Varney Agency, celebrity loggers launch niche venture
A Bangor-based insurance company and a logging operation from Millinocket featured in a television series have formed a joint venture aimed at bolstering the logging industry here in Maine and across the country.
Representatives of the Varney Agency -- with more than a dozen offices in Maine -- and the Pelletier Brothers Inc., whose struggles and successes have been chronicled in a continuing reality series "American Loggers" on the Discovery Channel, announced this week the formation of the American Loggers Insurance Co.
The new company will offer insurance to logging companies, both large and small, as well as to trucking and heavy equipment industries.
American Loggers was licensed to sell insurance in 39 states at the time of the company's announcement at a press conference Tuesday at Dysart's Truck Stop and Restaurant in Hermon.
The new insurance company is expected to be headquartered in Millinocket, with potentially satellite offices elsewhere in Maine and in other states as the business builds, says Tim Varney, president of the Varney Agency. Varney says he is optimistic that the company will hire at least four people within the first six months and will be licensed in the remaining states within the next few months.
While the Varney Agency has provided insurance for years for Pelletier Brothers, whose family businesses include logging operations and a restaurant, it was only recently that the insurance company considered expanding its individual expertise to other logging companies in an effort to reduce their high insurance costs.
Logging is considered one of the most dangerous occupations in the state, which means high premium rates that those in the industry say lead to reduced profits and prompts some operators to be under insured and at risk. Insurance coverage can amount to 3%-5% of a company's budget, says Mike Beardsley, executive director of the Professional Logging Contractors of Maine, whose members account for about 85% of the wood harvested in the state. "It's not a small number as far as a business expense," he says.
By reducing claims, companies can cut their premiums by thousands. Varney told Mainebiz the current average per-truck insurance cost for one logging company his company works with is $7,500 per year, while the average costs for other companies Varney insures is $2,500 per truck per year.
The approach put forth by American Loggers Insurance can save logging companies money without reducing insurance coverage. Although insurance companies have safety requirements in place, they don't tell you how to implement them, Varney says.
And that's where the Pelletiers come in.
Not only are they lending their American Logging name to the company but also their knowledge. Pelletier Brothers Inc. has managed to cut its per-truck premium cost by more than 50%. With 18 trucks, that's a huge savings, says Randy Pelletier, who, along with brother Eldon Pelletier, spoke at the press conference.
"By using what has been a proven cost-effective way to employ safety programs with the Pelletier brothers, we'll be able to take that same thing and go into smaller companies, even single operators, and help employ those safety programs, which will decrease their claims, and therefore decrease their insurance costs," Varney says.
Precautionary steps like knowing how to best place steps on the skidders to keep them from being torn off in the woods can save wear and tear on equipment. And placing a log beside a delimber in a logging yard prevents trucks from passing the delimber, a potentially dangerous situation.
The Pelletiers have been harvesting and logging in the Maine North Woods for more than three decades, including base camps at Fifth Saint John Pond in the western part of the state and a smaller operation near the Allagash Waterway in the Telos area.
"I think that because of our past experience, we probably will be a big help to this," Eldon Pelletier says.
Beardsley says he is not surprised that the Pelletiers are opening a new venture in insurance. He says the Pelletiers are savvy business people, and by entering the relatively untapped market of logging insurance, they are further diversifying their revenue stream.
Production of the third season of "American Loggers" is underway and is expected to air in 2011.
Read more
Varney Agency seeks Canadian expansion with new stake in large Quebec sawmill operator
Most Recent
Most Recent
Comments