Hi, welcome to today's webinar, Logging Equipment, Introduction to Exposures and Values, hosted by Inland Marine Underwriters Association. I'm Lillian Coulson, Vice President and Secretary at IMUA. Thank you for joining us today. We have over 180 attendees registered today, and we look forward to a great session. Also thank you to my colleagues, Eileen and Ali Monreale, for working behind the scenes to plan and coordinate this webinar with today's presenters. A few technical tips. You'll find your attendee control panel on your screen that will minimize by default. At any point, you can right-click on the orange arrow icon to bring it back up, and then go to uncheck, go to options, and then uncheck the auto-hide on your control panel. Here you'll also find the handout tab with an abbreviated PDF of today's presentation. There's also in your control panel the question box where you will type in your question and then click submit. I'm going to write the questions for our presenter, Jeff Vaughn, who looks forward to answering them during the Q&A session at the end of today's presentation. To encourage you to ask questions and to encourage your participation, IMUA will email a $25 Amazon gift card for the most best engaged attendee, a combo of those criteria. We like to add a little competition and fun where we can, so let's get started. I'm honored to introduce today's webinar presenters. Jeff Vaughn is currently the Vice President of Programs at Specialty Program Solutions, known as SPS. Since 2015, he has been instrumental in the creation of the Atlanta operation and is responsible for all operations, underwriting, finding authority, marketing, and program management functions. Prior to SPS, Jeff was the program manager and spearheaded the creation of the Inland Marine Forestry and Construction Program for on-point underwriting. His responsibilities included operations, production underwriting, marketing, finding authority, carrier relations, technology, and compliance. During his tenure at on-point, the operations grew from startup to an annual growth written premiums in excess of $15 million. Jeff began his insurance career in 2000 at Britpulk Insurance, an MGA specializing in the forestry, logging, and construction equipment industry, where Jeff held numerous positions over a seven-year period, including marketing manager, production underwriter, claims and loss control, and senior underwriter. Jeff lives in Atlanta, Georgia, and when his schedule permits, he enjoys golfing, fishing, and other outdoor activities. Jeff presented on this very topic of logging at IMUA's 2022 Annual Meeting in Savannah to positive feedback, and we're thrilled to have him with us today. Please welcome Jeff Vaughn. The floor is all yours, Jeff. Thank you, Lillian. Hey, everyone. Good afternoon. Appreciate you sitting in. Well, if you're ready, we'll jump right into it. I'm not familiar how many of you are within Woods Logging Equipment. So I figured I'd give you kind of an overall of what I've seen in the industry, broken out by equipment, regions, exposures, and so on, and then kind of we'll focus more on the southeast, which has been my area of expertise from Texas to Virginia. So we'll walk through the various regions. So as you can see, the coverage is first-party physical damage, mobile equipment used in the trade. Over the years, the programs I've written were primarily with admitted companies. I have done some admitted, but a majority of the business of the competition is admitted as well. We use a combination of AIS forms and some proprietary forms as well. AIS has been pretty good with our standardized forms. We've done a couple of enhancements here and there, some of the endorsements that were specific for the logging and lumbering class. You'll see the eligible classes. These include the wood mills, logging operations, the wood mills, excuse me, wood yards and mills, we cover the mobile equipment with some stationary. I would like to briefly touch on the chipping and mulching operations as they are high risk and could involve both on-premises and in Woods exposures. These operations have the potential for very high aggregate values based on the chippers and grinders alone, which can run in well in excess of 500 to a million or some of the newer machines. Keep in mind, you'll have additional supporting equipment as well. So your total TIB in any one job site or premise can fluctuate tremendously. Majority of these machines include fire suppression or multiple fire extinguishers. Now in lieu of water, you could do cold fire and some other items are highly recommended and any additional water on-site water supply is a plus. By that, if you're on-premises, main water supply is in close proximity to the chipping and grinding operation and in Woods, a water truck is pretty handy to have on the job sites. So for this presentation, we'll focus more on the in Woods exposures and of the logging operations. So as you can see, there are four timber producing regions in the U.S. Due to the short time frame, we'll just touch on the three blended both the Northeast and the Midwest together, but the South accounts for a good percentage of the timber production in the U.S., plus that's where we write a majority of our operations have operated. The remaining regions, Pacific Northwest and Midwest, Northeast regions are relatively close in percentage and production. So a typical logging operation in the Southeast, the terrain is more rolling hills, gentle slopes, so use of wheeled machines is preferred. Your fellow buncher, that's your main piece, utilizes a sawhead attachment to cut the trees at the base and lay over. As you can see from the picture, the buncher reference is from the machine's ability to bunch up the trees and cut multiple at one time. Now these are high valued and range from 250 to 500. This slide is a little dated. They've actually gone up a little more and then you throw on some of the supply chain concerns and so on. The machines keep really increasing in value. This is a very high risk unit, so we'll go into more detail and exposure during the claims section of the presentation. The skidder is a unit below and is an integral part of the operation. As the buncher cuts the trees, the skidder hauls into the landing or loading zone. Now skidder price tag can run from 200 to 