3 QUESTIONS: PENNSYLVANIA LUMBERMENS’ JOHN K. SMITH

JOHN K. SMITH, president and CEO of Pennsylvania Lumbermens Mutual Insurance Co., has learned a lot over 40+ years in insurance:

1Tell us about your first experiences with the lumber industry, and how you got involved with it.

Smith: I had been in insurance for more than 20 years when Pennsylvania Lumbermens Mutual Insurance Co. first reached out to me. My experience ranged in positions of ever-increasing responsibilities running large profit centers for national and multi-national insurance companies. But I always wanted to run an entire insurance company, not just a division or region. At that time, PLM was a tertiary insurance player in the lumber and forestry niche. While I had never envisioned leading a small company, I was intrigued. Joining PLM was truly a great decision. My wife, Julie, and I have met tremendous people, from PLM employees to industry clients, who welcomed us into the company and the industry.

One of my first interactions with the lumber industry was at an association dinner where I was clearly the youngest person at the table. The dinner conversation revolved mostly around business operations and new technologies. I was taken aback by the transparency and willingness to share opinions among competitors. At one point, a business owner asked me why he should insure his business with PLM. I launched into the benefits of a PLM relationship and the rest of the table took note. Others joined the discussion and asked deep, pertinent questions. When I finished my pitch, the gentleman who opened the dis- cussion doubled down, making me repeat myself. Then he informed me he had been PLM insured for decades. In fact, most of the people at the table were PLM customers. The joke may have been on me, but I learned if I spoke my mind, told the truth, treated people fairly, and lived and breathed the promise we make as an insurance carrier to be there at the time of a claim, we would thrive.

The challenges PLM faced 20 years ago have changed, and we have changed to meet them. I firmly believe the day you realize you don’t love what you’re doing, that should be the day you move on and try something else. I love what I’m doing. There has never been a day I regretted choosing to lead PLM.

2What have been the greatest challenges over the years?

Smith: Recognizing all the challenges that need to be handled to develop effective plans and procedures, and ensuring we have right people to manage them, has been our greatest challenge. We call this the Enterprise Risk Management (ERM) process. PLM’s ERM process is deep and broad-based. It gives us a framework to not only address those risks we know about, but also to help us identify developing risks and prepare for those we do not yet know about.

For example, consider the winter freeze of 2021 in Texas and the Midwest. Texas is not known for winter freeze losses. Regardless, we were not significantly impacted because we have a strong plan in place to handle multiple types of weather-related property losses. We executed our plan efficiently and effectively to operate as normal, focusing on helping our customers get their businesses back up and running after a loss.

This challenge was different from COVID-19. The pandemic forced us to send our employees home, where they remain to this day. Yet despite the initial uncertainty, we had a plan to deal with dispersing our workforce if the office became inaccessible due to a fire or a significant cyber event. So, we adjusted our plan to fit COVID-19. Within 48 hours, we established a fully remote workforce and did not miss a beat.

The point being is that when asked about challenges, all I hear is “how do I manage risk?”

3 What have been the most significant changes?

Smith: Two decades ago, PLM was operating at $45 million of premium volume and $60 million of policyholder surplus. There were four or five mutual companies focused on the lumber and forestry segment. PLM’s footprint was primarily on the East Coast.

Today, we are arguably the market leader in our niche with a national footprint. Our premium last year was at $375 million. Our policyholder surplus was just under $200 million, and our profitability has improved dramatically. We are the only mutual insurance company left focused exclusively on lumber and forestry.

What has not changed and will not change is my love of the business, and the commitment and dedication of the PLM team in our pursuit of demonstrating the value of the PLM relationship.

– Send suggestions for future interviews to David at dkoenig@526mediagroup.com.