CA Insurance Commissioner Lara Approves 8.7% Workers Compensation Increase

Rancho Mesa’s Alyssa Burley and President David Garcia discuss California's approved 8.7% workers' compensation insurance rate increase, its impact on businesses, and practical steps business owners can take to prepare for the changes effective September 1st.

Alyssa Burley: You're listening to Rancho Mesa’s StudioOne™ podcast, where each week we break down complex insurance and safety topics to help your business thrive. I'm your host, Alyssa Burley, and I'm joined by Dave Garcia, president with Rancho Mesa. And we're going to talk about California's now approved workers' compensation insurance rate increase. Dave, welcome to the show.

Dave Garcia: Thanks, Alyssa, glad to be back here in StudioOne and anxious to get this information out there for everybody.

AB: Yeah. So we've actually been talking about the proposed workers' compensation increase for, I don't know, the last few months. And we've published multiple articles and podcast episodes on the subject, and now it's actually official. California's Insurance Commissioner, Ricardo Lara, has approved an 8.7% average rate increase.

So Dave, in your opinion, what kind of impact will this increase have on California businesses?

DG: Well, you know, this is a deep, deep topic. So I'll try to be brief right now. So in short, you know, we've obviously been talking a lot about this recently, and particularly about what's driving these increases. But rather than go over all those elements again, I'd encourage the audience to listen to the three-part series I did recently with Margaret Hartman. She's the Senior Vice President and Chief Marketing Officer for Berkshire Hathaway Homestate Companies. They're one of the largest specialty work comp carriers in California and Margaret gave just tremendous insightful overviews of what's at the heart of this and the increases range from medical cost inflation, payroll inflation, and cumulative trauma claims just to name a few of the many cost drivers.

So to fix those, we're definitely going to need reform, but as with anything else, to address those bigger problems that are going to require that type of reform, I just don't see that coming until 2027 at the earliest. Maybe election year 2026, puts a little upward pressure there, but I'm not going to bank on anything happening before 2027.

So with Laura's decision, the WCIRB just recently released their new pure premium rates per class code, which we take the opportunity then to download that into our pricing models here at Rancho Mesa. So that gives us an ability to identify the individual impacts these new pure premium rates will have on each class code.

AB: Okay, and we'll include links to those three episodes with Margaret in the episode notes for this episode. And I would encourage our listeners to reach out and see if this increase or how this increase is going to impact your individual class code.

Now, when can California business owners expect to feel the result of this increase?

DG: That's a great question, Alyssa. So this all goes into effect September the first of this year. So these pricing changes will take effect on that day. But the thing that business owners should understand is that those changes will not take effect for them until the actual renewal time of their workers' compensation policy.

AB: All right. So businesses with a renewal date on or after September 1st will feel this change. While someone who renews, let's say in February, won't feel this impact until February 2026, correct?

DG: Yeah, exactly. You’re spot on there. And that's why I think we've tried to kind of be the canary in the mine here by publishing so many articles and podcasts months ago to try to get this message out because, so many of the businesses that--so for those business that renew really close to September they have some opportunity to get prepared the time is short.

AB: All right so there are things business owners can do to prepare even if they renew early September, maybe October?

DG: Yes, there's ways to prepare now and that's whether your renewal is in September or some month after September. But let me just stress this, time is of the essence. There is no time to delay. So the closer you are to September 1st in your renewal, you really have no time to spare.

So along those lines, we've got solutions here that we think will help all businesses. So we're going to be taping an episode here in the next few days that will spell out exactly what businesses can do now to try to mitigate these increases. The good news is we have the answers and on top of that we're more than willing to roll up our sleeves and get to work.

AB: If you're talking to your client today we know the time is over the essence what are you telling them?

DG: You know I'm telling them that the first thing they need to do is understand what the actual individual increase is to them and their pure premium rates. So they need to reach out to the broker, hopefully they're aware of what those changes are, and find out is it a single digit, double digit, high double digit increase, it's going to really make a big difference.

The second thing they really need to do is kind of roll up their sleeves and have somebody audit their safety program.

And then thirdly, I think it's time to really mine into your claims and try to develop solutions to the root causes of those claims. Without those three things, the wave's going to hit you and you're not going to see it coming.

So we all need to just encourage one another, now's the time to be proactive. And this is work that is able to be done. This is not overwhelming work. It's a matter of being proactive, understanding the situation, and then implementing a strategy and moving forward.

So businesses that are out there, reach out to your broker, reach out to us, talk to somebody now, don't wait.

AB: All right, and I look forward to discussing all of those ways California businesses can prepare now for the coming increases. So Dave, thank you for joining me in StudioOne.

DG: Alyssa, thank you so much, an audience out there. Really, time is of the essence. So make those calls.

AB: All right. Well, thanks for tuning in to our latest episode produced by StudioOne. If you enjoyed what you heard, please share this episode and subscribe. For more insights like this, visit us at RanchoMesa.com and subscribe to our weekly newsletter.

Mid-Year Insurance Outlook for Contractors: Rising Costs, Tighter Margins

Author, Casey Craig, Account Executive, Rancho Mesa Insurance Services, Inc.

As a contractor in California, you are likely feeling the squeeze, right now. Material costs are up, labor is more expensive, and insurance, typically a predictable line item, is becoming a growing burden on your bottom line. 2025 is proving to be one of the most challenging years yet for construction business owners. Even companies with best practice risk management controls in place are getting hit with premium increases that are hard to absorb.

Auto Insurance

Auto premiums continue to climb, making fleet coverage one of the fastest growing expenses for contractors.

Replacement parts and labor costs have skyrocketed. Even a basic bumper repair now involves expensive sensors, which take longer to replace and recalibrate.

Distracted driving is at an all-time high. Today’s younger drivers have never known life without a smartphone, and it shows—claim frequency is rising, especially in high traffic areas like Southern California.

These and other factors are pushing rates higher, regardless of your claims history and shrinking margins even for the most careful contractors.

Workers’ Compensation Rate Increases Expected Soon

Even as jobsite safety improves and injury rates fall, workers’ compensation costs are trending upward—driven largely by the costs associated with litigation and cumulative trauma claims.

Each claim costs more, especially when attorneys get involved.

Once a claim becomes litigated, it can escalate into a cumulative trauma (CT) claim. This drastically increases costs while also impacting your experience modification (Ex-MOD). Even when carriers believe the injury did not occur on the job, the burden of proving it often forces them to settle anyway.

Fraudulent or exaggerated claims are becoming more common, particularly after layoffs or when employees feel disgruntled.

Contractors with tight margins and lean crews are at higher risk as a single claim can now have twice (or more) the financial impact compared to just a few years ago.

Shrinking Margins: More Pressure, Less Room for Error

Between rising insurance costs, wage inflation, and higher overhead, contractors are operating with less margin for error than ever before. Jobs that were profitable five years ago may now just get you to breaking even—or worse. Compound this with fewer jobs to bid leading to more competitors bidding on each job, all while trying to remain profitable.

This puts even more importance on risk management and proactive insurance planning. It is not just about reducing the frequency of accidents—it is about protecting your margins and keeping your business viable in a high-cost environment.

What You Can Do Right Now

Do a thorough review of your insurance policies to ensure you have the broadest coverage in place and understand clearly where the market is headed in advance of bidding projects. Revisit your stretch and mobility program, heat illness prevention protocol, and ladder safety training—especially with the rise in fraudulent claims. Avoidable injuries will only add to the pressure and compromise margins.

Ensure your fleet safety program is updated and consider using cameras or apps in vehicles that restrict phone use while driving.

Make sure foremen and all staff are treating employee’s well. Disgruntled employees are typically the ones who can and will file claims if layoffs are required.

Track and manage claims closely to prevent small issues from becoming a larger impact to your Ex-MOD and your future workers’ compensation costs. This includes building out a formal, written return-to-work program.

Partner with a broker who understands your trade and can advocate for the most competitive rates and broadest coverage for your exposures.

If you have any questions relating to this article, I am more than happy to provide a detailed audit of your insurance portfolio and safety programs. Contact me at ccraig@ranchomesa.com or call me at (619) 438-6900.

Preparing for the Summer Heat: Heat Illness Prevention Resources from Rancho Mesa

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

As temperatures continue to rise through the summer months, heat illness prevention is essential to protect employees from the dangers of extreme weather.

Rancho Mesa has a variety of safety resources available for employee training and incident reporting.

Heat Illness Prevention Workshop/Webinar

Rancho Mesa’s Heat Illness Prevention workshop provides an in-depth overview of California’s Heat Illness Prevention regulations for outdoor and indoor workplaces. This workshop is also available as a recording (webinar) that covers the key elements required to protect employees from heat-related illnesses and ensure company compliance. It can be access through the SafetyOne™ Learning Management System.