350,000. Again, these all depend on the model, year, make, and model. The skidder is also considered a high risk unit. Now on any given job site, both these units run for an average of 10 plus hours a day. So between the combination of constant ground speed, external heat, high engine temps and hydraulics, these have a considerable impact on the machine. Log loader, typically located in the landing or loading zone and constantly moves the wood around, loads the trucks to haul to the mills. Price range can, you know, from 150 to 275, depending. These units are considered low risk and exposure is somewhat limited as these machines are stationary with less stress on the engine, hydraulic systems, and involve more idle or downtime. So consider a small three-piece logging operation and the combined value for the units can vary widely depending on the year, make, and model. On average, 75% of logging contractors run one to two crews. So with just three of these minimum pieces used for a typical operation, you can run in well in excess over a million dollars at any one job site, not counting the additional support equipment they'll have on hand. So we'll briefly touch on the Midwest region. The terrain varies a little more from rolling flat to steep. Preferred cutting machine in this region are the track versus the wheeled processors and harvesters. These allow for better stability and maneuverability. Processors have a very versatile head, which can be programmed based on the tree diameter to ensure fast and precise harvesting of the wood all in one motion. Keep in mind the type of timber, the geography vary widely, so the machines they use may also vary depending on those conditions. These processors run from 300 to 500. Again, they keep increasing in value. So along with the processor, you have your forwarder, which are more preferred over the skidders in the region. These units have a larger carrying capacity and maneuverability and follow behind the harvesters collecting the cut logs to transport to the landing. As with the processor, values are pretty high, up to 500,000. There's also a knuckle boom located on the unit, so you can do some loading and unloading at the cutting site and landing. Log loaders are the preferred method for loading and unloading, and operations consist of wheel loaders, track loaders, or trailer mounted loaders. There may be additional support equipment on site. The minimum logging operation for the Midwest may range from two to three units. These units are higher value, so again, two newer units and you're well over the million dollar mark, not counting the sporting equipment. The Pacific region is extremely fascinating, and the equipment they use varies significantly. The machines typically utilized for harvesting range from mechanized to non-mechanized with processors to traditional felling using chainsaws. Working conditions are very difficult to extremely steep, the mountainsides. Note the increased sticker price on these units. Anyone who has watched Axeman on the History Channel would be familiar with some of these machines. If you have not, it's definitely worth a YouTube search. The show pits three large logging operations against each other in various locations in the Pacific Northwest to see who can harvest the most timber in record times. It's a pretty cool show, I recommend you guys look it up. In addition to that, they also utilize yarders in the same region. There are a few different configurations and variations of the yarder, but most are used as stationary or mobile with extended boom. These have guy wires, anchor points, and a system of pulleys and winches to pull logs up the mountain to the landing zone. You'll note the sticker shock is well over a million, and when you get into the, they're extremely expensive when you get into the newer ones. In addition, you'll have all the supporting equipment also. So this is a pretty cool skyline operation. The main line is the line that runs from the tower down to the anchor, and the carriage is the one that pulls the cable, pulls it back and forth. These are the logs. The trees are manually filled, and the chokers, employees on the ground, wrap cables around the fallen logs, and the carriage is typically radio-controlled, gas-powered pulleys, pulls them up the mountain to the landing. Minimal logging operations for the Pacific, again, range from two to three units. The yarders alone are extremely valuable, depending on the year, make, and model. So we'll shift gears a little, I wasn't sure who all was familiar with kind of the production or supply chain, but this is kind of what you're looking at from a timber to a merchant. So it all starts at the top with the landowners, timber dealers, and various mills that own the timber. These are some of the larger companies across the U.S. From there, each of the timber owners negotiates the harvesting of the wood. Majority of landowners have contracted logging companies and push productions in quarters as needed. After harvesting, you've got your logging companies that use their contract haulers or their own fleets to transport to the mills. From there, lumber is shipped to the retail wholesale vendors after it's through the processing, and then there's your end to the supply, or to the vendor. Now as you can see at the bottom, the lumber prices have been very volatile over the last few years. After a considerable increase through the end of 2020, lumber prices skyrocketed to an all-time high, driven by historic levels of demand and mounting supply chain issues. It was nearly a 400% jump in lumber prices, so anyone who's been to their local hardware store had noticed the price hike in a two-by-four or a sheet of plywood compared to just a few years ago. One of the associations that we follow very closely and we ended up joining, sent me a survey of loggers in the Midwest and Southern regions. And the loggers were asked a number of economic and operational questions. Their overall outlook was similar to 20 and 21. This was 22 results with no significant change from previous market conditions. Majority of the issues related to their top three concerns are of course, rising fuel costs, trucking or transportation costs, which are the owner and contract haulers, and surprisingly, or not surprisingly, their insurance costs. The consensus is with the