Hello and welcome. I'm Lillian Coulson and I'm pleased to introduce today's webinar titled Logging Equipment Underwriting and Claims Considerations. Please be aware of the IMUA statement. Please be aware of the General Star National Insurance Company Disclosure. Our esteemed presenters are Jason Paisela and Steve Lindley. Mr. Paisela, who has been in the insurance industry since 2001, is a second vice president and executive underwriter with General Star Insurance in New York City. While primarily working in property and inland marine, he has also spent time as a workers' compensation premium auditor and as a loss control consultant for a captive E&O program for agents and brokers. Mr. Paisela earned a bachelor's of arts degree in geography from the University of Buffalo, where he specialized in international trade and world commerce. He later earned the CPCU designation in 2013. Mr. Paisela is also a valued member of IMUA's transportation committee. In his spare time, he enjoys architecture, history, landscaping, and genealogy. Mr. Lindley, president of Knowles Wheeler Incorporated, is a native of Oregon. Mr. Lindley served in the U.S. Army infantry from 1967 to 1968, including one tour in Vietnam in 1968. After his service, he worked for 20th Century Fox fabricating props for Animal House and Emperor of the North movies. He then worked for Weyerhaeuser in a lumber mill for one year before turning to work as a log truck driver for a number of years. Mr. Lindley was hired by Knowles as a heavy truck specialist in 1980, and he purchased the company in 1982 and began handling logging equipment claims. He is licensed in Oregon as a claims adjuster. With over 46 years of experience, Mr. Lindley is the longest serving reserve police officer in Cottage Grove, Oregon. He's been married for 49 years, has two children and four grandchildren, and in his spare time, he enjoys golf. Welcome, Jason and Steve. The floor is all yours. Thank you, Lily, and thanks for having us. This is Jason Paizala. I'm going to just take a moment to kind of go over what the learning objectives are. I'm going to start out going through the underwriting and loss control slides. In that section, we're going to talk about kind of the regions of the country and what kind of logging happens where. Some of the underwriting concepts, introduce you to some of the more usual types of equipment, some things you might want to see in a submission, maintenance and loss control, and some of the external resources that are available to you as you are starting to underwrite this sort of thing. After that, Steve will take over and go into the claims and adjusting, and that'll be the presentation for today. With that, I'll jump right in. There are three principal regions in the country where logging takes place. The foremost is the western forests of the Rocky Mountains in the Pacific Northwest. Primarily out there, you're going to get about 60% of the soft lumber yield that comes out of the United States. A lot of the western pines, some spruce, some fir, that sort of thing. Followed by the South Atlantic and the Gulf States, which makes up most of the remainder of the soft lumber yield in the U.S. Again, pine, some ash, that sort of...those types of woods down that way. And then your hard lumber, your hardwood yield in the United States comes out of the Mississippi River Valley and the Ohio River Valley. And that, for the most part, makes up the large part of the lumber yield in the U.S. Logging companies kind of come in two general sizes. You've got your larger, certainly sizable companies, and then more often than not, you'll see smaller companies. The larger operations can have 500 or more employees. They're typically associated with a large lumber user, warehouser, furniture manufacturers, paper manufacturers, paper goods manufacturers, all that kind of fun stuff. Typically they're going to own large tracts of wood and woods so that they have readable and easy access to the lumber they need for their manufacturing processes. On the other hand, you're going to have the smaller companies. Typically they're sole proprietorships, maybe a father and son, a family, a nuclear family gets into the business. They're going to have small schedules for the most part. They may be dedicated to a particular lumberjack or to a particular small manufacturer, but more often than not, they are dependent on landowners to approach them about coming in and logging their particular lots of land. In these instances, they tend to be more surgical strikes. The landowner is going to want certain trees removed or certain sections removed, but others preserved, so it does make the logging process a little trickier there. Office hours for a logging company typically are nine to five, but you will rarely find the owner in the office from nine to five. They're typically out on the site. Your office hours are going to be secretarial, paperwork, maybe a mechanic or a warehouse manager, and that's going to be about it. Your field workers are going to be probably getting out onto the logging site somewhere around 7 a.m., and they're probably not headed back in until the sun goes down, weather permitting, of course. Both types of companies will try and utilize some of the publicly available education resources that are out there to keep the skills strong for their workers, both federal, state, and even sometimes local governments will have some very valuable education resources out there, not just for the inland marine side of things or fire prevention side of things, but also from the casualty and workers' comp side as well. Timber companies also provide some of these resources, and the national and state trade associations do a phenomenal job in this area, so I would encourage you to take a look at those and take a look at some of the flyers and videos that they put out from a training perspective because they do come in quite handy. The harvesting process generally starts with some pre-planning, especially when it's...when the smaller sites are doing sort of a precision harvest, going into a private land or park land and only taking out certain sections or certain trees, but leaving a lot of it standing as opposed to any kind of clear cutting that's usually much easier to plan because there's nothing left at the end. The cutting process starts with