Completing this training counts towards earning the RM365 Advantage Safety Star™ Program certificate of completion.

Heat Stress Online Training Course

Two Heat Stress online training courses are available through the SafetyOne Learning Management System. Employees assigned to the Heat Stress training will watch a training video and take a quiz to complete the course.

Toolbox Talks

A number of Toolbox Talks are available in SafetyOne in both English and Spanish, and can be used for weekly safety trainings:

• Heat Exhaustion/Sunstroke

• Heat Illnesses

• Heat Stress Prevention for Landscape Contractors

• Heat Stress Prevention for Tree Care Companies

• Protecting Yourself Against the Heat

• Warning - Extreme Heat is Coming

Observation Reports and Mobile Forms

SafetyOne app users can utilize Observations to document when heat Illness prevention programs are followed on the job site and identify when there is an issue.

Mobile Forms can be used to collect and report safety data relating to heat illness using templates such as accident reports, incident reports, and daily reports.

Heat Advisories

SafetyOne administrators can utilize the Company News function to send heat advisories to employees who may be working in high temperatures, and remind those employees of ways to stay safe in the heat.

Documentation through the HR Portal

If an incident does occur on the job, employers can document the incident in their OSHA 300 logs through the RM365 HRAdvantage™ Portal.

For more information about heat illness prevention resources available through Rancho Mesa, contact your Client Technology Specialist.

Liquidated Damages: What Every Contractor Needs to Know

Author, Andy Roberts, Account Executive, Rancho Mesa Insurance Services, Inc.

For a surety agent and underwriter, there are specific provisions within a contract that are important. One of the more critical provisions, references Liquidated Damages (LD). Often overlooked by contractors, LDs represent important elements of the contract that can cause significant financial losses on a project. So what are LDs; why are they important; and, what can contractors do to make sure the LDs in their contracts are fair?

Liquidated damages are daily charges within a contract that come into effect when there are delays on a project. The amount of the charge is spelled out within the contract, usually as “$X amount per day,” and are put into place to compensate the project owner for losses they may experience when a project’s completion is delayed. While that seems straightforward, this provision is very important and contractors need to understand what can happen if LDs are enforced on a project because of their delay.

If an owner is assessing liquidated damages on a project, the concern is that the contractor is going to start minimizing profits and depending on the amount, it could happen very quickly. Additionally, as those profits drop, cash flow can become an issue. This will lead to a potential default due to the financial distress which would trigger the surety’s involvement. There are a couple of ways contractors can mitigate their exposure to liquidated damages.

First, contractors should try to limit their exposure by capping the amount of the damages that can be assessed. We often see flow down provisions within subcontracts, where the higher LDs are used and it doesn’t make sense for the sub-contractor to take on that risk when their contract amount is significantly smaller than the prime contract amount. Second, contractors should try to negotiate terms that would limit their exposure to the damages that they cause.

While the liquidated damages provision within construction contracts is often overlooked, the daily amount that can be assessed can quickly become significant and should be considered prior to signing a contract. 

Should you have more specific questions about LDs within your contract, give me a call at (619) 937-0166 or email me at aroberts@ranchomesa.com.

A Contractor’s Best Practice Approach to Price Escalations in the Current Market

Author, Anne Wright, Surety Relationship Executive, Rancho Mesa Insurance Services, Inc.

Historically, market conditions and economic factors have contributed to both contractors and subcontractors having to deal with price escalations. Today, the uncertainties of how the tariffs will impact the construction industry is causing many to rethink their pricing models and contracts.

I engaged the input of a couple of our colleagues in the legal realm here in San Diego– Luke Thompson of Thompson Law & Consultation and Jeffrey Baird with Finch Thornton and Baird, to get their take on price escalations. And, I thank them for their feedback on presenting some information that might be meaningful to our audience who are unsure how to handle the rising costs.

One notable observation regarding today’s construction industry suggests that some companies pursue their backlog of projects without proper consideration of profits. Many contractors have concerns about an uncertain flow of money in both the public and private sectors, so they are taking these jobs without proper evaluation of the profitability of the job and the balance sheet.

The construction industry certainly learned some lessons during COVID for dealing with cost increases from project delays, primarily from supply chain issues that impacted budgets for both labor and materials, and schedules. Both public and private owners, did, however, often recognize that there needed to be some flexibility with schedules and prices as a result of these impacts from supply chain problems. 

General contractors may work to include protections in their prime contracts with the owners to address price escalations. Educated subcontractors will also make sure that they confirm these provisions in the prime contract, and that these flow down in their subcontract.

So, here we are today with some lingering questions about the effects of the supply chain and market conditions. And in 2025, the discussion now also includes potential impacts from tariffs. Contractors are now wondering what products might the tariffs affect? How do we adapt to the on again/off again news and chatter about the what, when, and how much cost increases might come from tariffs on various products?

In gathering some feedback, I have been told that some contractors are now submitting their proposals with language regarding long-lead items and material escalation warnings due to tariffs.

Savvy subcontractors are also requesting copies of the prime contracts to review the escalation provisions to make sure they have some protection, and if not what they need to negotiate into their subcontracts to ensure that they are protected. Thorough contract review and modifications will always be important regardless of the market conditions.

Steel, wire and certain other commodities regularly fluctuate in pricing. That said, it is prudent to keep a watchful eye on such items, and have good communication with suppliers, general contractors, and project owners to manage pricing changes and expectations.

Historical data that suggests vendors will honor prices represented in the purchase orders and offset the loss by making higher margins on future orders when the market settles down. However, if we have learned anything about this industry, nothing is that predictable. 

So, your best practice strategy is to pay close attention when talking to your vendors, and review your contracts and subcontracts closely to make sure you have the most reasonable protections as possible. Having an attorney review each contract is typically money well spent.

Feel free to reach out to me for a referral to an industry partner in the legal realm. I can be reached at awright@ranchomesa.com or (619) 486-6570.

And again, I thank Luke Thompson and Jeffrey Baird for their contributions here.

Workers' Comp Rate Increases On the Way with Margaret Hartmann: Part 3

In the final episode of a three-part series, President David Garcia and Margaret Hartmann, Sr. VP and Chief Marketing Officer with BHHC, discuss the WCIRB's proposed 11.2% workers’ compensation rate increase in California. They explore how this may impact employers, and actionable steps businesses can take to mitigate rising premiums.

Dave Garcia: Hi, you're listening to Rancho Mesa's StudioOne™ podcast where each week we break down complex insurance and safety topics to help your businesses thrive. I'm your host, Dave Garcia. Thanks for joining us.

So today with the WCIRB's recent announcement of 11.2% recommended rate increase in workers' compensation, it definitely feels to me like the workers' compensation marketplace in California is about to change, and with that in mind, we've invited Margaret Hartman, the Senior

Vice President/Chief Marketing Officer at Berkshire Hathaway Home State Companies, who's one of the largest specialty workers' compensation carriers in California, to give us some insights as to how this recommendation came about, what are the areas that are driving this increase, and what employers can do to try and mitigate the rate increases.

Hi Margaret, welcome back to StudioOne. Thanks for joining me today.

Margaret Hartman: Thanks for having me.

DG: It seems to me Margaret, given all the data and recent recommendations that many employers have not all are going to experience rate increases on the renewals. You know, we know Commissioner Lara--generally speaking--the Bureau makes their recommendation which they have at 11.2. Commissioner Lara--usually in June so it could be any day now-- will make his recommendation.

MH: I think it's today. There's a hearing today. He may not decide today, but I know there's a hearing today.

DG: Okay, well it could be today and today, so the we're taping this it's June the 10th. You know, I don't have a crystal ball. My crystal ball has snow in it I think he's going to come in with a recommendation of somewhere between four and six percent increase or somewhere in that range, six to seven, I don't know. Regardless, it's going to be a recommended increase, which we have not seen in over a decade in workers' compensation. So while that means it's going to put upward pressure on rate, that doesn't mean every single policyholder in California will see the same rate increase as another.

So your experience modifications come into play, your claims experience is going to come into play, and most importantly too, your safety practices. And this is where we're really auditing that and then allowing your broker to present that to the marketplace and what you're doing to prevent injuries from occurring and then what you do once an injury occurs. I think that is the really, really critical right now and Margaret, what actions would you recommend they try to do, if they see an increase to try to mitigate the increase and in some cases maybe there's still a decrease out there?