increased cost of lumber and increased operational costs, the problem is the loggers are still being paid the same. So between the mills, the owners, the retail and wholesale, who benefited from the price hikes? Now we've seen some of the price come back in line over the last year or two. So my favorite, and that is the primary cause of loss is fire. And we'll start with the high risk units, which I mentioned earlier on in the presentation. These units operate under extreme temperature, pressure, and any lapse in maintenance or routine repairs and cleanliness could lead to significant losses. Like most high hazard classes, it's not a matter of if, but a matter of when. The logging class in particular has both frequency and severity. And the slide indicates a few of these concern. You've got your high engine, you've got operating temperatures, you've got extreme pressure. Routine engine maintenance is critical. Replacing the hydraulic hose is very critical. Any exhibiting of any signs of deterioration, frayed or cracked line, all kinds of sources of fuel can accumulate due to normal operation or service or component failure. These include needles, leaves, barks, wood chips, sawdust, hydraulic oil, grease, and fuel. And sources of ignition include the overheating engine, hydraulic components, exhaust components, as far as due to damage to the electrical systems. Now with the fires, you can track it by number one cause of loss. And then this data set represents over a five year period. Now with that, we've got the working fires and the after hour fires. So we'll cover the working hours first. So working hour fires range from rupture of hydraulic hose and also debris and fluid buildup in the engine compartments and belly pans. Majority of the claims we see during working hours, the operator says they hear a loud pop. The engine area is engulfed in flames. One of the line ruptures, hits a turbo, and between the pressure and the heat quickly engulfs the engine compartment. If a unit is built in suppression, they will manually deploy the fire suppression or it automatically discharges in the event of incident incendiary event. Majority of times, operators usually jump out, grab the fire extinguishers and discharge trying to put the fire out. Occasionally you'll have electrical fires which catches debris on fire. These can be wiring harnesses that are damaged. And most times you can distinguish these before the machine is engulfed. You've got also upset overturn. This is about nine out of 10 times due to operator error. When the operator cuts a tree in an incline or angle or the machine is off balance, it loses stability. Depending on the size of the cutting head compared to the size of the tree, maybe too much for the machine to handle. So top heavy rocks in the machine, it turns over before the operator can release from the saw head. And if it's running, this usually a high percentage results in a total. Now the after hours, these are by far the most frustrating. They can range from lightning strikes, electrical fires, which these units are equipped as most of them are with a master switch. The master switch is off, could have an electrical problem. That causes some of the fires as well. And then last is arson. We'll discuss additional procedures during the loss control review to possibly help minimize this exposure. In the event of hard burns, you typically will bring in your CNO, of course, depending on the value of the machine and the year, et cetera. But depending on the... They're sometimes difficult to determine the cause of loss due to the condition of the machine. So you'll see the two down here. These are separate ones, but burned completely, took the tires and everything. So physical damage is another. These exposures vary widely and make up a remainder of the claims data. Vandalism is a big concern. These are some pictures of our past losses. Little joyriding on a machine into the pond. Hunters shooting up cabs, breaking windows, damaging engine components. Most times, it's an attractive nuisance. But most times the hunters are outraged at the logging operations due to the wildlife in the area. I assume it's a justifiable form of retaliation. You've got vandals shoving dirt, gravel, and we even had a case where there were BBs into the oil reservoirs and fuel tanks. So of course the operator comes in, does his walk around, starts the machine, shortly after it seizes up. This typically leads to a costly engine tear down and rebuild. Now you throw in supply chain concerns, along with low inventory of replacement machines and so on. Now it's increased these guys' downtime. So you've got also, you've got physical damage from falling trees or debris. This has gotten more expensive over the years. The older machines back in the day, they used to just beat out the dents, replace the glass, and they were up and running. Now with some of the newer cabs, due to OSHA and some other requirements, the costs have increased because the newer equipment requires replacement of the entire cab. Whereas before, you can just basically repair the damage without replacing. You have a little bit of theft. Given the remoteness and isolated job sites, theft is a concern. In the past, we've had equipment stripped, tires and wheels stolen. In some instances, these have pulled up lowboys on a Saturday evening, Sunday evening, loaded up a piece of equipment and driven away. And then you've got your various smaller stuff with theft tools and equipment and so on. As far as flood damage, I've experienced very little knock on wood over the course of my programs. We just recently had, last year, with some of the record or historical flooding in Mississippi, we had a schedule of about 12 units that was involved in a low-lying area. The insurer was cutting a couple of tracks in a low-lying. It came on pretty quick. He was unable to get down there to get the machines out. But with the right, you run your flood modeling, but the problem is you're running it from your shop location. This is mobile equipment. It's gonna be operated in a radius of, say, 100 miles. It's tough to account for this exposure when a majority of the equipment is at the job site or it's spread over multiple job sites. But we've had good success and been able to mitigate loss by working closely with our producers and insurers to move the