NORTHWEST G F MUTUAL INSURANCE COMPANY FEBRUARY 2014 NEWSLETTER

Transcription

1 NORTHWEST G F MUTUAL INSURANCE COMPANY FEBRUARY 2014 NEWSLETTER From the President s Desk In case you were wondering about the absence of our January newsletter, I want to assure everyone that neither Sharon nor I were ignoring our work duties while basking in some warm tropical climate. Unfortunately quite to the contrary, we were both struggling with the loss of a parent. Dad passed away on January 7 and while I was spending my final hours with him, I received a text from Sharon saying that she had just lost her mom that morning was clearly not getting off to a good start. Both of these losses present a clear and distinct void in our respective lives. Sharon would begin each and every day with a trip to her mom's apartment to make sure that she was fine and had everything that she needed for the day. I on the other hand would end every day with a phone call to my parents. Dad had an insatiable appetite to hear about every detail of my day, and was always interested in everything relating to Northwest GF. Our interest in and care for our respective parents wasn't so much reflective of our quality of character (well maybe in Sharon s case!), but more so represented an obligation that was forged by the selfless care and unconditional love that we had both been the recipients of. There is something unique and wonderful about our parent s generation, especially those who grew up in the great American Midwest and who embraced the values of hard work, honesty, and dependability. These values engendered a wonderful quality of individuals who became caring, compassionate and nurturing parents. They are truly irreplaceable. Our hope however, is that over time the pain of saying goodbye will transition into fond memories and eternal gratitude for having known and been loved by these wonderful people. We currently live in a world in which right has become wrong and irresponsibility is encouraged under the banner of freedom and individualism. We can be thankful however that we have been given a clear moral compass and two worthy life examples to emulate. As Sharon and I move forward individually from these losses, we can continue to pay tribute to these wonderful people by making sure that decisions made and leadership exercised, will always be reflective of the enduring qualities and life lessons taught to us by these wonderful individuals. In Loving Memory of: Leona Schumacher Gene Bowker

2 What s Your Perspective? When it comes down to it, very few things are black and white nowadays. Pure objective analytical thought is seldom practiced. For the most part, people's opinions and thoughts on almost any topic, most often reflect how they want things to be, not how they actually are or should be. Most young men gain their first lesson on differing perspectives when they get married. Before I married, my perspective was that I would only need about five things in my bathroom. The day after I married, I walked into my bathroom and observed around 200 different items. I could only readily identify about 15 of them. Before I married, my perspective on being a man was that I should be strong, decisive and exercise leadership. My wife's perspective was that I was something akin to a domestic animal, and that if treated with both firmness and kindness, I could probably be trained to do most things correctly. My perspective was also that if someone said it was okay to do something I would go ahead and do it. I quickly however learned that when my wife made the statement "go ahead", that was a dare, not permission! I quickly learned not to do whatever it was! Well unfortunately, many of the issues that we struggle within the insurance industry are not immune to the influences and effects of perspective. Perhaps one of the most routine is the differing perspective on home values that occurs between pre-loss and post loss evaluations. At the point-of-sale, the client desires a competitive price. Accordingly the client s perspective on the cost to rebuild their home in the event of loss is one of optimism. The desired outcome of a more affordable premium clearly provides them with a skewed perspective on value. After a loss however, a policyholder s perspective is not an optimistic one. It is a perspective that is derived from need and a firm resolve to make sure that no one cuts corners in regards to putting their valuable property back into its pristine pre-loss condition. Upon this writing, I sit at my desk observing a repair estimate on a dwelling located in North Dakota oil country. The estimate is indicating a charge of $460 per square for shingle replacement! Obviously if this policyholder can't find anyone to do the work for less, they will want this claim handled promptly based on the available contractors estimate. Similarly in the event of a total loss, the insured will not be arguing that the contractor s reconstruction bids are too high, only that there was a failure to assist them in regards to procuring adequate insurance to value. So how do we handle perspective in regards to property valuations? Well we need to interject some objectivity into the overriding subjectivity! First off, we need a good evaluating tool such as E2Value. E2Value s perspective is simply one of accuracy. They have nothing to gain from either being over or under priced on their construction estimates. Keeping in mind that the cost that E2Value derives is not reflective of market values but actual costs that would be incurred to rebuild, their ultimate goal is to be within 5% of the actual reconstruction costs. The valuations are calculated based upon