MH: Sure. And I mean, we've talked a lot about some specific ways that employers can help themselves out. But really, that experience modification that you're talking about is the best way to manage your insurance premium. So as you mentioned, there's going to be probably some sort of rate increase and probably single-digit, I'd imagine. And I agree with you four to six, three to five, something like that, but you're experiencing it. So that's, the carrier will have a base rate increase, increase likely, but your net rate is not going to be the same as that base rate. And the only way to impact that is to have a low mod. So try to manage your experience mod as much as you can.

And again, that's all the things we talked about, having the safest work environment that you can so you can prevent accidents from happening and then partnering with a carrier that's focused on providing the best possible care, getting claims resolved quickly and efficiently.

DG: Yeah, and we know, as Margaret said, it’s your premiums can be predicated on your payrolls by class code, multiplied by the final rate from the carrier, multiplied by your experience modification. But to get to the final rate of the carrier, there is some subjectivity still available with the carriers. So they can deviate a certain percentage, usually it's plus or minus 50%, off of their base rate. But in order to warrant those credits, it's going to take real items to try to get the carrier to understand why they should apply those credits. So when we talk about that out there, what your broker does is he or she submits to a carrier your information. We call that a submission.

So Margaret, how important is receiving a complete submission early in the process of benefit to the policyholder in getting the best possible rates?

MH: Yeah, I think it's incredibly important. So an underwriter is going to be getting a lot of these

applications, right, they're coming to their desk. And the ones that are complete, where they don't have to call or send an email or ask questions or try to get more information, those are going to rise to the top of the stack and they'll be able to process them quickly and maybe get the quotation out, right?

And then that starts the process of negotiation or tweaking that price. So the earlier that you can do that, the better. I think it definitely helps. And then the more complete the information is, you know, that will help the underwriter better price the risk as well.

DG: Yeah, are there any parts of submission that, you know, they're all important, but does any part of it carry more weight for your underwriting team than another area?

MH: Yeah, I mean, I think we look at the account as a whole, but obviously, loss history. It goes a lot into how we view an account, how we price an account. You know, a lot of times there's a supplemental application and employers out there have checked the box. "Oh, yeah, I have a safety program," blah, blah, blah.

But sometimes it becomes a check the box versus a, you know, "What exactly are you really doing?" But the proofs and the pudding, what does the loss history look like?

We also pay a lot of attention to payroll too. Is the account growing and if there's substantial growth in the payroll versus the expiring year, what's going on is there going to be growth and if there's going to be growth, it's not to say we would dislike the account, but that's one where we may want to keep an eye on them. how are they going to manage hiring practices to bring on all these new people? What kind of projects are they going to be taking on? It just goes into us understanding what that risk is isn't understanding how to price it.

Likewise, if the payroll's dropping substantially, why is that happening? Is there a layoff spending, those kinds of things? And then we look at the risk quality, risk management, safety program. Those are harder to get our arms around because as I said, a lot of people will just kind of check the box. Yeah, we have these things. So a narrative is really important from the broker, kind of putting together the story of the account.

The loss history, none of these things are the only, they're only a little piece of the puzzle, right? So maybe the loss history is such that it looks really bad and then in the last two years, it's improved. If you can substantiate why it's improved, not just send, here's the loss runs and here's the application, but this employer really took some steps to improve their loss profile. You know, they hired a new risk manager, they automated a lot of their procedures. Those are things that are going to play into the price and you're going to go, well, I think that account is going to perform the way it has the last two years, not what happened in the past. And they may still have a really high mod because of past poor losses. So it can help kind of paint the picture of what's going on with the account today.

DG: I think that's great you know what it sounds to me and it's high time it's time for everybody go to work, you know the broker needs to go to work and not just check boxes needs to provide more information. I know we regularly dig deep into those things if payrolls are going up maybe it's just payroll inflation maybe there's no new employees everybody just got pay raises or now they're doing union work versus not. Like you need to know more than just the basic facts. And I love the summaries, you know, we're a big proponent of that. But I think I'm always three dimensional, always seems to be the best. And so I know we've worked in the past Margaret, when we get looking at a new potential client of ours, we put all the all the paperwork together, the summaries, the losses, the payrolls, all those things, but it's still paper.

And what I think I like, you know, how we work with you is we'll say, "Hey, can we go out and do a joint call together so you can actually ask the questions and see the operations?"

Do you think having the carrier go out prior to quoting the business is a benefit to the business?

MH: Yeah, absolutely it is. And we love to go out and see the prospects. There's nothing like meeting somebody face-to-face, looking them in the eye and seeing the operation as well. And on the other hand too, they have an opportunity to meet us and see their service team and what they’re going to get from us. You know, policy, especially in the workers’ comp, you know, they all kind of cover the same thing, there’s not really a lot changes besides maybe a deductible. So it's really the service that's important. And so I think it's good for an employer to actually meet their service team and see who's going to be working with them in the future. Yeah, I mean, absolutely. We love to do that. We're always open to having our folks go out and meet with prospects face to face.

And now with virtual too, a lot of times we will do them virtually. It's easier and you can do them quickly. You can get them set up quickly.

DG: I'm sure you can do more than two or three in a day if you need to.

MH: Right, so either way. We're happy to have those meetings. And it does make an impact.

DG: So employers, I would encourage you, you're working with your broker currently to engage with them early. And when we say early, you're probably talking 120 days outside of your renewal date. So you want to get this process started early, particularly with the changes that are occurring. And then as a team, you guys decide should we involve some carrier interviews where we get an opportunity to talk to the carriers, and you can talk to more than one. You know, if you just want to get a comparison like who did you like better? They both offer great services and things like that. So it is going to, it's time to roll up our sleeves and you know really get to work here. There's some tremendously great work comp carriers--Berkshire Hathaway heading the

List--that are out there. So I would just encourage you to you know to go out and work with your broker partner and make sure that they're doing the job that they're supposed to be doing too.

So Margaret you know I appreciate your time today before we wrap up is there anything else you'd like to share with our audience.

MH: Gosh, no, I mean, I think we've covered a lot today. And again, I think our mission is really to provide, you know, the best possible care for injured workers, because at the end of the day, you know, that's what's going to result in the best claims costs more effective for employers. And it's the right thing to do. And keeping employees safe is the right thing to do, not just for, you know, an employer's business, but just because, you know, we care about people.

DG: Yep. And you've demonstrated that, you know, time and time again. So I think everybody out there, you know, there's been a lot of things that we've discussed today. If you're looking for more information, you know, reach out to myself or to Margaret directly, you know, you can go to our site, RanchoMesa.com.

And we're happy to help, you don't have to be our client, we're in this together. So Margaret, listen, I can't thank you enough for joining me today in StudioOne and kind of sharing your insights to this changing worker compensation marketplace. Last, anything else? How's Notre Dame football going to be this year? What do you think? What's your prediction?

MH: Oh boy, I don't know. Don't throw that curve at me. I have no idea, but I'm still looking forward to the season.

DG: Okay, there you go. All right. Well, listen, thank you all for joining me today in StudioOne. If you found this information useful, you can subscribe to our podcast channel, which is StudioOne, all one word, and it can be found on literally all the podcast applications. So thank you again for your time. Goodbye for now.

Ensure Pricing Accuracy and Validity of Insurance Coverage

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

As the insurance market for nonprofit and human service agencies continues to harden, with fewer and fewer insurance companies willing to insure valuable community programs, careful completion and review of the insurance applications will ensure proper pricing and coverage following an insurance claim.

Failure to ensure an application’s accuracy can lead to voided coverage, insufficient coverage, or overpaying of insurance premiums.

A best practice approach is to avoid all of the above by reviewing areas of concern that commonly lead to underwriter confusion and mistakes on insurance policies.

Statement of Values

Carefully review the broker’s Statement of Values (SOV), which lists each location and its underwriting characteristics. Each characteristic aids the underwriter in pricing and rating for the exposure to risk. The SOV will include:

• Location usage - is the location used for office space, a resale shop, a residential recovery center, or all three?

• Square footage - this is easy to overlook, but impacts property and general liability insurance premium.

• Building construction – what is the building date, construction type, and safeguards like non-sprinklered wood frame or sprinklered steel/concrete construction? Inquiring underwriters (and their supervisors) want to know.

• Are all non-owned locations listed? Leased space is often omitted. List the addresses of all operations to ensure coverage.

Vehicle Values

Is the list of vehicles accurate and does the replacement cost of each vehicle include modifications such as wheelchair lifts? Non-standard vehicles are often underinsured if the agent assumes it is just a standard Dodge Caravan without modifications.

Complete the Full Insurance Application

Renewal applications often do not contain space to update existing program details. So, share the details of new programs or ask about recent incidents that could result in a claim. Worse yet, a competing underwriter may offer a quote without firm and bindable terms, meaning the work product is incomplete and does not consider all exposures.