the felling, which is basically cutting the tree down in one way, shape, or another. Typically, they're going to use a feller buncher or harvester to saw right through the base of the tree, leaving a stump behind that's still in the ground and then the entire tree still up in the air. Once the tree is cut and removed from the stump, it is set on the ground, sometimes in a pile of six or seven, depending on the size of the tree. At that point, the skidder or the skidder with the grapple, or sometimes a yarder if you're out west in high terrains, will come out, scoop up the piles of logs, and drag them over to the de-limber, which is where kind of the processing happens. The processing, for the most part, is limited to removing the branches, the crown of the tree, basically the parts that the processing mill or sawmill or the paper plant doesn't want. So, there'll be large piles of brush and that kind of stuff left over. After the processing happens, you're going to have a pretty ... You're going to have a nice long log left over that needs to be transported to the processing plant. So, the loader will sort and stack these onto a truck, and the truck driver will ship that off to a warehouser or wherever the logging contractor has a contract to deliver the wood. And that's kind of the process in a nutshell. Maintenance is going to be your best friend on this sort of equipment. It is the primary way you're going to keep fires from happening in the equipment. It's also going to keep the logging contractor up and running. Most of your fires that are going to occur in this sort of equipment are going to happen from either poor maintenance or employee error, really. In the operation of this equipment, it's going to accumulate debris inside various parts of the machine. Some of the hoods on the machines are ... They're not solid. They allow air to flow through in order to keep the engine compartments cool or cooler. But in doing so, it allows twigs, leaves, pine needles, sap, all that kind of fun stuff to accumulate inside the machine, where you're going to have a hot engine block, moving pieces, belts, all that kind of fun stuff. So, it's generally not a great combination to have all that accumulated combustible debris in that hot compartment with a diesel, hydraulic fluid, oil, which may or may not be in the areas where it was supposed to be. You may also find some faulty ... Like everything, things wear out over time. So, you'll have faulty wires, corrosion, hoses break down over time, particularly hydraulic hoses you want to be careful of. Tanks can overheat, and all of this sort of together starts to build up a rather sizable combustible load inside the machine. So, it does need to be removed on a regular basis in various different ways in order to keep the machine safe and keep it from burning as you operate. The Forest Resource Association actually put out a nice one-page summary of the kind of the bare minimum maintenance requirements that are there, and I believe it was attached to the slides when it was sent out. Your logging contractor should be doing at least this in order to keep their equipment safe. The key one in that list is the cool-down period. Again, you're going to have all this combustible debris. Sometimes you can't get that out of the machine right away. It's just not convenient. So, you do want to keep the guys or girls on the logging site, keeping an eye on the equipment to see if it's going to smolder, and let the equipment cool down to the point where it's no longer an ignition source. Typically, 20, 30 minutes will do in moderate temperatures, but as the heat and humidity increases, of course, you want your folks to be staying there a little longer to make sure that things cool down properly and don't ignite. There are a significant number of fires that happen at 2 o'clock in the morning on these machines, and people show up Monday morning and find a charred skidder out in the middle of the woods, and it's just from that sort of thing. Financials. Logging companies typically work on and receive very low margins on the goods that they deliver, and a lot of their expenses, they don't have a whole lot of control over. Gas is going to be what gas is going to cost, and there's not a whole lot you can do about saving consumption or about the price of it. The areas that they have the most control over are going to be the expenses associated to maintenance and the expenses associated to labor, as much as they can control that. So, typically, what you'll find is a logging company that is in trouble or is particularly stressed, the first place they tend to go is going to be the maintenance, which is, of course, directly against what we need them to do, because we need them to spend the money on the maintenance in order to keep the equipment from burning up on us. And you'll notice here from some of the graphs that the profit on this stuff is not great, especially on the lower right-hand side there. You'll find that about 50% of the loggers make less than 6% profit on the work that they do. So, it doesn't give them a whole lot of room to play with. Along those same lines, you see the maintenance expenditures. This was taken from a survey of logging companies in the United States. And I kind of mentioned there were two loose groups of logging companies, basically rather large and rather small. But you'll see here in the graph that you've got better than, what, two-thirds of the loggers spend less than $100,000. Now, if you're a mom-and-pop operation, that may be more than enough. But if you're a supply and warehouser, I'm betting $100,000 probably isn't going to cut it to keep the equipment safe and maintained if you've got 500 employees and thousands of acres to log on a regular basis. Kind of the rationale behind replacing machinery, there are a few primary factors contributing to the decision to replace machinery. For those of you that printed this out on black and white, it doesn't translate very well. So, if you start at the 9%, that's your machine failure. And kind of work clockwise around the graph as you move to the right. You'll see that machine age and hours are your primary reason. And it sort of makes sense. After a certain amount of time, things just wear out. But downtime and repair costs are also going to be a motivating factor. And if you think