3 all the inputs of the home such as architectural style, exterior roofing, quality of construction materials, and type of construction, living area and all additional areas. E2Value appears to provide a very realistic and accurate measure of actual rebuilding costs and the utilization of this product is an excellent defensive practice for an agent against underinsurance and application of coinsurance penalties. So what steps would Northwest GF recommend to our agents? First off acquire and understand your client s perspective on the value of their home. Second run an E2Value reconstruction estimate as well as an alternative evaluator if you wish, such as Marshall Swift Beck (if you have access) and combine these values with any additional information that you have on the actual construction costs of your clients dwelling. Next, effort should be made to move your client's perspective towards a realistic understanding of the likely reconstruction costs of their home. If the E2Value indication is unrealistic from the policyholders perspective, or is not supported by the other evaluative information, your Northwest GF underwriter can look at all the information comprehensively and will attempt to work towards an agreement on an acceptable valuation. Recently a Northwest GF underwriter thanked an agent for their prompt submission of an updated E2Value reconstruction estimate. Our agent commented that "The E2Value estimating tool is not hard to work with and represents a great benefit to the insured. In fact when I explain to them the benefit of having things properly insured in the event of a loss, they typically have no problem with the premium increase! Now there's an agent whose perspective is driven by the desired outcome of simply doing things right. That's a perspective that will undoubtedly lead to a satisfied and adequately protected client! So let us know if you need any assistance in working with or generating the E2Value replacement cost estimates. Although E2Value provides an excellent estimating product, we also appreciate the role that construction nuances as well as individual perspectives can play in the process. Accordingly always keep in mind the personal nature of Northwest GF s service and the fact that dialogue and often times compromise is only a phone call away! NWGF 2014 REINSURANCE PLACEMENT From the Secretary s Desk NWGF reinsurance program placed with A rated carriers provides the minimum requirements for your mortgagee and umbrella carriers requests. We have attached the 2014 information and this information will be available at

4 THANK YOU TO OUR AGENCY FORCE FOR YOUR LOYALTY AND QUALITY BUSINESS. The following are the recipients of the 2013 Agency Profit Share Commissions: All Seasons Ins Agency Bowbells ND Bickett Ins Agn Carrington ND Bowerman Ins Agn Steele ND Home Run Ins Huron SD Campbell Co Ins Herreid SD Dacotah Ins Agn Mobridge SD Dacotah Ins Agn Webster SD Stenehjem Ins Agn Bismarck ND Fidelity Agency Winner SD American Ins Dickinson ND Walock-Johnson Agn Lisbon ND Sargent co Ins Forman ND King Ins Agn Faulkton SD First International Ins Fargo ND Hankinson Ins Agn Hankinson ND Hazelton Ins Agn Hazelton ND Insurance Plus Aberdeen SD Insurance Assoc St Thomas ND Jensen Agn Beresford SD Dakota Ins Solutions Roscoe SD 1 st Western Ins Hill City SD Kovash Ins Agn Dickinson ND Krein Agency Eureka SD Lakeside Ins New Town ND Lemme Agency Arlington SD Lenhardts Ins Gackle ND McClintock Agency Rugby ND Manger Ins Williston ND Marin-Biel Selby SD Heritage Insurance Serv Valley City ND New England Ins Agn New England ND Oyen Ins Agency Williston ND Pickthorn Ins Agency Sisseton SD Pierson Ins Agency Mitchell SD Security Ins New Salem ND John Sieh Agency Aberdeen SD The Signature Page Hazen ND Taszarek Ins Agn Kulm ND 1 st Western Ins Newell SD Western Agency Minot ND Western Frontier Ins Agn Bowman ND Lincoln Insurance Agn Hankinson ND Zeeb Ins Agn Menno SD