List Employed and Contracted Professionals

Professional liability is often rated on the number of employed professionals. A review of this section will ensure pricing accuracy and highlight professions requiring separate coverage, such as medical malpractice insurance.

Business Interruption Worksheet

Rancho Mesa clients understand the importance of business interruption coverage, so a thorough review of the worksheet’s definitions, the information contained therein, and hypothetical claim scenarios will help leadership make informed decisions. Without the proper limit, a seemingly insignificant property claim can result in critical lost revenue and extra expense. 

Right-sized Deductibles

Why pay for a smaller deductible if the organization only reports claims of financial significance? To ensure insurance premiums match leadership’s risk tolerance, the policyholder and broker should carefully review auto, property, and liability deductibles. Organizations accepting risk in the form of a higher deductible will realize premium savings.

In 2025’s hardening market, insurance underwriters need accurate and updated information to provide competitive and comprehensive quotes. Fortunately, it is easy to avoid a potentially uninsured claim or inaccurate insurance premium with a well planned and executed pre-renewal insurance review with an experienced insurance broker. Use these items detailed above to ensure the organization, its mission, and their employees are protected.

To ensure your nonprofit or human service agency has accurate coverage, contact me at (619) 937-175 sbrown@ranchomesa.com.

Workers' Comp Rate Increases On the Way with Margaret Hartmann: Part 2

In the second episode of a three-part series, President David Garcia continues his discussion with Margaret Hartmann, Sr. VP and Chief Marketing Officer with BHHC, and explains how companies can mitigate cumulative trauma claims in light of the WCIRB’s recent 11.2% recommended rate increase.

David Garcia: Hi, you're listening to Rancho Mesa's Studio One podcast, where each week we break down complex insurance and safety topics to help your businesses thrive. I'm your host, Dave Garcia, thanks for joining us.

So today, with the WCARB's recent announcement of a 11.2% recommended rate increase in workers' compensation, it definitely feels to me like the workers' compensation marketplace in California is about to change and with that in mind, we've invited Margaret Hartman, the Senior Vice President, Chief Marketing Officer at Berkshire, Hathaway Homestate Companies, which's one of the largest specialty workers' compensation carriers in California, to give us some insights as to how this recommendation came about, what are the areas that are driving this increase and what employers can do to try and mitigate the rate increases.

Hi Margaret, welcome back to Studio One. Thanks for joining me today.

Margaret Hartman: Thanks for having me.

DG: I know that Berkshire Hathaway, we've worked with you guys for any number of years. We have a tremendously strong relationship so I'm very familiar with a lot of the services that you're able to provide policy holders, but are you guys looking at taking any targeted steps to help manage this growing impact of CT claims as a company?

MH: Yeah, I'm glad you asked. We are taking this very seriously and we have taken some proactive steps here, including you know we have a task force a little committee that we’ve set up internally within our claims teams to try and manage some of these claims and have strategies for, you know, we want to make sure that we make decisions on these quickly, ones that are legitimate that we’re getting people treated quickly and though the system so that we can get them back to health and back to work as quickly as possible.

DG: You know, that's a really, really smart idea. I know you guys did the same thing during COVID, when you started to see COVID claims, you kind of bunched those into a unit because the repetitiveness of the type of claim led to expertise in managing the claim.

MH: Right.

DG: Yeah. That's a, that's, that's awesome. I'm glad to hear you're doing that.

MH: Yeah, so we've, you know, we've improved our tracking, like our CT tracking approach implemented some analytics on that so we can dig deeper on some of the doctors that we're seeing, some of the players in the CT space. We ramped up our training around the compensability decisions involved, more managers in the process. We've just, we've made a lot of targeted changes, including using data analytics again and identifying the players in that CT space. And then we really kind of launched a collaborative approach on how we're managing these claims. So along with our claims professionals and consolidating cases with specific claims professionals, we also have specialty teams that are pretty unique, including our medical excellence team, which is headed by our medical director, Dr. Lynn, who's an occupational health specialist. So she's developed some strategies for helping us deal with these. We have a roundtable approach that we've now implemented for some of these CT claims.

We also have a contribution team which is kind of unique as well. So, as I mentioned, a lot of these, since they happen over a span of time, it often, you know, somebody may work for multiple employers and we want to make sure that our policyholders are only paying for their fair share of those claims. So we have a contribution teams that helps us manage those third party recoveries and get those dollars back if somebody else is responsible for a portion of those claims. We also have in-house council and a very robust special investigation unit, for when we do start to see some of those like mass layoff type filings of CT claims, we'll get our special investigations unit involved in those as well.

DG: Is that unit also involved with I guess the slang word would be capping you know by attorneys?

MH: Yes.

DG: Can you explain what capping is and maybe how that hurts the system if you're the employer or the insurance carrier?

MH: Right well there's been several really, really high profile cases of capping here in California where people are actually going out and trying to that people to come in and get medical treatment, signing them up, say you have a claim and we'll send you in to see these doctors. I mean, to the point where some of them are really egregious, like people were having surgeries that they didn't need just so that they could get paid and then they're getting paid for that. So our special investigation unit is very involved in those types of cases. Those are, of course, very, very extreme cases, but we want to make sure that they're involved. And so when we start spotting some of these trends and behaviors and things, we will definitely bring them into the loop. And they work with the local district attorney's offices. A lot of them have very good relationships with the DA's offices so that we can move some of these cases forward and make sure that there's no abuse there. And then, you know, all of that is kind of what we're doing after the fact. But probably the most important thing, and I'm going to talk about this again when we talk about what employers can do, is getting loss control involved early on. I think our loss control specialists are very well versed in trying to identify these possible CT exposures that may occur in the workplace. And we may not be able to eliminate them all, but we can reduce the risk often.

DG: Well that's great. So let's switch gears now and start talking about what would you recommend employers do to try to mitigate this risk.

MH: Well prevention starts at the workplace level of course so one of the most effective things employers can do is foster early reporting, open communication, many CT claims stem from issues that were never reported or addressed early If somebody is having problems with their wrists, for example, because they're doing, you know, repetitive typing, we can get an ergonomic eval and get somebody out there to help prevent that injury from progressing because now we're going to have the right equipment in place for them to be able to do the job safer. And often some of these modifications are not expensive to do.

DG: And that ergonomic evaluation is something that your loss control department can assist with?

MH: They can assist with it. We also have a kind of a do -it -yourself app. Okay. You know, there's a lot of them out there. I mean, the nice thing for employers right now is that there are so many safety resources before you had to go through some library and now you can kind of Google YouTube videos and get them from anywhere.

DG: Right.

MH: So I'd say, you know, stay informed, stay engaged in what kind of preventative measures are out there. And then just stay tuned into what's going on with your workforce as well. Strong return to work programs also can help with that as well. I want to highlight another thing that, you know, we have nurse triage that's available for employers. So nurse triage programs where the injury gets reported to a nurse and they help to triage that injury, get them to the right medical provider network doctor and get people in appropriate treatment right away. That can also really help with early reporting.

Also, that these nurses take a pretty detailed medical history. So that can really go a long way to in helping like set the groundwork for the defense of a claim. If say the specific injury you talked about, sometimes a specific injury, then turns into a CT, then turns into multiple body parts, we'll have a detailed and recorded statement from the nurse with a medical history of the injured worker. So a lot of times we can use that to help defend against that spread. Now, you know, it was a risk, but now it's an elbow and a shoulder and a neck.

DG: Yeah, you know, big, big proponent of nurse triage. I just think it's you guys implemented that now I don't know several years ago and in just with our clients that utilize it we've seen a significant decrease in claims kind of growing arms and legs because it's make that phone call at the initial time the injury occurs. This is of course assuming a non -life -threatening type of injury. It's recorded as you said it's a very thorough, you know, evaluation by a nurse on the other end, but it is recorded. And then the nurses then report the claim into your claims department. So there's really hardly any lag time in reporting the claim. And then it gives your claims people an opportunity to get it from the jump. I just think that's a, if you're an employer out there and you're not asking your current carriers, if they have this availability you may consider moving to a carrier, like a Berkshire Hathaway, that does provide this service because it comes to you at no cost. Berkshire absorbs this cost and it's just a way of you know treating your employees better. They feel like you really care because you're getting immediate assistance right away. You know it also eliminates the drive time between wherever the injury occurred and whatever facility you're taking them to be seen. If it's not an urgent situation then they're just sitting in an urgent care waiting room and it's not very productive. So you know we've seen that the claim handled better and we've seen productivity have less of an impact negatively for our clients that use it. So I think nurse triage is really something that everybody should be using regularly.