equipment from low-lying areas to higher elevated ground or transport back to the shop. So in that instance I gave you before with the one in Mississippi was that we were able to, once the water dropped to a level, our insured got in there with his employees along with our adjuster working very closely. They were able to get the machines out. They were able to sanitize the machines, flush all the systems, and work quickly to get it all flushed out and repaired. So we had potentially 800 to a million of exposed, and I think we were able to, after all said and done, application of deductibles, we were looking at around 100 to 115,000 total payout. We had some older machines that, of course, were constructed totals, but we got some salvage back. But then we had some of the newer stuff, a little bit of electrical problems. But other than that, sanitizing the machines, getting it out of the woods, that was a critical component, and that was bravo to our, our kudos to our producer and the insured working closely with our adjuster to make that happen. So some of the last part of the claims, you're looking at the remoteness of the operation, minimal equipment, security procedures are in place. In the event of fire loss, the job site locations also have hindered timely fire department responses. This is interesting. We've seen this a little more over the years, operator error with the DEF system. This is utilized to reduce exhaust emissions and some newer equipment with the catalytic systems. Now there is a designated tank. We've seen it poured in the fuel tank and other reservoirs for some reason. This results in pretty much the engine seizing up, costly repairs, rebuilds, and so on. And the upset and overturn we've covered previously. So we'll go on to loss control. Now I've worked with a couple of these companies at the bottom over the last 20 years, and these guys have very experienced field reps. They're very timely, their responses, they give you very detailed loss control reports. And these are typically done within 30 to say 60 days after the effective date. These reports do identify any problem areas and do provide the underwriter with additional information that may or may not have been secured during the underwriting process. Recommendations and compliance are discussed with the insurer, usually at the job site. There'll be instances where, you know, fire extinguishers aren't charged or there's a unit that needs pressure washing. The inspector will stay there and the insurer will run and go get a service truck and they'll get it taken care of. So that's, it's a plus to have someone that knows what they're looking at, knows what to look for, gives you a good feel of what you can expect from the insured, how he feels about it, because, you know, the insured, if they're not gonna take care of their equipment, that's a problem. And we wanna know if that's gonna be a problem. So the two companies that I've used have been ACS, a claim service out of South Carolina and Preferable Reports out of Louisiana. Both companies do complete physical inspections. There's also been some advancements in technology. They've developed, one of them has developed a kind of client insured based app. I've seen it a little bit. I've not implemented it yet. We have some additional questions, but the app is supposedly very comprehensive and the turnaround time is very quick within, I believe he said, 15 to 20 days. So along with the automation, they follow up with emails and letters, push notifications for recommendations and so on. Each of those reports are reviewed by their quality control department and then forwarded on to the company. This is an example of one of the loss control reports. This is with ACS, who I've worked with quite a while. So we'll use this physical report for the presentation. So due to the size, you'll note at the bottom, there is a lot of equipment. So we visited the shop. These are where the units were and these are the ones that are in the field. So the write-up indicates a few issues or concerns, corrections or recommendations the insurer needs to complete. Majority of the time, the inspector will remain onsite to verify the recommendations are complied with. If insurer is unable to complete those, you know, for instance, shut down machine, taking it back to the shop, repair some lines, whatever. Co-contact the inspector once the repairs are complete and provide additional supporting documentation as needed. Now, these are good internal, external shots of the engine compartment. So you'll see the condition of the machine. You've got a little bit of dirt, a little bit of oil. So recommended pressure washing. Then you go to your pressurized systems. Now you'll know the clear pictures of the fire extinguishers and gauges, water tanks. You're probably not gonna be surprised at how many of these are not charged or are low. So you can see we've got a low charge here. We've got a zero charge here. And that was mentioned as one of the corrections that they needed, which I believe the insurer is taking care of that. So we've got an older clamp bunk skidder. You know, it's a 2004, but it's pretty clean. And then you kind of get the feel for, you know, the control, right? So you've got your pressure there. You've got your fire extinguisher. We've got a newer loader. You get a shot at the internal engine compartment. And we go into this, so it's pretty lengthy depending on the size of the schedule and the report. So, you've got a 2010 Bandit Chipper, pretty clean engine. And then right here, he's got loss prevention report, kind of general information. And he goes through all of these with the supervisor, foreman, or the insurer on site. And he goes and checks in. Down here, you usually find out if there's been any losses that may or may not have been indicated in the previous underwriting file. He goes into discussions on the recommendations for risk improvement. You've got equipment cool down. You got hydraulic fuel hoses, lines, connections, everything's checked daily. Spacing and security, locking up everything. And then of course, any notes, miscellaneous information would go here. The insurer signs it, and then we usually put that in the file. So, we'll run these loss control reports about every other year, depending on the size. And then of course, at underwriter discretion