about it, it's kind of like those of you who own vehicles, it's the same sort of thought process in a lot of it. They don't want to spend a lot of time, energy, and money trying to keep the machine running when they need to be out in the woods producing what's making them the yields that they make. And getting into the equipment, we're going to start off with a yarder. A yarder is not something you're going to see except probably in the Pacific Northwest or the Rocky Mountains. It's key peril is going to be collapse. And you can kind of see from the picture here in the slide, you're going to have some sort of base with a cable that runs out into where the logging is happening. This really does take the place of the skidder and the grapple. When the terrain is particularly steep, you're probably not going to get a skidder and a grapple up and down a 30% incline. So this kind of takes the place. What typically happens with these is they get overloaded. And the cables can't withstand everything. So eventually, if it is overloaded, they do snap and come careening down the hill. Another common peril is the carriage breaks down or lets go and goes careening down the cable, which is an awesome sight. If you ever find a video of that, I couldn't find one. Basically what they do is when the carriage is down the hill, there's more cables coming from the carriage. They strap the logs into the cables and pull them up the hill. Fellow Buncher is the next piece that we're going to talk about. And we actually have a video here to show you kind of what one looks like. It's a little loud. So if I'm shouting, that's why. Your key peril here is going to be fire. And this is one of the – there's kind of a team of three key pieces of equipment that you need for mechanical logging when you're out in the field. And this would be the first of them. And definitely the most hazardous from a fire perspective. The Fellow Buncher is, as you can see in the video, basically it separates the point of the tree from the trunk. And you can do the logs. You'll see based on the thickness of the tree that they can get. And when the field – the front of the truck can tear five into the cage there. And they get – in the case of field, it's going to have to come with a pipe wire. And through the wire, it's going to be the second tree that's going to be the one that's going to be in the front. And you can see that the trees are working on fine. So it doesn't have a lot of – I would say minimum half hour. Half hour would be preferable. And this piece of equipment, it catches on fire often. We see, I couldn't see any more skidding in this segment, so I think from a pre-fixing place, you're going to see skidders. But these are some of the bigger fires. This is a close-up view of the carriage area. And at the bottom of that carriage, there will be like a circular saw that goes in and cuts the tree from the side. Next piece of equipment is a tub grinder. Your key peril here, and there's going to be kind of a recurring thing. For most of this stuff, your key peril is going to be fire. This particular piece of equipment, it takes a lot of the scraps, the stones, a lot of the stuff that's left over, mulches it up, makes it available for landscapers if they want to use it for mulch, or just makes it easier to dispose of. Maintenance, again, is going to be your key. Sawdust, debris, flammable liquids, you want to get that stuff off the machine, particularly at night when it's going to be sitting, resting, and just given time to smolder and burn. The winner is the next piece of equipment. There are several types, some more mechanical, some less mechanical. This is your second piece of equipment that you pretty much have to have out on the logging site in order to be a mechanized logging operation. This takes care of the processing section. The pull-through delimiter is the one you probably see most often. Basically, it's blades on a stationary base with a chainsaw-looking thing at the end. They call it a slasher saw. You stick the poultry in one end and yank it through, and the blades take all the branches off. The slasher saw cops off the crown of the tree, and you wind up with a nice processed log. The stripper delimiter, the stroke, they get a little more mechanical. A lot of hydraulic fluids involved in that one. That's kind of an example of one on the left-hand side, lower left-hand side of the slide. Interesting pieces of equipment. Definitely worth looking at on a video or something. But as you're looking at those on a schedule, you kind of want to be wary because there's certainly more mechanical parts and issues that come with them. And one thing to kind of keep an eye out when you're looking at a schedule, they don't always tell you which kind of delimiter you have. Sometimes they just say it's a delimiter, so keep that in mind as well. Next piece of equipment is a chipper. You generally don't see these too much on a logging site. They're much more common with excavation schedules, land clearing schedules, landscapers, that sort of stuff. Fire is still your key peril, but theft really does get introduced here. They're small enough, and there's enough people out there that know and are comfortable using this that they do tend to disappear at times. Again, it's just an easier way to process some leftover debris and make something useful out of it or make it easier to dispose of. The next item is a stump grinder. Again, kind of follows the excavation, land clearing, landscaping thing. Not really a big thing in mechanized logging, but you will see them on other schedules. Basically, this is a rotating drum with some sort of a sharp blade on it, taking chunks of the stump that's left over on the ground and grinding that down below the surface of the ground so you can bury the stump and plant your grass and make it look like it was never there. The next piece is our third item in our mechanized logging team, and that's the skidder with gravel. You're probably going to see more fires on this item than any other. They are roaming around in the woods. The hood over the engine is typically open or allows air to move through in order to keep the engine and the mechanized parts cool. That, of course, allows twigs and weeds and all that kind of fun stuff to get in there. The people out in the field really need to be periodically