MH: Yeah, I Agreed.

DG: What other things Margaret?

MH: Again, I'm going to highlight loss control, you know, loss control specialists can help develop a plan to address some of the CT exposures that that may occur in the workplace. Some wellness programs and I know you guys implemented that mobility stretch program for landscapers. That is also very helpful if somebody's already, you know, stretched and they're loose and it can help prevent injuries. And if they're doing that consistently, it can also help prevent a CT claim.

DG: Yeah, yeah, thanks for bringing that up. We did, you know, we worked closely with your team to identify, you know, what is the predominant type of injury a landscaper might have. We found it to be lower back. It looked for the root cause of what it's what were they doing in those situations. Then identified a stretching program that helped mitigate that when they were going to be doing whatever that procedure in the work day entailed. And you know, I think when we do that, whether it's a broker, the carrier, the combination of the broker and the carrier, and then the employer, the worker feels like they matter, that somebody actually cares about them.

And you know, most people, that's all they're really looking for. It's like I want to provide a living for my family. I want to go to a work environment that I feel safe, that I feel valued. And so we're going to switch just a little bit about culture too. Do you find culture, you know, being a part of this that an employer can, you know, I mean, there's so many things, aging workforce.

So let's hold off on culture. Talk to me about aging workforce. I'm in that category. I'm 67 years

old. I was hoping to skip it, but we really need to talk about it. So is there any plan, you know, that you think an employer can do for handling the aging workforce like me?

MH: Well, again, I just think it has to be acknowledged and addressed. So, you know, Bureau of Labor Statistics is saying employees age 65 or older has grown 117 % in the last 20 years. So people are just staying in the workforce-

MH: -A lot longer. And, you know, I think employers just need to be cognizant of that and that there may be work modifications that can and should be done to accommodate some of these workers just to keep them also protected.

DG: Yeah.

MH: Often we will see CT claims and it's kind of the retirement claim after a prolonged, you know, like 10 year of doing heavy lifting, right? If it is some of these workers, you know, they're great employees. And that's why people keep them on and they want to continue to contribute. And I think that there are some ways that you can strategize on keeping them safe. So and I, I'm going to highlight loss control and reaching out to them or some of some guidance on some of those plans. And then, if there is going to be a pending layoff, there's some things that can be done in advance to prepare as well. So again, I think the partnership between employer and carrier, just open communication and knowing what's going on early on, we can help. We can't eliminate all of the exposure, but we can help mitigate some of it.

DG: Yeah, we get asked this question a lot prior to a layoff or even just during the regular work week is it helpful to have anybody acknowledge sign something saying I don't presently have an injury you know so they're going to be laid off and then you say great are you know you're okay yes would you mind acknowledging that is that just a pipe dream or is that something that maybe an employer should think about doing does it help at all if they have that document?

MH: I think it certainly can help and I think that there's you know the other side will argue well then are you putting it in their mind that you know now they've had a claim. I think there's ways to ask those questions that are you know are still legitimate we don't want to certainly be you know sneaky in the way we're asking it but we do want We do want to ask, is there anything we could do to make the workplace safer? How do you feel about the things that we have in place to keep you safe? Maybe having some of those questions. There are some ways that I think it does help if you can set that groundwork early on. Again, you might not be able to completely defend any of these cases, but it can just be one more thing. Look, we do ask how people feel at the end of their shifts, how people feel about our ability to keep them safe, and there was no issues at all until six months post layoff, and now all of a sudden we're getting this litigation. But all along they were saying that everything was okay. So I think it can help, and again, it's about really developing the right strategy and talking to our loss control professionals about how to go about doing that. That kind of tees up culture in a way, you know, the empathy, the care, all of those types of things. So, do you think that the culture of an organization can really impact the number of CT claims a business might have?

MH: I think it's probably the best way to impact the number of CT claims. You know, some of the things you were saying earlier about employees feeling heard and valued and safe, you know, physically and emotionally, you know, culture plays this huge role because those employees are likely to report issues early. And they're also not likely to litigate because they feel angry or disenfranchised or because they've been treated unfairly. So I think it's probably the most impactful thing that you can do is to have that really good culture. And on the other hand, we see environments where morale is very low and the culture's not good. And employees will find a way to retaliate on that. So it's often we'll see like a group of CT claims and they'll all be in one department or one unit or one team or reporting to one supervisor.

So those issues about leadership in your organization, you know, have to be addressed. And so yes, I think culture isn't just like a nice to have, it's actually a risk management tool.

DG: Yeah, and it's, you know, it's not to the point where you have to say, you know, the inmates are running the asylum kind of thing, it's like, no, but you know, it's the golden rule, right? Treat others that you'd like to be treated. So I think if you're, you know, seeing things or observing things that you don't feel are right, you need to do something to correct it. And I think that feedback to ask those questions like, is there anything else we could do or can be doing to make your job better, safer, more productive, things like that. It's an overused term, culture, you know, like what does that really mean? But boy, I'll tell you, I'm sure you've seen this, when you walk into certain businesses, within five minutes, you can see that on the good or bad culture scale, you're like, this is an energy company, these people are engaged, these people are happy to be here, they're working well, and you can walk into a company like, I don't think anybody wants to be here. It seems very punitive or something.

So I think it's a really good measure for us. And maybe another transition point here is to say, hey, do you think it's now time, given the changes that we see coming in the marketplace, that employers should really fully audit their safety plans, their cultures, and be looking for areas to improve it? Do you think that would be step one for a lot of companies out there right now?

MH: 100%. I mean, it's a best practice anyway to be constantly looking and evaluating and enhancing your safety program. But now with what we're seeing in the market and appending rate increase, it's really actually critical. And I think what you said about, you know, culture to wrap that up, you know, you can tell and a company has a really good safety culture. And if you want to help improve it, again, I'm going to make a pitch for loss control and our loss control especially, they do a lot of training on safety culture, train the trainers, training managers and lead people to do that. Because those are the key people within the organization. You know, you might say it at the top, but if it's not happening at the management level, it's probably not happening, and they have a lot of ideas. One of the strategies, as an example, that was mentioned to me was we had an employer that they had one of their lead people that was a very long-term employee that was bilingual. They have Spanish-speaking workforce, and he volunteered as part of his leadership responsibilities to be accountable for the work comp claims. If there was a work comp claim, he was kind of the go-to that they could come and ask questions on what to do, who to go to, how to report. And having that be somebody that was actually out there that was a worker on the floor made a huge impact with that company where they were having a problem with late reporting. So, that's just one little example of what an employer might do.

DG: Yeah, and there's, you know, a company safety program, it's like an octopus. It has a lot of different arms to it. You could be looking for root causes of injuries, what safety trainings are you providing to attend any workshops. If you have a claim or you engage, as you mentioned earlier, with a return to work program, are you reporting the claims timely? How are you investigating the claims you're looking for, hey an injury occurred, we should do an accident investigation and then use that as a training with other employees So that we don't have that reoccurrence of that issue because we've now trained for it benchmarking themselves against industry peers. How am I doing against other landscapers or whoever it happens to be I probably any one of those things you can spend a lot of time on but you need to tackle them You know those are all things and there's the list can kind of go on and on. Are there any one in particular that stands out to you? Or is that just-

MH: Well, you know, I'd say all of the above I mean I think everything you mentioned is really important and helping to manage claims costs and have a good safety culture and you know as I said before safety resources are readily available everywhere yeah and even if you don't you If you're a small employer and you say, "Well, I don't have a loss control consultant that's coming out," I mean, almost all carriers have safety centers, websites, and all sorts of tools and resources that can help keep employees safe.

And we haven't talked yet about return to work programs. And with indemnity payments on the rise, and I recently saw a study by another large multi-line carrier, but they write a lot of work with composition here in California, and they were noticing that disability days are very much on the rise. So it's important to get employees back to work as quickly as possible. And some employers don't have the ability to modify jobs, so there's no modified work available.

We have a transitional work program so we can get people back to work at local nonprofits. It gets employees back to some kind of modified duty, feeling like they're doing something to add value and help get them back on the path to recovery. So I would encourage a return to work program for all employers, especially given that we're seeing those increases and wages are continuing to go up too. So temporary disabilities tied to state average weekly wage, so we've seen some pretty big increases the past couple of years.

DG: Yeah, and you know, we've been big proponents of that and utilized your resources, whether it's, as you mentioned, kind of the re-employability side of your business where you do put them out into nonprofits or your other program, Shakley, which actually sends the work to their house.

MH: Right.

DG: So they don't even have to leave their house if that was the need. And we've just seen tremendous improvement in returning them back to their customary job.

