Producer Update: Issue 4 – 2023

With fall now upon us, comes the normal surge in late year activities as we all attempt to put the finishing touches on the year. It is still too early to tell profit-wise what type of year it will be at PLM.

We continue to be deeply entrenched in wildfire and hurricane seasons. With Hurricane Idalia making landfall on Florida’s Big Bend Coast and across the Southeast, we once again reached out to the many insureds in the path of the storm to discuss hurricane preparation steps. We hope these calls helped our customers prepare for the storm and minimize or avoid losses to their property and operations. We collected cell phone numbers and provided them with instructions on how to contact us if they needed help or had to submit a claim. If you are unsure if your cell phone or email information is on file, please reach out to PLM’s Customer Service Department at 800-752-1895 or at custserv@plmins.com. No matter where you are located, it is very useful for us to have that on file at the time of an emergency. On the day after Hurricane Idalia, our customer service representatives were back on the phones calling our insureds that were in the path of the storm to determine their status. We were able to do this even when the landlines were down because we had their cell phone numbers. I question how many other insurance companies reach out like this in the face of an impending disaster. I have had many insureds tell me there was something comforting in those calls, to know that they were not facing this stressful time alone. We do not expect much claim activity from Idalia based on our “modeling” but there is always a question in my mind with regards to how accurate any modeling tool is.

Our financial results have not improved since my last commentary. In fact, they deteriorated a bit in July, followed by a bad August. It remains to be seen whether or not we can recover our footing and improve our underwriting loss ratio before the end of the year, similar to how we did last year. Still, our balance sheet remains strong due to improved investment income, and production continues to be very robust. Our policy retention numbers (the number of customers that choose to renew with PLM) are at all-time highs at more than 90%. I would be remiss if I did not thank our policyholders that have put their faith and confidence in PLM by allowing us to handle some or all of their business insurance needs. We truly appreciate the opportunity to serve you. Do not forget we are also interested in providing you with a workers’ compensation quote through one of the many carriers we work with, through Green Tree Risk Partners, for this coverage.

Recognition in the Industry

This past month A.M. Best, the insurance industry’s leading analysts of financial strength, published its annual “Top 200” property-casualty insurance companies in America based on premiums. PLM jumped 25 slots and joined this group in the 188th position. Our growth over the last two decades has been remarkable, a testament to the fine work that our people are doing and the willingness of businesses in the lumber and wood industries to choose PLM! The PLM team remains committed to professional development with almost 100% involved in an insurance course. This ensures that with every interaction you have at PLM, you will work and speak with an insurance professional.

HBS Dealer recently recognized Kelly Sullivan, our Senior Loss Control Representative in Texas, as a “Rising Star” in the hardware and building supply industry. We are extremely proud of Kelly and the effort, commitment, and dedication that she’s put forth on behalf of PLM and our customers.

In addition, Lindsey DiGangi, our Assistant Vice President of Marketing, has recently been recognized as one of LBM Journal’s 40 under 40. You can read more on these two award recognitions in this issue.

Insurance Business America also just announced that PLM has been added to its “Top Insurance Workplaces in America”, another accomplishment that we are proud of and will help us attract and retain the professional talent that we need, and you have come to expect.

We believe the PLM team sets us apart from other insurance carriers. Too many times people make buying decisions based on price and not the quality of the product or service. We’ve all been there. Many of you have scratched your head knowing you provided world-class service by a great team with quality products, yet your customer has moved their business solely based on a small price differential. Everyone promises great service, but few can deliver it consistently and continually. It takes a great team to do that and we at PLM are extremely proud of the team we’ve assembled.

Please note the article in this issue on the recent appointment by PLM’s Board of Directors of Matthew Kienholz to Assistant Vice President of Regulatory & Government Affairs. Matt focused much of his entire career in the financial side of the insurance industry, but in an effort to broaden his capabilities he accepted the challenge of rebuilding PLM’s Regulatory and Government Affairs Department, something that was in need of attention. He is also leading our political efforts while organizing the team that works with several of your associations that are involved in this area.

Rising Insurance Premiums

People ask me all the time about soaring insurance premiums, so I thought I would address this issue. The insurance market remains a difficult one in general, with reinsurance costs soaring and in some cases availability of market “capacity”, particularly on large property lines, being difficult to secure. Like you, our employment costs are rising, and inflation has impacted the cost of everything in our business, including our own insurance program! On the claims side, inflation is impacting the cost to rebuild and repair in both the property and in the auto and general liability areas. Juries are handing out larger verdicts in general (we call that social inflation), nuclear verdicts (8-digit settlements) are becoming more common, the practice of third-party litigation funding, and something called the “reptilian theory”. The “reptilian theory” essentially suggests that the facts or law do not matter, but that the business owner is a bad person and has allowed his or her business to do bad things, and so jurors should award damages to punish them. Think about a situation where a business owner doesn’t test new applicants for drugs and then one of their drivers is involved in an accident while high. All of these trends are applying pressure to the general liability, commercial auto, and umbrella losses.

Property losses are up, and there has been a change in the types of losses we are seeing. New fire losses remain subdued, while weather-related losses, particularly to roofs, have soared in all areas of the country. There was a time when our insured located outside the Southeast would express concern for us charging them a premium for hurricane coverage. Today, what is driving costs are the hurricanes in the coastal areas, straight-line winds, tornadoes, wildfires, powerful hail, and lighting events that occur all over the country on a routine basis. So, costs are up, and availability is down when many are seeking to increase coverage limits, which is resulting in rising prices. Do I see this changing in the short term? While many might indicate they do, I am not so sure. Frankly it is too early to tell what next year will look like from a property insurance viewpoint, and I do not see the conditions on the liability side changing.

So, with that said, what can you do to influence your premiums? A good place to start is by actively attempting to eliminate or reduce your losses. For instance, did you know that some of the major areas of loss for a wood business from a general liability viewpoint are loading and unloading, forklift operations, and slip and falls? If you are a dealer, consider construction defect claims. Did you read the contract you signed or just signed it to get the business? In the auto areas, it’s all about driver training, distracted driving, and vehicle maintenance. I realize it’s tough to find drivers, so there may be pressure to lower your standards, including not drug testing, but think about the cost at the time of a loss. In regards to property, top areas of concern are electrical systems that are overloaded or not maintained, roofs that are older, and hot work. Check out our Loss Control Center at www.plmins.com/loss-control/ or talk to your PLM Business Development or Loss Control Representative to discuss what you are doing in these areas and what more could be done. Keep in mind, however, that this is not a loss frequency business, it’s a severity business. This industry does not have a lot of small losses, in fact many don’t have any, until they do, and it is severe in nature.

Finally, I would note that recently we have been asked to speak at various wood association events on a wide-range of insurance-related topics from insurance basics, the claims process, insurance pricing, the impact of cannabis on a business, and risk management issues. If you’re involved in a wood trade association or buying group, please feel free to reach out to us if you are interested in presentations for your membership.

I invite you to reach out to me to discuss any and all insurance-related topics by calling me in my office at 267-825-9246 or dropping me an email at jsmith@plmins.com.