as well. So, then we include the additional information, the original schedule, which helps because we refer back to this in the event of a claim to see where maybe the tire tread was, engine hours, and so on, to help in the event of like a heartburn and so on. So, that pretty much wraps it up. Lillian, do you want to take it from here on the poll question? Thanks. Okay, well, we're opening up a poll now. Okay, so the results are in based on the discussed claim data set. What percent of fire losses happened during working hours? For the answer 33%, 25% of our respondents chose that. The main choice was 76% with 65% of our attendees selecting that. 92% only 6% chose that and 80% only 4% chose that. So most people thought the answer is 76% and the answer is, tell us Jeff. 76%. So I guess we are at the Q&A piece. I apologize, I guess I kind of flew through this a little quick, but definitely some time for Q&A. What would you like to know? All right, so that's great. We do have some questions that have come in. All right. Yes, so going back to when you were going over the loss control report, we had a question from Tony Gonzalez and he asked, which of the two does the remote customer-driven inspection? Say that again? Which of the two with the remote? Does the remote slash customer-driven inspection? Both of them do. Both of them do provide physical on-site inspections and each one have experienced field reps that are very knowledgeable on the with logging equipment. So the reports will vary a little differently, but the good thing is with both companies, they'll help you to customize what you would like to see, what additional information, and I'll give you an example. Like for ours, I learned this from my boss way back in the early 2000s, was that you wanted to get a good representation of the schedule. You want to see at a minimum 50% of it with an emphasis on the higher risk units because as you saw from the claims data, that drives a higher percentage of the losses. So when we do these inspections, they are on-site and they will cater those inspections, getting the pictures, you know, fire extinguishers inside the engine compartments, physical inspection of the outside of the machines, and so on. Thank you. We have a question from Ian. He says, I know this is property damage. Have you heard or seen anything related to liability claims from logging operations? For example, logging equipment caused damage to another party. Yeah, that would be general liability. No, ours is first-party physical damage only. In the event, you know, we had an instance where an insured was moving a skidder from one job site to another, was basically like you would see an agricultural piece of equipment, say a tractor or something like that, moving from one plot to another. He was driving along and a car came around the corner and hit him versus him hitting the other, you know, versus by FERSA. So no, my understanding that should be covered under the GL policy. Thank you. And then we have a question from Mark. How is this equipment transported to the site? Typically Lowboys. Majority of times your larger loggers will have their own Lowboy trailers, they'll have their own contracts, their own haulers. They either use exclusively or they'll have their own trucks that they can move the equipment back and forth. Depending on the size of the equipment, sometimes they have used pilot cars on some of the bigger stuff to make sure that the, from location A to location B, there's no issues with, you know, bridges, overpasses, stuff like that. Using predetermined routes and so on. We now, we have a question from Janelle. Do some of these pieces that you, the equipment, do they have built-in fire suppression? They do, but the interesting part is they'll have water tanks on some of the skidders. They can be, you can put additives in them, but a majority of the automatic fire suppression systems are installed at, via the dealership, the dealer or the insurer will have them installed themselves. We haven't really seen as much coming from the factory with the already installed systems other than your typical fire extinguishers or water tanks from the manufacturer. I feel that they should put those on, you know, coming from the manufacturer, but the dealerships, whenever they get the units, they'll push to get, depending on the type of equipment and so on, the values, they'll push to get the equipment installed and then that's usually a third party that comes in and puts it in. This question is from Derek. What about GPS units on the equipment? Yeah, I think the newer ones do. When the timber dealers go out there and they mark the tracks to cut, I think a majority of the new stuff now, you can plug in your coordinates and it'll go through and it'll harvest that track of land down to within a probably a foot or two or even closer and so that you don't have any overcut or anything that would cause a GL problem or negligence on the insurance part. So yeah, they've got GPS location on them that they can use and then, yeah. All right. So we have a question from Jane. How old is typical equipment or expected lifespan of equipment, say, feller, buncher, or skidder? That's a good question. So interestingly enough, the regions that you saw, you know, Pacific Northwest, the Northeast, Midwest, the South, by far from what I've seen, runs newer equipment and I think it's really due to the conditions. So a pretty solid logger, say, three to five pieces here in the South, is going to swap this equipment out every three to five years. He'll be running new stuff. You get up in the Northeast, the Midwest, and some of the Pacific Northwest, you could have a 10 to a 20-year-old machine, whether it be a high-risk harvester, a processor, or skidder, or a, you know, loaders and stuff like that. So ideally, I would say probably seven to ten years would be the most, the oldest you would want to go. About every five years, the insured needs to take the initiative to go and basically replace all of his hoses. At that point, that seems to be a good number that they need to go in and replace all their hydraulics all the way through the head. Any of the high-risk stuff that's under pressure, it's a little pricey, but at the end of the day, it'll save you from having a significant fire loss. Basically, you said replace every five