Looking Back on 2020 with Andrew Belcher
By: Andrew Belcher
2020 was an unprecedented year for us all. Many businesses have had to pivot and adapt their usual ways of working, and forestry insurance was no exception. At Continental Underwriters, Inc., we are continuously striving for improvement for our clients and the industry, and today we’re going to shine a light on some of the ways we’ve applied that company virtue to the tumultuous shifts 2020 brought us.
SHIFT #1: A Drop in Capacity for Forestry Insurance Products
Since our founding in 2013, we have taken pride in our ability to anticipate and exceed the needs of our customers. This came to full fruition for our company in 2020 after witnessing the late 2018-2019 market transition of big-name insurers becoming less and less willing to cover high-risk industries like forestry products. Because of this change and the subsequent events of 2020, many insureds are seeing limits cut while rates and deductibles continue to rise.
While this ever-changing situation likely feels overwhelming to most other insurers, we have really found our stride in being able to navigate the nuances of the marketplace while remaining one step ahead of whatever’s next, and it all starts with identifying risk. By knowing the context of the business as well as the ins and outs of the forestry class, we’re helping brokers and their clients navigate this uncharted territory by looking for ways to better manage costs and find policies that reflect changing risk appetites.
One immediate thing that brokers can do for their clients (besides continuing risk assessments, of course) is to start having open conversations now about what’s happening in the industry, offering to explain why these shifts are occurring and discussing the kinds of regulatory practices that mills can start putting into place to better manage costs and remain insurable in the future.
SHIFT #2: Growing Needs Around Business Income and Stock Insurance
Most businesses saw the first big impact of the pandemic during that initial shutdown in March. But as soon as sawmills were identified as an essential business, things turned around quickly for the softwood industry. While mills continued to work business as usual, folks quarantining at home started considering finally building that deck or treehouse they had always dreamt of. Combine this trend with a boom in new construction homes, and you end up with a market chock full of demand while trying to keep up with supply. This could mean that the Business Income has increased, or stock values are higher than previously carried. But with this growth comes the need to accurately portray that increased value in the business income worksheet and schedule of values.
As experts in the forestry insurance industry, our team at Continental Underwriters, Inc. has been busy educating and coaching our partners to be as equipped as possible to have conversations with their clients about revising these BI worksheets to reflect the growth and make sure that stock is accurately listed in order to get the correct limits in place. Another goal we’ve prioritized during this time has been ensuring that our brokers have all the resources and confidence they need to jump into discussions with clients about renewals, even if it’s earlier than they usually would.
As for our clients, the one main thing they can do in the immediate future to remain profitable is being open to these conversations and willing to take another look at their business income limits currently in place. In order to continue anticipating the needs within the lumber industry, we must be willing to have these open conversations as soon as possible.
SHIFT #3: Property Conservation Programs Lead to Better Insurance Rates
Something we’ve seen arise in the forestry business – particularly amid the insurance marketplace – is the countless list of benefits from property conservation programs. For example, mill owners that have already implemented formal programs for things like hot works, housekeeping, preventive maintenance, and safety training are on average paying less than those that have not yet made those adjustments.
For a long time, there wasn’t a big focus on these controls by insurance companies. But over the last several years, and even more so recently, it has become more important than ever for folks in the forestry industry to be paying attention to these practices and incorporating them into their routines as soon as possible. Beyond the formal programs, a lot of it comes down to just basic mill care, like cleaning up your station after a shift or wetting down the wood before welding. It might sound over-simplistic, but simple tasks like these have become the differentiator in whether your facility is insurable or not.
We have been keeping a close eye on these standards changes along the way, and because of that, our teams are more than well-equipped to get clients educated and excited about this safer and smarter direction the industry is going in. Our team is prepared to help clients through any tactical roadblocks they may encounter while trying to implement these new routines, and we’re excited to see how the changes will benefit everyone in the long run.
Staying ahead of what’s next in the lumber industry is one of the things we do best at Continental Underwriters, Inc. But a key part of doing that is also being able to look back and see how far we’ve come. 2020 was one for the books, but with the right partnerships in place between the mills, brokers, industry representatives, and service providers like us, we have a feeling the best is yet to come in 2021.