And it also, just for employers out there, if you’re able to continue any of the wage during that period of time, any portion of it, it comes off of that temporary disability benefit so, your wages that you’re going to pay that person this work does not accumulate to go towards your experience modification. So, only the actual temporary disability payment that the carrier is making on behalf of you go into that calculation. So, you know, for our clients, they're very aware of that, they understand, you know, how many dollars of claim value is equal to one point of claim, and they realize, well, if I just pay this person X, I've reduced my experience modification by one, three, five points. So, there's just a lot of benefit to doing it. So I would definitely encourage you to take a look at that. Make sure that your place in your business with a carrier like Berkshire Hathaway that offers those tools.

Margaret, listen, I can't thank you enough for joining me today in StudioOne and kind of sharing your insights to this changing worker compensation marketplace. And thank you all for joining me today in StudioOne. If you found this information useful, you can subscribe to our podcast channel, which is StudioOne, all one word, and it can be found on literally all the podcast applications. So thank you again for your time. Goodbye for now.

New Auto Insurance Minimums Could Expose Coverage Gaps for HVAC and Plumbing Contractors

Author, Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

The State of California has raised its minimum auto insurance limits effective January 1st of this year, and it could be problematic for some HVAC and Plumbing contractors.

Although the intention of the limits increase was to expand coverage for victims of accidents, there is concern that it will marginalize many drivers.

According to a 2023 study from the Insurance Research Council, California was already among the nation’s leading states for share of uninsured drivers at 17%, with many anticipating that number to be increasing.

Drivers that had carried the previous minimum limits due to financial constraints may not be able to afford policies with the higher limits and may choose to forego insurance altogether. For those that qualify for the California Assigned Risk Plan, their policy limits ($10k/$20k/$3k) will actually be lower than the previously imposed minimums ($15k/$30k/$5k).

Other drivers that had previously carried higher limits may now choose to reduce their limits to the state minimum due to the rising cost of auto insurance statewide.

With the commercial auto insurance marketplace already facing challenges, many carriers have chosen to reduce coverages they are willing to provide.

One key area of concern for HVAC and Plumbing contractors is Uninsured/Underinsured Motorists coverage, which provides coverage when an accident is caused by a driver who either does not have insurance or whose policy limits are inadequate to cover the costs of medical care and property damage arising from the accident.

Without appropriate coverage, an HVAC or Plumbing contractor could be found responsible for significant financial costs caused by medical expenses, lost wages, and pain and suffering due to injury to drivers and passengers of their vehicles – even if they are not at fault for the accident.

Here are 3 steps to help insulate your business from such a loss:

1. Review the personal use policies in your company’s fleet safety program.

   Do employees drive company vehicles home and/or are allowed to use company vehicles outside of the course of work? Who else can drive or be in the vehicle as a passenger? Establish clear answers to these questions and enforce your policies, reminding employees of them, as well as the risk of neglecting them.

2. Review your current insurance coverages for limits and symbols.

   Uninsured/Underinsured Motorist coverage limits can vary greatly from one carrier to another, while California allows policyholders to waive the coverage completely. Also, verify that the limits apply to the appropriate vehicles for your company with the relevant auto symbols.

3. Meet with your broker early in the renewal cycle.

   Discuss auto coverages, review vehicle and driver schedules, and develop a strategy to approach the market to secure the appropriate coverage for your business.

If you have questions on auto insurance coverages or would like to complete a policy review, you can reach me at (619) 486-6554 or mgorham@ranchomesa.com.

Workers' Comp Rate Increases On the Way with Margaret Hartmann: Part 1

In the first episode of a three-part series, President David Garcia sits down with Margaret Hartmann, Sr. VP and Chief Marketing Officer with BHHC, to explain the outcome of WCIRB’s recent 11.2% recommended rate increase, and offer insight on what areas are driving this increase.

David Garcia: Hi, you're listening to Rancho Mesa's StudioOne™ podcast, where each week we break down complex insurance and safety topics to help your businesses thrive. I'm your host, Dave Garcia. Thanks for joining us.

So today, with the WCIRB's recent announcement of 11.2 % recommended rate increase in workers' compensation, it definitely feels to me like the workers' compensation marketplace in California is about to change. And with that in mind, we've invited Margaret Hartman, the Senior Vice President, Chief Marketing Officer, Berkshire Hathaway Home State Companies, who's one of the largest specialty workers' compensation carriers in California, to give us some insights as to how this recommendation came about, what are the areas that are driving this increase, and what employers can do to try and mitigate the rate increases. Hi, Margaret. Welcome back to Studio One. Thanks for joining me today.

Margaret Hartman: Thanks for having me.

DG: All right. Well, let's just roll up our sleeves and jump into this thing. So starting with the 11.2 rate increase being the recommendation by the Bureau, and the root causes driving it, aside from cumulative trauma claims, which we definitely will talk about today, what are the other areas that are driving this recommended increase?

MH: Okay, well, I think first we have to start with medical cost inflation, which we thought we would see a couple of years ago, and I think really because we've had very good fee schedules here in California, the impact of medical inflation was delayed a little bit. We are now starting to see significant growth in paid medical services per claim in 2024, attributed to a recent growth in the number of medical transactions per claim and a continued increase in paid per transaction.

So one of the other things that happened a couple of years ago is they redid the fee schedule for medical legal services and we've seen increases for medical legal services per claim also with an increase of 15% in 2024. So those numbers are now starting to hit and they're really pretty big numbers.

DG: Yeah, so when you talk about medical cost inflation, that's something I think our audience is probably well aware of just in their own health insurance costs. I mean, what we're talking about here is you go to the doctor for some procedure, it's going to be more expensive today than it was five years ago, simply because of inflation in the medical arena. Is that kind of what we're talking about?

MH: Absolutely.

DG: Yeah. So that eventually is going to trickle into the premium, the losses and all of those things for when we consider workers' compensation, it's going to pull into that arena as well. So that's it. That's a cost driver, an increase that has to be accounted for.

MH: Absolutely.

DG: Yeah.

MH: The fee schedules have now caught up with medical inflation.

DG: Yeah. What else is driving this Margaret?

MH: So we've also seen a slight increase in indemnity payments of about 3%, which is driving indemnity claim and just an indemnity claim is really a lost time claim, a claim that it's not just a need for medical but also disability payments.

DG: Right. So you're going to be away from work.

MH: Right. So the projected severity on indemnity claims for 2024 was 6% higher than in 2023. And the average severity in 2024 is the highest it's been in more than a decade. So we, so we talked a lot about the workers' compensation market and how great the Senate Bill 863 reforms that happened several years ago were on the industry. Well, now we're starting to see that some of those increases creep back in. And so we're seeing indemnity claim frequency also on top of the severity. So it's kind of a double whammy.

DG: Yeah, so more serious claims and more often.

MH: More often.

Yeah, okay.

MH: Now, interestingly, this is what we're going to talk a little bit about, start to talk about CT claims. There was a lot of volatility obviously in frequency during the pandemic years, but then we started to see claims frequency start to tick up and really the sharp increase in the frequency of claims really involves these cumulative trauma or continuous trauma claims that we're going to talk about here in a minute. That started really in 2022 and has continued through the beginning of this year as well. So if you take those claims out of the system, there's a slight actually decline in frequency. So those are really what's driving claims frequency here in California.

DG: Okay. So CT claims is the major driver for this cost increases. So you mentioned it, but before we jump into the topic, just for the audience, how do you define Cumulous Trauma, a CT claim? What is that?

MH: Okay. Yeah, I'm happy to describe what that is.

DG: Give it a shot.

MH: I'm also going to tell you, though, that one last thing on the increases, because these continuous trauma claims are typically litigated, there’s also been a big increase in loss adjustment expenses and we saw a 10 % jump in 2024. So a lot of that 11.2 % increase is driven by these negative trends, including this big impact on continuous trauma. So now I'm going to delve into what is this and you may hear the term cumulative trauma, continuous trauma, RMI, of motion injury, repetitive stress injuries.

The thing that's in comment about these claims is they occur gradually over time. So it's not a specific incident that causes it, but it's a gradual onset. And they result from repetitive stress or continuous exposure or chronic overuse of a body part during work activities. So to give you a couple of examples of repetitive stress injuries is carpal tunnel syndrome, which happens of the risks from repetitive typing. You can have back pain from chronic heavy lifting or bending and stooping.

Hearing loss is another form of continuous trauma from prolonged exposure to loud machinery. You have respiratory claims from prolonged exposure to chemicals.

So those are just some examples of what a continuous trauma claim is.