years, around approximately every five years? The hose, if you go and replace all the hoses every five years, that seems to be kind of, that was what my adjuster told me, and it kind of makes sense. If you really want to drill it down with the granular detail on the claims and the average year model and so on. And as far as inspection is concerned, Kira was asking, would you recommend an inspection every two to three years? So it depends on the carrier or the program itself. We run them once a year depending on the size type, the TIB, excuse me, the premium and TIB, and then we'll also, you know, there's underwriter discretion. You know, I would say once every two to three years. And then, of course, you got the old underwriter discretion default as well. We have so many questions, Jeff. I was trying to bundle, like, put some of them together, but there's, I mean, lots of great questions. This one's from Marina. What kinds of deductible structure are you seeing for logging equipment? Good question. You guys are trying to get the secret sauce here to riding this stuff profitably, aren't you? No, so, you know, type and value, right? We use, we probably start at a minimum $2,500 deductible, and we go up to $25,000 and sometimes even $50,000 on larger chippers and grinders. The reason being, that is a big piece of equipment, and a $50,000 deductible on a piece of equipment that majority of times will be a total loss in lieu of a partial loss, I think that is reasonable, and I think with enough skin in the game, the insurer is going to take the extra steps to put in additional firefighting safety equipment and so on. So, yeah, $2,500, $5,000, $10,000, and $25,000 and $50,000 even. Thank you. This is also from Marina. What protective safeguard measures are mostly recommended? You know what? Routine maintenance. It really is. At the end of the day, the loss control reports are critical, because once you see the physical, the unit yourself, because you're not going to see this during the underwriting process, but once you see the machine and you see the inside of it, it's completely coated in oil, debris, you know the guy's not doing his routine maintenance. Cleanliness. You have to check your hoses. You have to do your daily walk-arounds and inspections. These are all critical items to keep you from popping a hydraulic hose, setting the machine on fire, even the kindling in the bottom of the belly pans, dropping the belly pans, you know, at a minimum once a week, maybe more, and getting it all cleaned out so that that kindling, when that equipment's sitting there going through the cool-down process, it doesn't light that kindling on fire, so when you leave, it starts smoldering, smoking, and next thing you know, you've got a fire. So, routine maintenance is, in my opinion, that is critical, and that's what you get with a good loss control report, will give you a feel for how that insurer maintains his equipment. So, you can decide to stay on it, you can decide to get off. Thank you very much. Switching gears a little bit, Adam asks, has AI worked its way into the logging industry, and if not, when do you anticipate it will be utilized? You know, I can see the machines, just like any autonomous vehicle, right? I can see them pre-programming the machines, like when the previous question with the GPS, you know, they can plug all this information in, just like the newer machines with the cut-to-length harvesting operations, they plugged all that in. So, I mean, yeah, it's possible. I just think the costs would be so extravagant that they, you know, from a cost-benefit perspective, I don't see it. It'll be quite a while before it'll be completely automated. Thank you for that. I have a question from Mark. He's asking for your thoughts on loggers broad form coverage. Yeah, that would be on the GL. Yeah, so that's on the, that's typically on general liability policy. So, with your standard ISO policy, you'll include the large and broad form, and there's different coverages embedded within that form. It's not very extensive form, and it varies by carrier. So, for instance, loading and unloading, you know, you'll have a limit there. You'll have a fire and overcut limit, sublimit built in. So, say you cut over, you know, five rows into someone else's property, you've got your overcut exposure there, you know, your typical GL exposure that you would see from logging operations in general. Thank you. This question is from John. Is logging suffering the same deficiency of labor as many other industries? And if so, how do you see that affecting the physical risk to the equipment, if at all? That's a good loaded question. You know, good, good, good help is hard to come by. The logging, from what I've seen, in particular, the southeast is a very generational industry. It has, it is definitely passed down, and I've been to a lot of these conferences, and a lot of these trade shows, and other things, and association meetings where you meet the father, you meet the grandfather, you meet the son, you meet, you know, the grandsons. So, I love that fact, and the workers, I think, are pretty loyal. I don't see the equipment operators turning over as much as I would see the trucking. The trucking industry probably, in my opinion, is taking the biggest hit, because the the pool of qualified drivers is shrinking exponentially. So, other logging companies are kind of scavenging other logging companies to get their drivers, paying them more, a little bit better benefits, saying, hey, you know, you're going to be home at six o'clock at night, however their, you know, compensation works. As far as equipment operators, I haven't seen really a, or there has not been mentioned a big concern on that. It was really on the trucking, because of the need for good quality CDL drivers, and you see that across pretty much all the regions, too. This question is from Ann. Does the AIS form automatically cover flood and earthquake, or is that added by endorsement? No, it is a, the one that we use is AIS, IM 7010404. So, it's an all-risk form, so it includes flood and quake. Now, we do have the ability to sublimit it, or exclude it altogether, but typically it's an all-route. Our programs have always been all-risk policies, subject to underwriting as, you know, quote-unquote. And this one is from Jim. He asked, oh goodness, I