5 2013 Agency President s Club Qualifying with year end written premium of $75,000 or greater while maintaining a year end written premium to paid losses loss ratio of 40.0% or less All Seasons Ins Agn Bowerman Ins Agn Campbell Co Ins Agn Cardinal Ins Agn Coss Agency Dacotah Ins Agn Dacotah Ins Agn Fidelity Agency American Ins Walock-Johnson Agn Sargent Co Ins King Ins Agn First Intl Ins Hankinson Ins Agn Hazelton Ins Agn Insurance Associates Dakota Ins Solutions Monte Kovash Ins Agn Gary Krein Agn Lakeside Insurance Lenhardts Ins Agn McClintock Agn Manger Ins Oyen Ins Agency Parsons Ins Agn Payne Ins Pickthorn Ins Agency Pierson Ins Agency Security Ins John Sieh Agn The Signature Page Taszarek Ins Agn Union Ins Western Frontier Ins Agn Lincoln Insurance Agn Zeeb Ins Agn Bowbells ND Steele ND Herreid SD Mott ND Miller SD Mobridge SD Webster SD Winner SD Dickinson ND Lisbon ND Forman ND Faulkton SD Fargo ND Hankinson ND Hazelton ND St Thomas ND Roscoe SD Dickinson ND Eureka SD New Town ND Gackle ND Rugby ND Williston ND Williston ND Viborg SD Eagle Butte SD New Salem ND Mitchell SD New Salem ND Aberdeen SD Hazen ND Kulm ND Halliday ND Bowman ND Hankinson ND Menno SD

6 Dear Lender, In 2011 A.M. Best lowered our company rating to a B-. This action was precipitated by several years of adverse weather patterns which served over time to limit the profitability of our operations. In 2013, with distinct signs of operational improvement, AM best attached a stable modifier to this rating. Since our 2011 downgrade, our focus on strong continuous fiscal improvement has resulted in a 26% increase in our company surplus. Our working with A.M. Best will represent a continuing process as they require future demonstration of our ability to sustain this level of improvement, as a condition precedent for consideration of further upgrading. NWGF remains a secure and stable company. Accordingly the purpose of this communiqué is to provide lenders with both assurance and information which should eliminate any concerns regarding the safety and adequacy of NWGF policies. First and foremost our company possesses a secure level of policyholder surplus. Additionally we have in place a solid reinsurance program for 2014 with top-rated reinsurers, (see attached list). With 25% of our property risk ceded, and the maintaining of only the first $70,000 of any multiline loss, our $5 million per risk cover combined with our $5 million catastrophe occurrence blanket, provides our company with strong loss support and surplus insulation. In addition to our comprehensive reinsurance program, Northwest GF Mutual Insurance Company is a member of the South Dakota Guarantee Fund. This should serve to further mitigate the perception of any existing solvency risk to a NWGF policyholder. Northwest GF Mutual Insurance Company has been in existence for over 116 years. Although past events have required the initiating of some operational improvements, our seasoned operations and tenured staff combined with adequate capitalization and solid reinsurance agreements will serve to ensure our ability to continue the providing of superior protection and service to our policyholders for many years to come. Please do not hesitate to contact our company at should any additional information be needed or desired. Regards, Brian Bowker Pres/CEO NWGF Mutual Insurance Co. Northwest GF Mutual Insurance Company PO Box 100 Eureka, SD Phone FAX

7 To all NWGF Agents, Throughout our 116 year existence, Northwest GF Mutual Insurance Company has experienced countless underwriting cycles and weather patterns. However in 2011 we were the unfortunate recipients of an A.M Best downgrade which resulted in a B- rating for our company. Although surplus capital remained adequate, the extreme weather over the prior year s resulted in the lack of the level of operational profit that A.M. Best requires of their higher-rated companies. Accordingly after this downgrade, NWGF has embarked on a campaign to achieve marked improvement in regards to our operational performance and fiscal health. Subsequent to our rating downgrade in 2011 NWGF has realized a 26% increase in company surplus. Although 2013 presented unprecedented storm losses, operational strategies aim at fiscally strengthening the company served well in protecting the existing surplus. This presented an opportunity for us in 2013, to go on the offensive with A.M. Best., which resulted in the addition of a stable modifier to our current rating. This type of dialogue with A.M. Best will represent a continuing process as they will require a continued demonstration of our ability to sustain this level of improvement as a condition precedent for consideration of further upgrading. In addition to our strengthening financial position, we have again secured the placement of a solid reinsurance program. Our 2014 reinsurance agreements are written with top-rated insurers (see attached list) which provide our company with an extremely comprehensive reinsurance program. With 25% of our property risk ceded out, and the maintaining of only the first $70,000 of any multi line loss, our additional cover of $5 million per risk and $5 million in catastrophe cover affords tremendous insulation for our surplus from the impact of any large single loss or multiple loss scenarios such as hail/wind events. Although the A.M. Best rating process may arguably not be well suited for small companies, our company has elected to submit to this process as we still feel that the A.M. Best rating remains relevant to our operations and markets. With that in mind our goal will be our re-ascendance into the ranks of higher-rated companies. Considering that the movement back up to the ranks of higher rating levels will take time, we do want to continue to our assist our agents in educating and addressing any concerns presented by lenders. Accordingly, we have attached a sample letter and information sheet regarding our reinsurance program. This information may be sent directly to lenders in order to quell any issues or concerns regarding acceptability of NWGF policies. In the unlikely event that lenders would still require additional information, please contact our company as we will provide these entities with additional detail regarding our reinsurance program. We continue to remain a strong company with a vibrant reinsurance program. Additionally as a member of the South Dakota Guarantee Fund, you can rest assured of the safety we represent to your clients and of our ability to continue providing superior protection and service to all of our policyholders for many years to come. Thank you all for your past and continued support of Northwest GF Mutual Insurance Company. Regards, Brian Bowker Pres/CEO NWGF Mutual Ins. Co. Northwest GF Mutual Insurance Company PO Box 100 Eureka, SD Phone FAX