getting in there and getting that stuff out so that it doesn't smolder and burn overnight. The gravel, as you can see, is basically just pinchers. They grab the trees at the end and drag them over to the cylinder. You do have, again, oil, hydraulic fluid, so spills need to be taken care of. Any kind of accumulations need to be addressed. You want to make sure, as much with this piece of equipment as with the fellow buncher, you're following your regularly scheduled maintenance. This slide just kind of points out you want to make sure you're taking in the whole risk. One example is when you're east of the Rockies versus west of the Rockies, you really don't have the terrain issues that you do have other places. What makes a good risk? You want to be looking for experience, somebody who's been doing this sort of business for five years or more. Obviously, there's a learning curve that goes with operating this sort of business, so you want somebody who's been doing it before. I've kind of gone through the financial end of it already, so somehow checking financials to make sure that they've got the finances to maintain the equipment and the personnel that you need. If you're working with a broker or a retailer that is placing the liability and the worker's compensation as well, that certainly makes a stronger case for who you're working with. As hard and as difficult a line of business as this is for us, it's even worse for the GL and the worker's comp side. They go through some very rigorous inspections, and if the retailer or the wholesaler is on those pieces as well, you probably have somebody who's very knowledgeable about the safety procedures at that particular operation. Equipment should be running about five to seven years old is probably about the break point between new and old. State and national logging associations, handwritten maintenance schedules, equipment that is inspected each day prior to use, especially hydraulic hoses, battery connections, those sorts of things are really very important. If those things aren't inspected prior to the use each day, if a hydraulic hose bursts, you're probably looking at a pretty big fire. They really should be checked for cracking, wear, degradation, all that kind of fun stuff. Again, the cool-down period, manufacturer installed fire suppression, having a fire extinguisher on the machine. The fire extinguisher works great for small buildup fires, things that are smoldering, but if a big sudden fire happens, the guy is getting off the machine and leaving the fire extinguisher behind, so it doesn't really help you too much on those. Just kind of keep that in mind. As I mentioned, our kind of mechanized equipment team, the Skidder and the Delimer, if you're looking through your schedule, you should be able to pick out those teams so that you know that all the equipment is being listed. Oftentimes you'll find that it's not, and you'll need to judge whether that's adverse selection. Sometimes the logger only insures the equipment that's being financed, so as soon as the financing is paid off, they take it off the schedule. The good news on that is typically that's newer equipment, so they're adverse selecting against themselves. Sometimes you'll find that the manufacturers provide their own financing and the insurance perhaps along with it, and that might be where you find a little adverse selection because the manufacturers are taking all the new pieces of equipment and they're leaving you with the old stuff. Typical submission requirements, for those of us that rely on the Accord, your Accord 125, your Accord 146, there are certainly markets out there that have their own and have developed their own application, supplemental or full application. Schedule of equipment is incredibly important to have a full and complete one. That would include the make, the model, the model year, a brief description, don't rewrite Moby Dick, we would just need to know if it's a dozer, if it's a track hoe, if it's a fellow buncher, I don't need to know what color it is or any of that kind of fun stuff. And the serial number, last six digits usually works, and the loss payee, so we know who to cut the check to if it were to burn. The reason why this is important is because if the insured were to buy, let's say they have two Bobcats listed on the schedule, but when we have a claim, there's four out in the field and we don't know anything other than they're all the same model number and they're all the same make, we don't know which ones are covered and which ones aren't. So that really can cause a bit of an issue when adjusting a claim. Five years loss run, that's certainly going to be a company by company guideline, but I think most, at least that I'm aware of, tend to do the five years just because of the volatility that comes with this particular class of business. On this slide, I've provided some resources that I know I've certainly used and are certainly out there. The first couple of websites are to help you with valuation. It's not going to be like Marshall's lift and back. We're never going to have the hours on the machine, so use that with a little bit of a leeway, but it'll give you a guide. I also listed the National Logging Associations. They're well worth taking a look at and reading through some of the safety information they provide. The US Department of Agriculture posted an online forest operations textbook, which is incredibly thorough. The list of equipment that I linked there is phenomenal. There's stuff on there I've never even heard of. So it's definitely worth taking a look at and when you run into something that you're not familiar with, it might be a good place to check and find out what it is. Some of the Southeastern State Logging Associations, their websites are here, but if you go into the Nationals, they usually have links to all of them. This is a list of some of the equipment manufacturers. It's by no means all-encompassing, so if you find something that's not listed here, don't be surprised. You can get maintenance schedules, specs, an idea of what these things look like and how they operate, how they should be transported. So they are good and useful resources. They also will have safety information for operation, fire prevention, that kind of fun stuff. And with that, here's some of the references I use, and