accidentally deleted it. My apologies, Jim. If you want to drop that back into the the question, I accidentally, I was trying to expand it, and I accidentally deleted the question. Jim Henning, my apologies. Hi, Lillian. I think I still have it on my. Oh, okay. Great. Um, it says, is this industry suffered after coven with experienced operators leaving and having to bring new ones on. And if so, has that impacted claims frequency. Uh, good question. Um, we did. We have discussed the impact of coven many, many times with both our carriers. Um, as far as the, the in woods logging piece of it, I think it was minimally impacted. The reason I say that is you're talking about. In woods logging exposure, uh, operations, which are very remote. Typically, your average size operation is what 3 to 5 machines. So, maybe 4 to 5 employees, so you didn't have really a problem with coven, nor with the shutdown where they ran into. That impacted the supply chain was some of the mills. If originally when people were, you know, when coven, they were diagnosed or whatever, they came in and they tested for, they would have to basically shut down the mill for, say, 2448 hours. Sanitize the place and then bring in a new crew. And then try to get the mill back up and running. Fortunately, for us, I mean, we really did not see much impact by way of coven. On the loggers, nor did we, the, the major impact was really the supply chain. There was some delays getting equipment repaired. I did not see by data comparison. I did not see an increase in claim count with the coven because as far as we were concerned, our guys were still. So, we didn't really see that we did see some issues where with a pretty, you know, could be a sizable delay on a repair of a machine, because you're waiting on some parts that the factory or manufacturer was behind on producing. But for the most part, you know, most of the shops in and around the area were able to keep those machines or get them back in service pretty quick. I hope that kind of hope that answers your question. Thanks. Thank you for that. So, this is from Cody for the high value and high risk equipment. Do you as the underwriter incentive incentivize proper and consistent maintenance with discounts or policy credits. That's a good question. Read it back to me, just so I make sure I get where he's going. Yes, for the high value and high risk equipment. Do you as the underwriter incentivize proper and consistent maintenance with discount so do you give good discounts or policy credits to, you know, encourage proper maintenance. I'll be quite frank with everyone. No, we do not incentivize them to do their job. We are a for profit company, we all want to make money. So I'm very firm with our loss control, and with our agents that our agents convey that clear message to their insurance, that the only way you're going to get reduced premiums is to not have claims. If you want to take higher deductibles will be more than happy to give you a discount there. But at a minimum, the insured is responsible for maintaining their equipment. And because at the end of the day if we don't. If we can't keep this profitable, you know your insurance premiums are just going to continue to go up, and with the premiums market as tough as it is right now, and the cost of the insurance is softening slightly and the cost of machines are going up substantially. The math doesn't work. So, yeah, if an account is clean, and their loss control report comes back spectacular, I'm going to do whatever I can to keep that machine and we're going to make sure that producer knows that will will apply discounts as needed. But at the end of the day, we'd like to keep track at a minimum with inflation. We do want to get some lift across the board. Thank you. And there was in the second part was, how do you under a Cody's question, how do you underwrite the operators of the equipment, do you exclude certain operators who lack experience or avoid writing insured to are generally less experienced. We look at a certain number of years in business, we have some general underwriting minimums within our quote unquote sandbox underwriting sandbox. So the kind of getting into the secret sauce here. We don't underwrite each individual operator. We underwrite the insured as a whole. And we expect them to, you know, comply with loss control their insurance to comply with loss control and keep in mind a lot of our agents that we have these relationships with these producers are the front line. These are the guys that are working very closely with our insurers. And these are the guys that have a niche in the business. I can name a few in just about every region. But these are the guys that know the business, they work closely with our insured through some of the other lines, they have, you know, tailgate safety meetings. So, you know, it's the producer, I mean the relationship with the producer and the producer with the insured. That's critical. This is a question from Isabel she was asking what was the name of the logging equipment show you that you recommended. Oh gosh, there's there's quite a few so summer every year, summer every other year. So in south and excuse me in Mississippi. There's the Mid-South forestry show which I believe is this year that's every two years. That's a really good one is a representation of say Mississippi, Louisiana, Georgia, Alabama, it gets a pretty good drawing. Pretty good. Attendee and the Virginia show out of Richmond is is really cool. That one gets a little more than northern upper north states. That one's every two years. There's a North Carolina biomass show that is every two years. And then you have some of the smaller Conferences and associations and trade shows that they have every year like Great Lakes has one every year. The Great Lakes timber professionals that services all of the Michigan, Minnesota, you know, it's held either in Upper Michigan Or in Green Bay, Wisconsin. That's pretty good show. And with those three different ones I named, you'll see a varying degree of equipment that you saw Through some of the presentation, whether the track machines, the cut to leave processors, the chippers and grinders. It's pretty cool to see the different equipment that you'll typically see in those various regions. And she was also asking, there was one that you mentioned