8 Reinsurer Domestic A.M. Best Rating S&P Rating NAIC Code FEIN Reinsurance Placement Effective January 1, 2014 Surplus 1st 2nd Multiple Line Multiple Line Property Per Risk HO/FO Quota Share Umbrella Quota Share 1st Catastrophe 2nd Catastrophe Arch Reinsurance Company A+ A $822,615, % 25.00% 25.00% 25.00% 25.00% 5.00% 5.00% 5.00% Catlin Underwriting Inc. on behalf of: Lloyd's Syndicate SJC Employers Mutual Casualty Company A BBBpi $963,024, % 9.50% 9.50% Mutual Reinsurance Bureau on behalf of: Church Mutual Insurance Company A NR $415,279,000 Employers Mutual Casualty Company A BBBpi $963,024,000 Kentucky Farm Bureau Mutual A BBBpi $938,414,000 SCOR Reinsurance Company A A $618,859, % 50.00% 50.00% 50.00% 50.00% 10.50% 10.50% 10.50% Shelter Mutual Insurance Company A BBBpi $1,397,888, % 7.50% 7.50% Europe R + V Versicherung AG NR AA- AA $6,514,187, % 20.00% 18.50% London A A+ AA % 25.00% 25.00% 25.00% 25.00% Lloyd's HDU A A+ AA % 7.50% 7.50% Lloyd's KLN A A+ AA % 3.88% 7.75% Lloyd's TML A A+ AA % 1.12% 2.25% Lloyd's AML A A+ AA % 20.00% 20.00% 3rd Catastrophe 15.00% 15.00% 11.50%

