Earlier this year, we released our annual report, which outlines the success we achieved in 2016 as an organization. We are also pleased that A.M. Best, the most widely recognized provider of ratings and financial data for the insurance industry, reaffirmed our rating of A- (Excellent). Our results continue to be acceptable as we wade more deeply into 2017.
Interestingly, we are off to the strongest start we have had in nearly a decade for new business development, while our ability to retain customers upon renewal is close to record highs. We believe that these results are a reflection of the value we demonstrate to our clients and the level of risk management and insurance we bring to wood-related businesses throughout America. Apparently, many of you (and your customers) agree.
Recently we have noticed a number of past clients returning to the fold. We feel this is due to competitors who have jumped into the niche thinking they had a better approach, but have become so overwhelmed with losses they are exiting almost as quickly as they entered.
We are exceeding our premium budget both on a new and renewal basis. Our losses are well within expectation and our expenses continue to remain stable due to the aggressive expense management programs in place.
Over the past four or five months, I have received a significant number of calls regarding trends in the commercial automobile marketplace—perhaps you have, as well. PLM and almost every other major commercial auto insurer in the U.S. have embarked upon broad-based programs to address unprofitability associated with this line of business. While many are talking about distracted driving being a problem, in my estimation, the issues in the commercial auto market reach much further than that.
Utilization of commercial vehicles has surged as a result of the rebound in housing and the economy—not only in the lumber industry, but for business in general. Hence, there are more commercial vehicles on the road today. Now, the drop in the price of gas, reduced unemployment, and an increase in consumer confidence have crowded the roadways further with a significant surge in private passenger automobile travel. This is occurring at a time when infrastructure projects focused on American’s highways have increased road hazards significantly!
We all know how difficult it is to hire and retain quality drivers. There are more inexperienced drivers on the road who continue to increase the frequency of losses to a significant extent. If you have been driving in urban areas lately, something you may have noticed is the number of bikes on the road. This has caused further angst. Finally, we add the issue of distracted driving—and I don’t just mean texting and cell phones. In today’s vehicles there are more radios, gadgets, and navigations systems that all contribute to additional distractions.
The difficulties in the commercial auto market are visible on the claims side, as well. The cost to repair vehicles, including the sheet metal involved, has increased. Medical costs are also skyrocketing.
So, what is the solution? We are closely underwriting each of our renewals, enhancing our loss control operations and attempting to provide insureds with more extensive support for various safety vehicle training programs. We have looked not only at the previous loss history of our insureds, but have attempted to look into the future to better understand what pricing will support losses in the pipeline. All in all, the insurance industry is enduring significant losses. At the end of the day we can expect pricing to rise—in some cases significantly— in the commercial auto marketplace as a whole.
If you want to talk commercial auto loss control, please feel free to contact Doug Hoyle, our Loss Control Director, at dhoyle@plmilm.com or 267-825-9128.
We recently held our annual policyholder meeting and were delighted to add two additional Board members to the PLM and ILM Board of Directors. Cally Fromme, Vice President of Development at Kodiak Inc. and W. Craig Myers, recently retired from PLM, both accepted their nominations to our Board of Directors and were elected during our April policyholder meetings.
Further, the Board was pleased to appoint four of our fellow employees to Assistant Vice President positions: Traci Barber, AVP of Customer Service; Kathleen Dalton, AVP of Operations; Tricia Kilrain, AVP Field Operations Western Region; and Bob McSorley, AVP Field Operations Northeast & Mid-Atlantic Regions. They were all recognized by the Board for their outstanding expertise and contributions to our clients and to PLM. Further information is available later in this document regarding these individuals.
Should you have any questions or comments please feel free to direct them to me at jsmith@plmilm.com or give me a call at 267-825-9246.