When Logging Insurance Got Tough in Pacific Northwest, Firm Got Going with Its Own Program

By | August 9, 2022
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When the going gets tough, the tough get going. That might be the most apropos slogan for Axe Insurance Group.

The logging industry may be about as tough of a business as one will find. Not only is it well-known to be difficult work, but it is an industry that isn’t always liked, or understood, by everyone.

Securing and maintaining insurance for U.S. logging contractors has become increasingly difficult, and an increase in wildfires has made things in the business harder.

Several factors are working against loggers seeking insurance: Strict eligibility guidelines, insurers leaving the market, an ongoing driver shortage, legislative issues, nuclear verdicts, and as mentioned, wildfires.

Many of these factors are not new, and they have been festering over the years. More than a decade ago, when one insurance business was faced with the difficulties of finding insurance for their customers at good prices, they decided to cut their own path.

Bryan Graham

Associated Insurance Services is an independent insurance agency that was established in 2005 as a subsidiary of Associated Loggers Exchange, a reciprocal workers’ compensation insurer doing business in Idaho and Montana. It is closely affiliated with Associated Logging Contractors of Idaho and Montana Logging Association.

One of the biggest issues the firm faced was that the national logging programs were making a lot of their underwriting decisions based on what was happening in other areas, such as the Southeast portion of the country.

“It was having a pretty adverse effect on the way their programs were starting to look up in our region of the country,” said Bryan Graham, the firm’s forest products director. “That was really what drove the necessity to try to find something better.”

This “something better” finally came, after years of work, on March 1, with the launch of Axe Insurance Group, a program in Idaho and Montana underwritten and backed through Lloyd’s of London Marketplace.

Pacific Northwest logging is a tough industry. So a program called Axe Insurance Group was formed to make insurance more available and affordable for loggers.

The logging insurance program features general liability, commercial auto, equipment and excess liability. It’s tailored to fit the needs of the logging and log hauling industry in the Northwest.

The program was more than a decade in the making. And, according to Graham, who spearheaded the development of the program, it may be the first program of its kind developed by an insurance agency.

“It’s been a very long time coming,” Graham said.

And he means long. Work on creating the program started in 2010.

At that time, the firm didn’t have a large enough book of business, and it didn’t have the data to back up the information they were providing to markets to which they were pitching the program.

“They wanted a lot more detail on the claims numbers, in particular, to justify the loss ratios that we were saying we had been capturing in our program, up until that point,” Graham said. “Basically, we kind of determined that we needed to take it upon ourselves to really track that information in-house much better than we had been, and not relying on the actual insurance companies that we wrote the policies through to provide us with that info.”

Thanks to that groundwork, they eventually got help from a well-connected insurance professional named David MacPherson, who works with C. J. Coleman & Company in London.

“He started taking our program data throughout the London marketplace to find us someone that would be willing to partner with us,” Graham said. “That process started in 2020. We were about 10 years down the road from when we initially kind of started this whole concept of things we’re trying to accomplish. He got some traction in a couple of places, but some markets didn’t want to offer the whole program to us. We wanted it to be the whole thing. We wanted the auto, the liability, the excess, the equipment. We wanted all of it.”

The logging industry may be about as tough of a business as one will find. Not only is it well-known to be difficult work, but it is an industry that isn’t always liked, or understood, by everyone.

Finally, in 2021, MacPherson helped the firm find an underwriting arm of Lloyd’s, called Brace Underwriting Ltd.

“We started working with them, and took about a year to kind of finalize everything on what our policies would look like, what the rates would look like, what our authority within their program would give us on that side of things,” he said. “Finally, we secured the underwriting pen with Lloyd’s, and the contract with them, on March 1 of this year.”

This comes at a time when more states and entities are asking more loggers to help with wildfires, which have been particularly severe in the Western U.S.

“We’ve seen the state, and actually, the federal government, as well, start to open up some more land for both harvesting, but also with the concept of fire mitigation work, as well, providing some more spacing between the trees out in the forest, and kind of cleaning things up, out there, better than it has been in the past,” Graham said.

Of course, that creates another insurance consideration for the industry.

“A lot of the insurance companies have concerns, and I suppose understandably so, about dealing with forest fires, or around them,” he said. “We figure it’s better to get these fires put out, than starting them in the first place. We want to help encourage our customers to get involved in that stuff, and be a part of the solution on that side of things.”

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