9 If you know other e2value users who do not receive this newsletter, please forward this to them. Customer E-Newsletter February 2014 Valuation, a Local Perspective, Part II As we mentioned in our October 2013 newsletter, we recently received permission to visit, listen and learn about homes insured through an agency in Raleigh, North Carolina. This was important for them and for us so that we could all discuss how their builders develop their costs, how we develop our replacement costs and to determine what, if any, our differences were and why. We were invited for a visit so each party could speak directly to their perspective of building costs for homes in a city. Our Customer Inquiries Out of the approximately 2,200 customer support inquiries per year, only about 7% are directly related to a valuation question. Overall less than one-tenth of one percent (0.01%) of our users contact us for support issues and overall less than one one-thousandths of a percent (0.001%) of our valuations result in a customer directly contacting us about the value. We offer our customers direct support via phone and for inquiries about saving a report, the value, clarification of a term, technical issues, etc. We will also visit our clients and their agents, in addition to phone interviews, s and webinars. We will always spend the time necessary to answer any concerns, but especially any concerns about value. We also make presentations to groups of agents or sometimes just to one agent. Often our presentations are requested after an agency review that shows our replacement cost values are different sometimes vastly different than other replacement cost values the agency sees. Across the U.S. our estimators produce just under one-third of the structure valuations. For most average homes, the variance among replacement cost estimators seems to be relatively minor. As an example, if three out of three vendors give a value for a home within a 10% range of $X, none of the replacement cost vendors stand out. On the other hand, if one vendor lists a replacement cost 20% or even 100% different than two other vendors, that vendor draws deserved scrutiny. As we ve mentioned before, we develop replacement costs that are a reflection of the local markets. Our values are not really our values but are reflective of the builders in any given marketplace. Our goal is to be within 5% which means plus or minus 2.5% of any structure s value. Our values are constantly tested by both individual disasters and large, catastrophic events. To date, the feedback from the paid claims is positive for our customers. Meaning that, our initial values have followed along with the paid out values. The Visit to Raleigh In this article, we profile the agency, Bagwell & Bagwell Insurance, located in Raleigh, North Carolina The agency was started in October 1919 by Walter Bagwell, who quickly established an honorable reputation by providing comprehensive coverage coupled with superior customer service. Bagwell & Bagwell Insurance is known for reliability, honesty, tailored coverage and an unmatched commitment to each client s needs. Walter Bagwell s legacy continues and is even more relevant today. Today, Bagwell & Bagwell Insurance is an industry leader, operating solely to We Congratulate Beverly and David Chesney, of Chesney-Leonard Insurance Agency, St. Clair Shores, MI on their retirement and offer them best wishes! Helpful Estimator Tips Retail Store and Warehouse Combination Structure Q. In the Quick Commercial Estimator, how do I enter a combination structure of part warehouse and part retail store? Does it matter if I put it all in as a retail store? A. In QCE we offer the option to enter structures as attached to or built into or contained within to allow users to define the square footage and different materials of each structure type. These structure types typically have different interior features and finishes, which users can account for in the equipment / contents field. By entering them as separate structures users can better define each section. Detailed instructions can be found in the Help Center Manuals section. Cost per Sq Ft Is Too Low Q. The cost per sq. ft. in the replacement cost report is $ It would be impossible to rebuild a house for $85.04 in this area. A more accurate figure would be around $150 per sq. ft. for a residential property. The $85.04 per sq. ft. might be enough for a noncombustible commercial building but not a frame residential property. Can you explain why this is so low?