that was on YouTube as well. If you remember that one. If you could repeat it. Yeah, that was a it was actually a show on history channel for many years. Well, for a few seasons. It was called x men. And it's, it's basically the show is set in the Pacific Northwest. So you'll see the machines that they use there. And then also you got swamp bloggers, which was out of South Carolina. The, the, the, that one's also on YouTube. They were on But yeah, those are a couple of shows that are pretty interesting and you'll really see how some of the logging operations work. And then you can also Google. This question is from Mark has wildfire been a big issue in the logging industry. You know, Pacific Northwest on the West Coast. Yes, I knock on wood. Yeah, it is something to consider. My understanding is that it in the event of a wildfire. Yeah, it is something to consider. My understanding is that it in the event of a wildfire that if the insurance try to go in and remove their equipment, they could potentially be stopped. Yeah, it is something to consider. My understanding is that it in the event of a wildfire that if the insurance try to go in and remove their equipment, they could potentially be stopped by the game for the forestry commission or the firefighters or whomever, they won't let them go in and get their equipment out of there. And I have heard of those situations. So, and it's tough to see that where they could go in and get their equipment but due to safety reasons the they won't let them through to go get their equipment. So, it is a consideration. We have a comment from Brian. He was saying on on feller bunchers and de-limbers, fires tend to start when the unit reaches about 9,000 hours. Okay. Um, so I guess probably divide that out find out how many years that equipment but hopefully the items that are going to cause the fire would be the hoses and in the other components that would have been changed out or repaired replaced and so on. So, it's possible. I know the fellow bunchers and the skitters are more of the those are the majority of the claims as you saw with our claims data and that's just a small representation of our data. But when I look at our, our universe of data which is way more than that and I do the math and it kind of run our analytics that yeah it's still that 75-25 split between fire to this dam and so on. Thank you so much, Jeff. I'm going to do two more questions and and then we'll wrap up. Okay. So, we have another question from Kira. Do you require a master logger to be on staff to add a level of comfort? Now, um, a lot of these, uh, I've been doing it 20 years since 2000 and my boss, you know, my, the guy I learned it all from very knowledgeable, he had been in it for quite a long time before that, and the quality of the logger has gotten better and by that I mean the education levels. A lot of these loggers, the generational loggers are graduating from forestry schools, they're learning the business both on the financial side and on the operations side, and they're running, I'm not going to say better operations, I think they're just better educated to run tighter operations. So, as far as like a master logger on, on the job site, honestly, I wouldn't know that unless it was included in the narrative, which a lot of these guys are. A lot of these larger accounts will have, you know, educated sons and grandsons and so on. Thank you. This question is from Anne. Okay, so are these machines being built in the US? Is replacement coming from outside the US? Do they typically want DI with their value? Say that last part, the what with their value? DI with their value. I can't, there's some, I didn't get that part, I apologize. Oh, do they want business interruption with their value? Oh, BI. No, we, I mean, again, ours is first party physical damage, we don't, you know, all risk direct physical loss. That's it. We don't do any, as far as BI, no. Now, majority of the machines are made in the US. There are some that are made overseas, but TigerCat, John Deere, of course, Caterpillar, which is now Weiler, and so on. So those are probably three of the top brands that we see on probably 80 to 90% of our book. Okay. Thank you. And this is the last one that we'll do. In regards to the Skyline operation, for the chokes that are in the operations that would potentially become a liability as well, what other measures would be implemented besides a liability clause? I have no idea. I have no idea. I'll be honest. Other than that is probably the most dangerous job that you can have between the potential for falling trees, you're down there wrapping the cables around, getting it set to being hauled up the mountain. I don't know. I'll be honest with you, I don't know. Okay. All right. Well, definitely a couple of attendees, including Cody, did confirm that they are definitely here for the secret sauce. So thank you. Thank you so much for all these questions. I mean, it's really a testament. And Jeff, do you want to move it to the question slide now? We can pick a winner for the... There we go. And we'll pick a winner. I know I called out a lot of names and would be happy to help you, but do you remember anyone, any of the names with their particular questions? Well, you know, I like Mark's honesty, that he was here for the secret sauce. So let's... Actually, Cody. What's that? That would be Cody. Cody. I'm sorry. Perfect. Yes. Excellent. All right. Congratulations, Cody. Congratulations, Cody. $25 Amazon gift card to you. All right. Well, I've enjoyed this. Thank you, guys. And great questions. And you have my email if anybody wants additional information other than the secret sauce, Cody. Feel free to shoot me an email. My door is always open. Yes. Thank you so much, Jeff. This has been excellent. We do have the survey we will be sending out, and it should also be in the chat. It is in the chat. So when you have a chance, please take a few moments to provide your feedback to IMUA. We really appreciate your feedback on our webinars, and we'll use that to plan future programs for IMUA. Awesome. Thank you so much, Jeff. This was fantastic today. We really appreciate it. Lily and Irene, thank you, guys. Awesome. Thank you.

logging equipment

Jeff Vaughn

maintenance

routine inspections

fires

feller bunchers

skidders

trade shows

Axeman

Swamp Loggers