I guess I will turn it over to Steve. Steve, the microphone is below yours. Thank you, Jason. Hey, Lillian, first thing, I want to thank you for that very impressive introduction you had for me. I almost recognized who that guy was you were talking about. In this headshot photo, that's yours truly standing by a log deck up in northwestern Oregon. The photo was taken January of 2016. I just want to demonstrate that, hey, we're not out of big logs. We still have some big trees here in the Pacific Northwest. I found it kind of unusual that it wasn't raining that day up in the Tillamook area. It rains here in Oregon every day. For you folks that might be considering packing up the family and moving to Oregon, keep that in mind. It's really a miserable place to live. Think of Panama, but much colder. Besides, you know, your kids could potentially wander off into the forest and get eaten up by grizzly bears. Just kidding, folks. We welcome you with open arms. Just bring an extra job and a suitcase full of money. I suspect that logging probably evolved pretty much the same through across the country. Up until about the turn of the century, everything was done by manual labor, strong backs. Of course, they used cattle, horses, mules for skidders to haul the logs or guide the logs. Around the turn of the century, the steam engine was introduced and other logging equipment. The yarders and log loaders were steam powered. Here's a photo of an old machine found in a museum in central Oregon. It's a track mounted log loader that is steam powered. Some of the first yarders, again, were steam powered. The drums or the hoists were mounted on sleds or logs. And it drug itself under its own power from landing to landing. This particular machine, I note, has a gas motor on it. So it was probably built in about the 30s. The diesel engine was actually invented before the turn of 1900. But it still, at this point in time, was awkward, low powered, and low RPM. And it just wasn't suitable for this type of application. To the right is the spar pole. Some of the first machines actually just used a standing tree. They'd delimit the tree, and they'd rig their blocks in the top of the tree. Just due to the nature of our terrain here in western Oregon, cable logging or yarder logging is prevalent. If you get into the eastern part and the central part of the state, you're looking more at mechanized harvesting, skidder logging, that type of logging. Shown here are a group of machines I recently took a picture of, by the way, that were built back in the 1970s. Maybe I'm just getting cranky in my old age. One thing of many things that seems to annoy me anymore is people referring to yarders as towers. Jason, I commend you. I didn't hear you speak that term in your presentation. There are towers, and I'll show you an example of towers further in my talk. These machines, again built by Medill, are referred to as mobile yarders. They're smaller machines, whereas a tower, and I think we can show you one here, usually has an 80, 90 foot to 110 foot two-piece tube. They're extremely large machines, weighing 150,000 pounds or more. Here's this gadget, another tower. The tube obviously isn't on the machine. Very expensive to operate, very expensive to move. They usually have to, on a 98, such as this machine, disassemble the machine, haul it in several pieces, and then reassemble it once it gets on the log landing. I used to handle a lot of losses on these gadgets, and they've pretty much just gone away, just simply due to attrition. Here's another Medill. This machine, probably with a little bit of work and effort, could be sold and put back to work. An 046 is fairly common, yet it's out in the woods. Sunderburg bought out Skagit, who went out of business in the 80s during the recession, along with virtually all the other big yarder manufacturers. Berger, Washington, Skagit, just due to lack of sales, they just folded up their tents and went away. Again, Sunderburg bought out their copyrights and continued to build yarders up until the early 90s. And then they eventually went out of business. This is a machine you'll probably be seeing on a schedule. There's probably 100 of them out there, if not more. An older TMY-70, they also come mounted on tracks. The track version is much more popular simply due to its ability for it to turn on its own length and negotiate the sharp turns on logging roads. Same machine on a track would be worth about $550,000. This TMY-70 is probably worth about $4,500. Here's another Thunderbird. This is track mounted. It's not a TMY-70, but a later model, 6170. It's a mobile yarder. Again, still out there working. These machines were made to completely refurbish time after time after time. They're handmade. You can take a machine built in the 70s, and it's actually being done. Put hundreds of thousands of dollars into them and virtually have a new yarder that was built 40 years ago. Jason had mentioned and showed a video of a feller bunch that worked at TigerCat, yellow machine. You're going to get applications that show, say, a John Deere 759 processor or a John Deere 759 feller buncher. They look similar. The values, they greatly differ simply due to the attachment. The feller buncher, the hot saw seen at the bottom, it's all mechanical. The LogMax danglehead processor above it is computerized. It bucks, it delimbs, it cooks you dinner, it does everything. The same machine with the two different attachments on it can be worth $100,000 in difference. This I found interesting. It's probably one of the first, quote, shears or feller bunchers produced. It was also found at a museum built in 1960 up in Canada. It was actually used by Weyerhaeuser until about 1980 when it was retired and donated to this museum. Fascinating piece of equipment. It's interesting to see how those processors and shears and feller bunchers have evolved. I spoke earlier about older yarders taking them in, having them refurbished, and just simply due to the lack of new yarders. The only company building larger mobile yarders today is Medill. They were bought out by Nicholson, a company up in Canada. You can still order a brand new machine. However, you better have about a million and a half dollars in your bank account before they start production, because that's what it's going to cost you. Consequently, they