10 meet the changing needs of a diverse and expanding client base. Personal relationships are paramount to the Agency taking the time to understand each client s situation and risks ensures complete protection. Families grow, businesses are built and plans change. Bagwell & Bagwell Insurance provides the flexibility to adapt at every milestone. At Bagwell & Bagwell, clients are family. The Agency asked us to come to Raleigh to learn more about their client base and their extensive knowledge of the building costs in Raleigh. We met with the agency leadership, personal coverage team, and respected local homebuilders Jon Rufty of Rufty Homes ( and Sam Barrow of Lane Bradford Building Company ( It was a privilege for us to hear directly from the Bagwell & Bagwell team and the local homebuilders. A strong factor that has influenced the building costs for Raleigh is the city s explosive growth. According to the City of Raleigh Planning and Development department s spring 2013 report, from 2000 to 2012 the population grew by 150,000 people from an existing 280,000, which is a 65% increase. Housing units grew by 55,000 between 2000 and 2011, increasing from 121,000 to 176,000 units. Keep in mind what happened in 2008 and 2009 to building and growth across the U.S. For example, in Raleigh in ,000 single-family building permits were issued. By 2010 that dropped to 570. As a comparison, Atlanta, GA, proper, is similar in size, but from 2000 to 2012 its population grew only 5%. In 2000 Atlanta had 187,000 housing units and by 2010 it shrank to 185,000 units. Raleigh, on the other hand, was hit by explosive growth, then a growth slowdown and now has strong growth again. Those dramatic changes will have an impact on the price of housing and the price spread. One of our challenges in gathering data is that we need to compare the living space of all homes to properly compare similar homes and prices. Builders like Jon Rufty and Sam Barrow, know their costs and view pricing slightly differently than we do. While we all need to know the cost of electricians, plumbers and finish carpenters, etc., builders need to know the precise cost of everything, especially in the case of these builders where each home is completely custom. To them, they can t compare one home to another home since one customer may want certain floor covers that dictate the home s framing, while another chooses a different floor cover and that changes the framing for that home. Such items impact the home s framing and related costs, which no one will ever see, and will also contribute greatly to the cost of finish materials, staircases, roof structure and material even cabinetry and how the home stands the test of time. Builders need to watch and know very precise costs involved with each project or they don t stay around long. While we do review and care about all costs involved, we focus less on the micro level and look more at total costs and overall costs of a project. Ultimately, the past is history and while important to learn from it, the past can t predict the future. Our clients need to know the price to rebuild a structure AFTER it has been completed. In other words, our clients need to know the EXPECTED cost. In Raleigh, we spent part of the time establishing that we were comparing apples to apples, and we were. (As an aside, we recommend that everyone agree on size, styles, materials and all the facts before discussing the value of any structure in question.) A few of Bagwell & Bagwell s client s homes were selected and processed through the e2value estimator. The homes selected were either built or renovated by Mr. Barrow and Mr. Rufty. From the height of building permits in 2004 to now, the growth, slowdown, population age and demographic shifts have changed the make-up of the A. Often the cost per square foot is used to describe the living area cost per square foot but that is not how it is used in e2value. In our valuations, the replacement cost of the home is calculated based on all the inputs for the home the Architectural Style, exterior and roofing materials, construction quality, type of construction, living area, all additional areas and square footage for each area, etc. After that is calculated, the replacement cost is divided by the gross square footage, which is the square footage of the living area plus all additional areas added together. We do this as part of the replacement cost analysis and ITV calculation if the Coverage A amount was entered, we provide a comparison of the RC gross cost/sq ft versus the Coverage A gross cost/sq ft. We often see a cost per square foot calculated as the replacement cost divided by the living area square footage, which in this example is $337,000/1866 = $180 per square foot. This number may be more in line with your expectations. However, this type of calculation does not reflect any of the additional areas and their impact on the bottom line replacement cost and, depending on the additional areas, the cost per square foot varies significantly. When looking at the $85 per gross sq ft, it may also help to know that behind the scenes we are pricing living area at a much greater value than the additional areas (basement, garage, porches, etc.), but the $85 is the average cost for all areas. Waterfront versus Beachfront Q. Can you explain the difference between Waterfront and Beachfront locales? A. Waterfront means that the home is adjacent to the water. This is often used if the home is on a lake, river or any large body of water but not on a beach. Beachfront means that the home is adjacent to the water and beach, typically the ocean or other large body of water. If it s on the beach, select beachfront.

