 2018 and early 2019. This trend continued into March. Many would say it is because of the drop in economic activity within our insureds’ businesses. That may be the case, but we will have a better understanding of this as we move through April.
Throughout the COVID-19 crisis, we have attended many of the virtual conferences and webinars run by wood trade associations. We are doing what we can to be supportive of those organizations as they cancel face-to-face shows, conventions, and meetings. To date, 23 shows have been postponed and an additional 23 have been canceled outright.
As I write this, the construction industry in most states continues to be deemed an “essential business” (as is insurance). Many states have indicated that retail and wholesale building material dealers and hardware stores fall into the category of essential businesses, as do pallet operations and sawmills. With regards to light manufacturing, it depends upon what product is being manufactured. We believe upwards of 80 percent of our insureds are still operating to some extent at the time of this writing.
We are aware and you should be as well, that there has been a significant increase in cyberattacks! We fully expect that more of these attacks will be successful as people modify their operations to remote operations. At least once a week, we are reminding our people about the threat of cyberattacks, and in particular the amount of “phishing events” that we see unfolding. If you haven’t paid attention to this area in your business, I strongly urge you to do so. With the rest of the problems facing all businesses at this difficult time, no one wants to deal with an additional, cyber-related problem.
Further, I would express some concern from a workers’ compensation and employment practices liability viewpoint. Balancing workplace safety, high standards for employment practices, and continuing operations is a delicate one in the best of times. Now, it requires razor sharp agility. More information on cyber-related protection and EPLI can be found in this issue.
I would be remiss if I didn’t take a moment to extend our recognition and appreciation for the efforts of our first responders and those involved in the medical profession. They are all working tirelessly on the front lines of the war against this terrible virus. They risk their own health and the health of their loved ones to help others. No matter what the problems we face in our own businesses, we need to take a moment to ask what we can do to support and thank them at this most difficult of times. PLM will be making various charitable contributions in support of all their efforts. We will also be helping those who are most vulnerable to this pandemic — the homeless and the soon to be homeless.
I wish you, your colleagues, your families and other stakeholders, success in navigating the turbulent and challenging times in which we find ourselves. As Americans, we have a tradition of overcoming adversity and rising stronger as a result. I have no doubt that we will do so once again while we conquer the challenges that face us all today. As always, the PLM team and I are here to assist you in any way that we can. While we may not be in our offices, we are all readily available by landline, cell phone, email or, for that matter, even snail mail.