DG: And that doesn't seem, I mean, obviously some of this could be industry specific. I think about the construction industry, as you know, we focus quite heavily on that. We see a lot of these types of claims from what you were talking about, the lifting, just the year over year over year of doing that manual work. But it's not limited just to construction, right? You're seeing these CT claims across the board, whether it's an office exposure, a manufacturer, hospitality, construction, doesn't really matter, is that?

MH: Absolutely.

DG: Okay. What do you, in your view, what have these CT claims met to the overall performance of workers' compensation claims in California? How big of an impact have they really had?

MH: Well, in talking about the numbers that went into that recommended increase, I mean, CT claims have had a pretty significant impact on our overall system. They're also, interestingly, kind of California -specific. We write workers' compensation, of course, in all states. And we really see this phenomenon here in California. They are typically litigated. 70 % of the continuous trauma claims that we see are litigated, which results in longer claim duration. So they're open longer, they're going to stay on an employer's experience mod longer. So there's a lot of challenges in trying to get these claims resolved. It's typically not a quick resolution. Often there's other carriers involved since they happen a prolonged period of time. They limit it to a year, but there could be two or more different employers that are involved in these claims. So, they can be rather complicated. And then, you know, applicants, attorneys here in California have been very aggressive about using social media and a lot of advertising to kind of get the word out and sometimes even kind of convince workers that the aging process itself is part of their continuous trauma.

And then the other interesting thing that's happened with CT claims recently is they were really, really prevalent in Southern California. So it's kind of started in the LA Basin and expanded throughout Southern Cal. But, you know, there was often talk about there was it was a tale of two states. Southern California had all these issues with CT claims. We didn't see them in the North. Now we're starting to see them. Since 2022, big increases in Northern California and the Central Valley as well.

One of the theories behind why that's happening, which I think makes a lot of sense, is that with the pandemic, a lot of things pivoted, a lot of these legal proceedings now have pivoted to virtual, so they don't have to go to the board to prove the case. The attorneys now can have clients all over the state, it doesn't really matter, and then handle depots and hearings virtually, so it's made it a lot easier for them to get clients that are outside of their area. So we've seen these claims really balloon and expand.

DG: So, that's kind of like you said that's a residual of the COVID years right that's what it had to be enacted and that's just continued.

MH: Right.

DG: Yeah so you know I'm already thinking of some solutions here but let's power forward here a little bit further. So are there any ways potential reform changes in the laws that you can see that might help tune this around?

MH: Well, you know, absolutely, there's opportunities for reform. For one, just tightening the standards around how CT claims are filed and accepted could help. The threshold in California is vague and really leaves the door open for some questionable claims.

Today, really, an introvert only has to prove 1% of work causation cause their disability. So they could have all sorts of pre -existing conditions, but if the work environment contributed even just very slightly like the 1%, that CT claim would be accepted. So you may get some apportionment on permanent disability, but you still, the employer would be responsible for the medical treatment and the temporary disability for that claim. So tightening up some of those thresholds years and years ago in California, we were seeing the same thing. It was just a flurry of mental health psychological claims and with the same threshold and they actually changed the threshold. So now for a pure site claim where there's no other specific incident, post -traumatic stress type situation, that's involved, it's a continuous trauma type of cycling, the work has to be the predominant cause of that. So it's like it's more of a 51% threshold. So maybe doing something like that.

DG: So I mean, that makes total sense to me, of course. What would it take to get something like that done? Why isn't that happening right now?

MH: Yeah, I think the biggest problem is that, you know, it's California right now is having problems with property insurance with a wildfire situation that we have here, auto insurance, there's just not been a focus on workers comp. Workers comp rates have just continued to decline for the past several years, so there hasn't really been any big efforts to make any changes there.

Now that we're seeing rates start increasing, we may see some reform. The California Workers Comp Institute is saying maybe in 2026, I think it's probably going to take a little bit longer than that before, you know, we see any types of changes. I think one of the other things that could be addressed to is really how post termination claims are handled because, you know, we still continue to see these post termination layoff claims where, you know, the insured has a layoff and then we see multiple claims filed often with the same attorney, same types of pleadings.

DG: So, on those post termination claims, is there any timeframe, post termination that they have to file the claim? Is it a year for that as well?

MH: It's not. So, a post term specific injury, there is a statute of limitations of a year, but not for a post-term continuous trauma because if the employee doesn't know that they're injured, they can't report the claim. And since the CT happens over time, the threshold is when you knew or should have known that you had a disability and an injury and so you have to have proof that they went to a doctor and someone told them they were injured and that kind of thing.

DG: So that leaves that door pretty wide open.

MH: Exactly.

DG: And just for the audience, we will get to some solutions that you can do as an employer to maybe try to mitigate some of these things. So what we really are trying to do is let's just get the issues on the table, try to really understand them, and then let's go about trying to put some fixes in place that in your companies that you might be able to do to try to help this situation. We're not going to be able to let it, we're not going to get it to go away until there's more reform. And as Margaret said earlier, that's going to take some time. But I think it's all employer groups, unions, associations, things like that. Now is the time to start to put some focus on, putting some pressure on Sacramento to try to get these things higher on the list and not let it just sit behind the wildfires and the other issues we have in California.

MH: Sure. And I want to add too that we don't want to take legitimate benefits away from somebody who's injured, but we have seen a lot of abuse with these types of claims and that's what we need to get out of the system.

DG: Yeah. I just, I mean, we can talk about the frustration and, you now, the accounts that we manage and work with and, you know, you just see where body parts become separate claims, you know, so it's a CT claim, first it's a shoulder, then a week later it's an ankle, then it becomes a back, an arm, you know, so these are just multiple claims then, which have individual costs, which again really impact the EMR's experience, lots of things like that.

Margaret, listen, I can't thank you enough for joining me today in StudioOne and kind of sharing your insights to this changing worker compensation marketplace.

And thank you all for joining me today in Studio One. If you found this information useful, you can subscribe to our podcast channel, which is StudioOne, all one word, and it can be found on literally all the podcast applications. So thank you again for your time. Goodbye for now.

4 Ways Tree Care Companies Can Strengthen Their Insurance Profile

Author, Rory Anderson, Partner, Account Executive, Rancho Mesa Insurance Services, Inc.

When it comes to insurance, your broker is responsible for representing your business to the marketplace. And, how your company is presented makes a real difference.

There is a clear distinction between a submission that includes only the basics—an application and loss runs—and one that provides a full picture of your operations, safety practices, and credentials. Underwriters respond more favorably to businesses that take risk management seriously and can show it.

So, what exactly helps you stand out in the eyes of an underwriter? What are they looking for when deciding whether or not to offer terms? Let us take a look at the factors that can move the needle in your favor.

1. Safety Culture and Documentation

A documented safety program goes a long way with underwriters. They want evidence that safety is part of your daily operations.

What helps:

• Commitment from the leadership team that safety is a priority

• Written safety manual and job hazard analysis process

• Regular, documented safety meetings (tailgates and formal trainings)

• PPE usage policies and enforcement

• Process for documenting when clients decline recommended work—for example, if you advise removing a hazardous tree and the client refuses, a signed acknowledgment or internal log can help limit future liability

The more specific and consistent your documentation, the more confidence an underwriter will have in how your risk is managed in the field.

2. Fleet Management and Driver Oversight

Auto losses are one of the biggest concerns in the tree care industry. Underwriters pay close attention to how you manage your vehicles and drivers.

What helps:

• Written driver policy, including MVR screening and standards

• Use of telematics to monitor speed, location, and driving behavior

• Formal accident investigation – written description, witness statements, and photographs

• Regular vehicle inspections and maintenance logs

If you are actively managing fleet and driver risk, it sends a clear message that your team is working to prevent losses before they happen.

3. Claims History and What You Have Learned from It

Most companies have claims—it’s how you respond that matters most.

What helps:

• Timely and accurate reporting of all claims

• Documentation of corrective actions taken after an incident

• Written loss narratives on large claims explaining root cause and what’s been done to prevent reoccurrence

• Using the claim incident as a teaching tool to prevent similar accidents

Underwriters are more inclined to offer favorable terms when they see that you have taken steps to learn from past incidents and improve your processes.

4. Industry Credentials and Professional Involvement

Credentials and affiliations show that your company operates at a higher standard, and underwriters take notice.

What helps:

• TCIA Accreditation

• ISA Certified Arborists on staff

• CTSPs (Certified Treecare Safety Professionals)

• Active membership in associations like TCIA and ISA

These credentials reflect a commitment to professionalism, ongoing education, and adherence to industry best practices.

Insurance carriers make decisions based on how they perceive your risk. The companies that demonstrate strong safety practices, solid operations, and industry commitment typically secure better outcomes.

You also need a broker who understands your business and knows how to present it effectively. If your risk management efforts are not being clearly communicated to underwriters, the value of that work can get lost.