don't sell that many. But they are taking these older machines, putting hundreds of thousands of dollars in them, making them comfortable for the operator. They're putting updated brakes and bigger drums on them. And it's commonplace. This machine is another that's going through restorations. It's an 071. It's being mounted on an excavator undercarriage called a hydraulic undercarriage. Very popular conversion. Look at what this thing can be worth when it's done. And you want to spend $1.4 million, or you want to invest $3.5 in something that will probably do just as good a job and not break your bank account. A few years ago, a Canadian company engineered and introduced a Felder buncher with a winch system built into the lower half of it, into the car body, that tied off the anchors at the top of a hill. The cables ran from the anchors down to the machine. Inside the machine, in the spools that were electronically controlled, they could sense movement of the machine up and down the hill and automatically kept the cables tight. The machine was called a Climax. They're being built today. The machine is retailing for over $800,000. What it does, it allows the machine to be used on steeper territory, and it gives the operator, I think, a little more confidence when he's looking out the window and it's straight, steep as a cow's face below him. This machine was kind of a spinoff of a Climax, where a John Deere 850 Cat had winches mounted to it. This machine would be parked at the top of the hill. The cables run down the hill to any Felder buncher. As long as you had a tie off on the car body to hook the cables. And this, too, it's all computerized. Nobody sets in the Cat during the day and operates it. It's all done by computers. It's about a $800,000 option for your $600,000 Felder buncher. But they're selling them. In fact, this is two different machines. One of them was at a dealer, and the lower one was on a job site I was on. As Jason discussed, fires are probably one of the higher risks you're going to have on logging equipment of any type. Felder bunchers, just the fact that there's tons of them out there seem to be prevalent. I work hand-in-hand with the fire investigator that looks at these, trying to determine causes. And he can spend hours looking at a machine and walk away scratching his head. It has been determined and pretty much not argued that 80% of onboard fires are due to hydraulic system failures. The remainder, 20%, would be electrical. Here's a fairly new machine, which is unusual. We find them burning after they get about 7,000 or 8,000 hours on it. This machine had less than 4,000 hours on it. It's a CAP 522. It was a machine working with that John Deere 850 tethering machine in the previous photo. This, we paid out over $350,000 on a total loss. Horse fires are an issue, although, believe it or not, not that common. Probably more in central Oregon than western Oregon. This was on the Yakima Indian Reservation up in central Washington. Burned up old Komatsu. This is a Kobelco 300. You'll note, of course, it's burned as well. The winch mounted on top of the upper frame. This machine is what we refer to as a yoder. There's a set of shivs on top of the boom. They raise the boom straight up in the air, run the cable up through the shivs, down into the rush. And la-la, you've got a yarder. Kind of a cheap yarder, but these things still, as used, can be worth $350,000. Here's a stroker to limber. See lots of those. Tons of wiring, tons of hoses, lots of potential for fires. This is something you're probably not going to see much of. This is an Eagle slack-pull carriage. In cable logging, you have to have a carriage if you're going to be productive. So virtually every logger's got one or two, one to use, the other for a spare. I can't remember what happened here. Obviously, it's been in a fire. But I don't think I've seen, in 40 years, maybe three carriages burn due to their own problems. Here's something you will see. This is a Bowman drum car, another type of radio-controlled carriage. These things fall out of the sky like rain. Probably one of the most frequent losses that I find reported, and I go out and inspect. Not just Bowmans. You have the Eagle carriages, as well as ACMEs. They all suffered the same fate. And usually, folks, it's from operator error, not from the mechanical malfunction of the yard or the carriage. Speaking of carriages, I found this years ago. I don't know who gave it to me. But it looks like a Popular Mechanics article, judging by the $0.25 for the copy. I'm guessing it was maybe in 1940. It just shows somebody had the initiative to dream up what the future Skycar might look like. However, you can't really see it in the photo, but it's got its own engine. And there's actually an operator sitting in this thing. I thought it kind of comical that you could see that he's wearing a business suit with a tie. I don't think I've seen a logger recently dressed in that type of apparel. But this is just a drawing and somebody's dream. Some other similar designs in that same article. From the claims adjusting point of view, these are the losses that I find that I'm receiving in frequency. Not necessarily dollar amounts or dollar values involved, but just the losses I get and the causes. Collision, all types of equipment. Upsets, all types of equipment. There's your fires. The carriages, they seem to come in droves. Vandalism and theft, not quite as common as it was back in the 80s when we had Earth First out here terrorizing everybody over the spotted elk controversy. But still a problem. Usually, teenagers out joyriding, drinking on a Friday night in their four-wheel drive pickup. And they come up on logging equipment and decide to break windows and empty the fire extinguishers and just create havoc and more of a nuisance to the logger than anything. And finally, we got our forest fires. Maybe I might be a little egotistical, but I think over the years I've been pretty successful in handling logging claims. I said many a time, you have to walk the walk and talk the talk. I've been involved in this industry to some extent almost my entire life. I seem to just naturally get along with these guys. I don't blow smoke. If I have questions, I'll ask them. That's my best learning tool, is the logger. Probably one of the most honored questions I've