11 builder s partners when completing a home. Each home needs trades such as concrete, insulators, painters, roofers, cabinet and molding suppliers, windows suppliers, and more. Further, custom builders also use supplies from the same suppliers large, national or regional builders use. The data we gathered indicates that custom homes are increasing in replacement values at a greater pace than the already-increasing costs of the lower and mid-value homes. That data was reflected in our reported values. Since the housing crash, the builders, sub-contractors and suppliers that survived are very different than those who were around just two years ago. Large builders had access to capital and were able to survive the crisis. When smaller builders went out of business, those left were able to gain market share. At the same time, large builders have a choice of where to put resources. Looking over the national landscape, would you choose to commit resources in Atlanta or Raleigh? Therefore, large builders increased their presence in Raleigh and, more importantly as far as we are concerned, affected the pricing in the Raleigh marketplace. The changes to suppliers, builders and sub-contractors, and influence of the large builders, increased pricing, even in the downturn. As lower and midpriced homes increase in costs, custom homes tend to increase at a faster pace. Speaking with Mr. Barrow and Mr. Rufty helped bring to life the data we see elsewhere and confirmed the information that other builders and suppliers have given us. Then, hearing from an experienced agency team with a long history in a town, a varied client base and commercial clients, also helped us. Conversely, we hope that this was helpful to them, as well. An issue we face and any agent or carrier also faces is that with three widely used replacement cost suppliers providing answers within an agency, getting varied answers can be a source of frustration for those involved. The e2value tools mean to help set the table as to the expectations of what a replacement cost could be with a total loss, only. We have no bearing on premiums, rates, coverages, etc. As reporters of values, we see our job as outlining a house s value with a total loss. It makes sense that a 5% variance on a $200,000 home meets less resistance or is noticed less versus 5% on a $2,000,000 home. As mentioned before, as homes go above $500,000 in value, we tend to have a greater divergence from other RC suppliers. Greater divergence of opinions tends to lead to greater scrutiny. Ronnie Bagwell and his team know their town, their clients and are another valuable resource to learn from. That scrutiny led to our meeting at the Bagwell & Bagwell offices. Bringing in the builders to hear from all of us at the same time, seemed to be a great way to review that divergence of values and either helped increase confidence in the e2value reported numbers or build confidence in other numbers. After further discussions with Mr. Rufty and other data reviews, his team and we agreed on the values for some of his projects. We were within 1% of Rufty Homes numbers, keeping us within our +/- 2.5% goal. We can t thank the folks at Bagwell & Bagwell Insurance enough for their time and effort. We enjoyed meeting and speaking with them as well as with Jon Rufty and Sam Barrow and their respective teams to learn more about building costs in Raleigh. Raleigh is great place to visit and do business. Keep an eye out for our next installment as we continue to highlight building costs in areas around the country maybe even one near you. You can also select both locales and if you do, it doesn t double up on costs. Our system will take into consideration the one that has a larger impact. Finding an Old Valuation Q. Is it possible to view an old valuation? I don t see it in my Smart Data Warehouse. A. Valuations are saved according to the date when they were first created. By default only the last two months worth of valuations will appear in the Smart Data Warehouse. In order to view valuations created prior to that, change the "From" date to before the valuation was originally created and, to limit the number of valuations in your list, enter either the policy number or zip code in the appropriate field. Then click on the Update button. You can also enter the property owner s name, street address or city to limit the results. However the entry must be exact and complete in order for the search to find it. Since there is usually less variation in the policy numbers and zip codes, these are often the best search fields to use. RC Higher than Cost to Build Q. The insured and their agency are questioning the replacement cost for their home, which was built 10 years ago. A. Costs have gone up quite a bit in the past 10 years. Some materials have increased faster than others but they have all increased over the past decade. [Note: We provide cost data each newsletter to help keep our customers informed about cost trends.] In addition, the number of available builders has declined over the last 5 or so years in many markets. This puts pressure upward on reconstruction costs. While the number of builders has been improving, the construction market is not what it was 10 years ago. We suggest that the client review all

12 Park Model Now Available in MMH We ve added the Park Model as a choice in our Manufactured and Kit Home Valuation Option. The Park Model is a small manufactured home that is limited to a maximum of 400 sq ft. Although considered a recreational vehicle, it is attached to local utilities for home-style fixtures and appliances. An additional feature of this new choice is that the structure profile will pre-fill once this Architectural Style has been selected. Market and Cost Data NAHB Article on Trade Contractors We thought you might be interested in this article where The National Association of Home Builders discusses the current status of trade contractors, Where are the Trades? Producer Price Index Industry Data Dec Dec Difference Cement mfg % Wood product mfg % Concrete block and brick mfg % Paint and coating mfg % Glass and glass product mfg % Asphalt paving mixture & block mfg % Asphalt paving and roofing materials mfg % Roofing asphalts & pitches, coatings, and cements % Source: Inputs to Construction Industries Producer Price Indexes Aug Unadjusted index Nov Dec Percent change to Dec from: Dec Nov Inputs to construction industries New construction Residential construction Non-residential construction* the details in the report and if he agrees with them, than we support the replacement value. Pronto TM Fast and Cost-Effective e2value's Pronto is an online residential and commercial replacement cost valuator that delivers instant insurance values. Users only need to input the property address in order for Pronto to deliver a replacement cost that is based on public, private and e2value data, and e2value s patented Expert Valuation System TM. Input just the property address Output today a complete property report with data scoring, images, valuation and risk mapping In the future retrieve the report online and update at any time For more information or a free demo contact your e2value salesperson or sales@e2value.com Save Today Build for Tomorrow Source: Table 9: Producer price indexes for material and supply inputs to construction industries, not seasonally adjusted, June 1986=100 except as noted, *June 2010=100 You received this e-newsletter because you are a customer of e2value or because you requested it. If you no longer wish to receive this e-newsletter, please reply with Unsubscribe in the subject line. e2value, Inc. P.O. Box 3518 Stamford, CT USA Contact us by phone at or cs@e2value.com Copyright 2014 e2value, Inc. Previous Customer Newsletters can be found in the Help Center, Educational Resources section. We also provide an index to help you find information on specific topics.