The Dovetail: Issues to Watch in 2023

By John Kennealy, Vice President of Claims

As we start this new year, there are several issues you clients should consider that could have an impact on their business. Risk factors for the lumber and wood industries are constantly changing especially in an ever-evolving world. Here are some areas to watch out for that are sure to bring new challenges to their businesses in 2023.

While not new per se, fire, wind, hail, and collapse will always be a loss factor. In addition to these perils, PLM and the rest of the insurance industry are beginning to see new trends in the area of extreme cold snaps. Twice now, first in February 2021 and late December 2022, southern states were hit with severe cold that led to a spate of frozen pipe and water damage claims. Staying vigilant about recommended loss control measures aimed at better weather proofing their businesses is the best way we know to ward off such claims. Wrapping exposed pipes, letting faucets drip, and properly heating buildings are just a few ways your clients can reduce their exposure to these types of losses.

Another thing to consider with the usual loss perils noted above, is to make sure to discuss with your clients about whether equipment breakdown coverage is right for them. Supplementing the commercial property coverage form, equipment breakdown coverage will address pressurized boiler explosions, electrical breakdown, and mechanical breakdown otherwise excluded under the property policy.

An important area to watch is cybersecurity. It is imperative that they are protecting their business from sophisticated scams and cyber risks. For example, there is no coverage under the property policy when an insured is tricked into voluntarily surrendering property to a thief. Your clients need to be extra careful to protect their point-of-sale system through physical inspections and software updates. If they don’t have a cyberattack prevention plan, they need to get one! Lastly, your clients need to make sure their employees understand the threats and are trained to recognize them.

Another key area in 2023 will be business interruption insurance which covers the reduction in business income when operations are interrupted by a covered peril. It is crucial that your clients are following the process by which estimated maximum loss of business income is calculated in order to determine the insurance required and to avoid coinsurance penalties. It is especially important that they carefully consider peak periods and movement in sales volume to get this calculation correct.

A lot will come at your clients’ businesses throughout this new year. Make sure their business is as protected as it can be by working ever more closely with your insurance partners at PLM.