ever been asked was, Steve, when did you own your own logging outfit? Hey, folks, I haven't set a choker in my life, and I'm not about to start. But my response to him was, Mr. Logger, I can't get up that early. And by the way, Jason, we don't go to work at 7 o'clock in the afternoon here in Oregon. It's not unusual to find the shovel operator on the landing at 3 o'clock in the morning loading out log trucks. And the crew usually will get there well before daylight. Another kind of pet peeve I've had in regards to claim settlement is, sure as company's sending out auto appraisers to look at logging equipment. It's pretty frightening for a logger to be approached by somebody wearing a business suit and a pair of polished Oxfords wanting to look at their vehicle. A log loader in the vehicle, it's a piece of equipment. A yarder in the vehicle, it's a machine. It doesn't get the claim off to a real good start when you have an insured that's thinking, oh my god, how's this going to turn out? You just have to bite the bullet and hire a professional. If I get auto losses in my office, I turn them over to somebody that knows how to do them. And I stay out of their business and would appreciate if they stayed out of mine. Most of these guys are businessmen. All they want to do is go out in the woods every day. When you're trying to wrap up a claim, you're trying to gather up paperwork, everything from recovery documents to invoices to even getting a proof of loss sign, you've got to be patient with these guys. Last thing they want to do when they come home at 9 o'clock at night is sit down at their desk and go and handle this type of paperwork. Many of them don't have a secretary, so they're mom and pop operations. You just have to hold their hand and sometimes almost help them get this stuff put together for you. Probably first and foremost, or last and foremost, get the claim settled as soon as you can. Pull the equipments down. We don't have one person out of work. We can have as many as 15 families. You've got the logging crew. You've got the cutters. You've got the log truck drivers. All those families not pulling wages while you're adjusting this claim. And eventually, they just have to go find other employment. And your insured loses his crew, and it just lends to costing him more money in the long run. You've been provided a printout of the logging history in the Pacific Northwest as I see it, or saw it, from 1960 to the present. I'll just let you go over that by yourself. Really no comments. Other than that, enough of talking about the past. Let's talk about the future. I think eventually that the old growth in the federal force, they're going to have to open that back up to logging. If anything, for thinning to get the fire issues back under control, I see equipment continuing to evolve, becoming more and more mechanized, fewer employees on the ground. This is basically safety issues. Here a couple years ago, I had a Kohler yarder that is built in Sweden that a local insured had and wrecked. And I was talking to one of the Kohler's mechanics, which they flew over here to help work on it. That was pretty spendy. But anyway, he mentioned their engineers were contemplating building an all-electric yarder. Not solar powered, not wind powered, but a machine using electric motors incorporated inside the drums. The brakes and gear reduction would be inside the drums. You would have a diesel generator that would run the motors. The concept is fascinating. You've got electric motors that have got the maximum torque from 0 to their 10,000 RPM. Whether Kohler ever comes through with the concept, I don't know. But if they do, it probably won't be in my adjusting lifetime. Well, folks, I hope I haven't bored you too much or talked you out of wanting to insure logging equipment. It's a fascinating industry. I've enjoyed my 40 some odd years here. And although I attempt to retire from time to time, the insurers that hire me say, no, Steve, you're not going to retire. So it looks like I'm here for the duration. Thank you, folks. And that will conclude my talk. Thank you, Steve, and also Jason, for a fascinating, as you said, the industry is very fascinating. And this was a fascinating and insightful webinar. At this time, our presenters will take questions. To ask a question, simply type it into the Q&A pod that we've brought up. And then click the balloon icon next to it, and we'll receive it shortly. So we'll just wait a few moments for questions to come in. We're actually going to bring the Q&A pod up again. Okay, it's up now. So we'll just wait a few moments for questions to come in. Okay, we have our first question. Do you see cross laminate timber and mass timber resulting in a resurgence in the logging industry? I'm going to say CLT is cut to length. I think you're talking about processors, and they're, I think, just getting off to a start. As far as mass, I'm not sure what you're referring to there. It could be biomass, and that's another kind of a spinoff of the industry that seems to be taking hold. I think it'll depend, too, on how fast these products get approved here in the United States and whether it becomes a big thing here like it has in Europe and Canada. That's still a wait and see. Very good, thank you. What methods have you found that work to get loggers to properly maintain equipment? Good question. I think it's just a matter of economics. Some of it doesn't cost you anything. Cleaning the equipment out and keeping the needles, pine needles, and small limbs and stuff out of their belly pans is just something that you have to depend on the operator to do. Unfortunately, you have to depend on them, and it's not always that easy. Well, I find, too, once they've gotten hit with a couple of losses, if you could explain to them how to prevent those from happening in the future. They've already sustained the economic loss from that end of it, so you find a much more receptive audience at that point. Thank you. And along the same lines, do most loggers keep records of maintenance on the equipment, especially daily? Steve, you probably know before I. You know, other than receipts or invoices for parts they bought, a lot of them have their own mechanic. If they change the oil in the order, they usually just write the date or the hours on the oil canister, and that's their written record. I don't know that many of them really keep accurate records other than, like I say, outside invoices and repair invoices, that type of stuff. This next question is regarding the extraction process that was discussed earlier. What is typically used to pull the tree from the forest area to the landing or roadside? It will depend on your terrain. Typically what you'll see in most parts of the country is going to be the skidder, which is a tool used to pull the tree from the roadside. What you'll see in most parts of the country is going to be the skidder with the grapple attachment. Once you start getting some decent slope to it, that's when the yarder will come in. How prevalent is fixed automatic fire suppression on equipment? And that's for me, and you have hit a hot button. Years ago, I really believe that the industry was oversold on fire suppression equipment. We had a rash of on-board fires to Temco telebutchers back in the 80s and 90s. I think simply because they made so many of them, it was, if you figure percentage-wise, it probably wasn't not that excess. But somebody convinced, I'm sure the manufacturers of this, the suppression systems convinced insurers that, hey, you put a automatic fire suppression system on that machine and your problems are solved. No, your problems are just starting. It's not a cure-all. It's the same systems used in restaurants. It's up to recent. It was a dry compound, a powder compound. And you take a machine out in the woods and drive it around and bang it around, rattle it around. That compound tends to pack in the bottom of the canister like a cornflakes in a box. And then when you have a fire, nitrogen discharges and nothing comes out but nitrogen and no compound. They are getting back into some wet type of product that they're using in conjunction with dry chemical. Ironically, I looked at a $350,000 Timber Pro just a couple weeks ago that is a total from a fire and it had that system on it and it still didn't save the machine. I call them suppression systems. And my definition of suppression is to beat back, or other words, run and get more help. I think I've seen one of those save a machine, one machine in my entire career. And it was a really a relatively minor fire on a brand new machine. I think combined with exhaust blankets, you're seeing more of those being put on equipment, fire suppression. I don't know that fire suppressants are good investment, but again at one time they were almost required before some insurance would even consider putting a machine on the policy. But that's my two cents worth. This question is also for Steve. In the transportation industry, driverless vehicles have become, you know, driverless trucks has become a hot topic. Do you see self-operating logging equipment on the horizon, similar to the driverless trucks? I think to a certain degree. I don't think you're going to see a yarder sitting out there working with nobody on the landing. However, we're finding accessories being more and more computerized, such as electronic chokers. They automatically release through the yarder engineer, just pushing a button in the yarder. So now you've done away with the chaser's job on the landing. There's grapple attached to carriages that have cameras on them that will seek out logs. And the yarder engineer sets in the cab and watches to monitor. And when the grapples over top of a log, drops the grapples and brings it in. Again, I don't see a complete transition over to being all controlled by electronics. But certainly a lot of accessories are going to be. Jason or Steve, can you talk a little bit more about the differences between logging risks out east versus in the northwest? One that was mentioned was terrain, but are there others? Terrain is the biggest one that I'm familiar with. Obviously out west you're going to be dealing with significant slopes, which could affect the traction of the piece of equipment. One other thing you're going to find too is temperature swings, especially in the summer. When you're out east, especially in the southeast, you're dealing with hot and humid summer days where this equipment has been running pretty non-stop all day long. It's going to take a lot longer to cool that down in a 95 degree day with a 60-70 percent humidity than you're going to have up in Oregon or in Maine, for instance, where it's 20 degrees cooler and you don't have all that humidity. Those are the two big differences that I've run across. Thank you. We have time for two more questions. One, you mentioned there are only one or two manufacturers of the new yarders. Can you repeat the names of those manufacturers? In the mainland or in the U.S., Nicholson, which is Medill, is building mobile yarders. There's at least one company in New Zealand that's building yarders and recently even sold one here in the Pacific Northwest. But to my knowledge, that's pretty much it. What is the approximate cost to install and maintain fire suppression systems? Most of them, I'm familiar with, they're called AMSALT 101. That's the powder compound. On new equipment, they're standard. If you want to have one installed on an older machine, I'm guessing they're retrofit. Probably, if done in a shop, will run you between four and five thousand dollars. As far as maintenance, that can be an issue. If it accidentally goes off, which does from time to time on these machines, you're 30 miles out in the middle of nowhere. The representative from AMSALT probably has to drive from Portland. He'll have a full day going out in the woods and cleaning the machine up and refilling the canisters. That alone can run a couple grand, so it can be expensive. Maybe a good investment as far as having one installed. It hasn't been proven, not to me anyway. Thank you, Jason and Steve. That's our time. Thank you both for a very informative and detailed presentation. Thank you also to our attendees for your participation and your interesting questions. All attendees will receive a survey via email. Please take a moment to respond to the survey and provide feedback to IMUA. This ends today's webinar. Enjoy the rest of the day.

Logging Equipment

Underwriting

Claims Considerations

Lillian Coulson

Jason Paisela

Steve Lindley

Logging Industry

Equipment Maintenance

Risk Factors

Fire Suppression Systems

Driverless Logging Equipment