Partnering with someone who knows the tree care industry and how to advocate for you in the insurance market can make all the difference—not just in pricing, but in the kind of support and coverage you receive.

If you want to make sure your business is being represented accurately and competitively, contact me directly at randerson@ranchomesa.com or call me at (619) 486-6437.

Four Areas of Focus for Landscape Contractors During A Hard Insurance Market

Author, Drew Garcia, Vice President, Landscape Group, Rancho Mesa Insurance Services, Inc.

The property and casualty insurance market continues to impact landscape contractors resulting in increased costs, changes to carrier appetites, and overall concerns for insurability.

There are four areas of focus your business can review to help manage the things that are somewhat unpredictable during this difficult insurance market

Renewal Process

It is always a best practice to start the renewal process early. Engage with your insurance agent 90 – 120 days before your policies renew. And, be prepared to update renewal information and learn from your agent about current market conditions.

Policy Structure

Consider policy consolidation. Some insurance carriers have capabilities to underwrite your major casualty lines (i.e., general liability, automobile, umbrella and workers’ compensation) to leverage all your insurance to see if you can create some economies of scale and perhaps more opportunity within the insurance market. As your combined premiums exceed  $200,000, additional deductible options may become available.

Pre-Injury and Accident Prevention

Implementing a strong safety program and ongoing training can help prevent employee injuries and third-party accidents.

Post-Injury and Accident Protocol

Conduct thorough accident reports and investigations. Gathering detailed information at the time of an accident or injury is critical for your insurance carrier to best handle the claim. And, create trainings to avoid similar incidents from occurring in the future.[DG2] 

These four areas should be on your radar to ensure that your company can weather the hardening insurance market.

To discuss these specific areas or to evaluate your current insurance program, contact me at (619) 937-0200 or drewgarcia@ranchomesa.com.

How Changes to the Expected Loss Rates Will Impact Concrete Companies

Author, Sam Clayton, Vice President, Construction Group, Rancho Mesa Insurance Services, Inc.

In addition to the Workers’ Compensation Insurance Rating Bureau’s (WCIRB) proposed 11.2% workers’ compensation pure premium rate increase, the WCIRB will also be updating the 2025 Expected Loss Rate (ELR) effective 9/1/25.

Each workers’ compensation class code has its own ELR and it is used in the Experience Modification Rate (EMR) calculation. ELRs are the average rate at which losses for a classification are estimated to occur during an experience rating period. They are expressed as a ratio per $100 of payroll and can have a significant impact on the EMR.

For example, the ELRs for 5201/5205 concrete class code will be dropping 19% and 10%, which we believe is not getting the attention it deserves. These decreases will have an adverse effect on concrete contractors’ EMRs effective 9/1/25 and beyond. 

In addition to your EMR, the lowered expected rates also impact your primary threshold. Your primary threshold is the maximum primary loss value for each individuals’ workers’ compensation claim. If the primary threshold goes down, a small lost-time claim will have a bigger impact on your EMR. As all contractors know, any increase to your EMR can not only increase your overall workers’ compensation premium but also impact opportunities to bid certain projects in the municipal/commercial market.

So, how can concrete contractors get out in front of this? 

1. Conduct open claim review meetings on a quarterly or semi-annual basis.

2. Audit any open reserves on claims that are impacting your current and future EMR.

3. Determine the timing of your next unit stat filing date.

4. Ensure that your accident investigations program addresses the root cause of claim frequency and severity.

5. Use trade-specific Key Performance Indicators (KPI) that benchmark you to other concrete contractors.

6. Work with your broker to project your EMR up to 7 months prior to your renewal date.

7. Conduct industry- specific trainings that are OSHA compliant.

We recommend taking a proactive approach. Here at Rancho Mesa, we can provide you with your industry specific KPI’s, a dedicated workers compensation claim advocate, a proprietary safety app, monthly safety workshops and more.  Start now to insure you understand the financial impact to your company and the steps necessary to minimize the disruption.

If you would like to learn more or have us assist you   I can be reached at sclayton@ranchomesa.com or (619) 937-0167.

Forty Year of Surety Bonding: A Look Back

Rancho Mesa President Dave Garcia and Matt Gaynor, Director of Surety look back on Matt’s career in the surety business and how it has evolved over the last 40 years, as he prepares for his upcoming retirement.

Dave Garcia: Hi, this is Dave Garcia. You're listening to Rancho Mesa’s StudioOne™ podcast where each week we break down complex insurance and safety topics to help your businesses thrive.

Today I'll be joined by Matt Gaynor who's our Director of Surety with Rancho Mesa. We're going to take a look back at Matt's career in the surety business and how it's evolved over the last 40 years as he prepares for his upcoming retirement in June.

Matt, I still can't believe you're retiring, but welcome to the show.

Matt Gaynor: Always great to be in the studio, Dave.

DG: Well, okay, Matt, let's go back. Let's wind the clock back and tell our listeners a little bit about how you got started in surety.

MG: So I worked in accounting for Merrill Lynch out of college and a friend I'd previously worked with started telling me about a career that involved both accounting and construction. So I joined Reliance Surety at their home office in Philadelphia, Pennsylvania in 1986 as a trainee.

DG: Wow, 1986, that's the year before I started in insurance, so you've got me by a year. So when you look back at when you first started in 1986, what are some of the things you observed about the way things were done back then?

MG: Well, first off, I started working in a company reading manuals, and for the first maybe four to six weeks, you're reading these boring insurance manuals and one other trainee that started with me we found out had narcolepsy.

DG: Oh my gosh.

MG: And he would fall asleep like after an hour reading so after a couple weeks they had to let him go because they said you know you can't really do this.

DG: No matter how much coffee he had right?

MG: No it wouldn't change it.

The next thing there was the biggest thing is communication. We only had a landline at our desk which for today's people that have cell phones and all they can't even imagine that and there was no voicemail. So if we got a call from our contractor client or from one of our branches, you just had a message at your desk that said, "Call this person back."

And there was no voicemail that said, "Here's what we want to talk about,” or any of that. So that's really been a big change.

DG: I can relate to that. I remember, you go out for a meeting, you come back in, you've got all these little notes on your desk of who phoned and what the phone call was regarding, and there was just a stack of paper, then you just had to literally dial them back, right, with the rotisserie dial.

MG: That's right, exactly. And you had to remember all these phone numbers, remember, there was no computer to look things up, you had everything written down on a sheet of paper somewhere.

DG: Yeah, you had to have your little business black book, so to speak. What about submissions, Matt? How did those, how have those changed?

MG: Yeah, that segues into how paper trails were created back then. I mean, we got all our mail through the U.S. mail. If you got something, I don't know when Federal Express was even started, but if you got something through Federal Express, it better be pretty important because the company wasn't going to spend the money to send something through Federal Express.

Now, fax machines had just come out. So when you received the fax, again, it had to be a pretty big deal, but the fax would go away from the paper so you had to make a copy right away because you were afraid the ink that came through the fax machine would just disintegrate and you couldn't read it in a few days. So that was a big change just the paper.

So think of that, it would take five days, six days for the submission to come through the mail and then you took a week to underwrite it. So it would take two weeks, which nowadays that's 30 minutes.

DG: Right, exactly. You know, I used to work for Xerox back before I was in the insurance industry and I sold those fax machines that had the disappearing ink. So yeah, I know exactly what you're talking about. How did it work on your files?

MG: Yep, so everything was done by hand. So when we would get the information in, you had to do a work in progress computation and you had to print it out very carefully because someone else had to read it. So they would just pick up the paper file and read it and look at your notes there. Now the year–end summaries we recorded on Dictaphone and a funny story with that was the first time I had to do one, my boss said, "Hey, go in a separate office and do this because you're going to feel really weird talking into this machine."

So the lady who typed up my first submission is laughing and laughing as she's reading it because I'd said like, start a sentence, I'd say, "Oh, damnit,” or something, and she'd just be like, “Oh, you made another mistake.”

So it was very overwhelming to record something on a Dictaphone.

DG: Yeah, I don't think people today can appreciate that. You know, they don't, it's so easy now to tape and record and delete and whatever. But back in the day, you know, you're talking into like a little cassette recorder kind of thing with a mic, and then you hand that little cassette to somebody and then they listen to it and type it. I mean, that turnaround time was immense.

MG: The amazing speed that she could type that at too, it was as she was hearing words, she's typing. I was overwhelmed by it.

DG: Well, let's talk about some of the softer side, paychecks, vacations, sick days. We're two older guys, so it's different today, but how was it back then for you, Matt?

MG: So every second Friday, around three o'clock, they handed you a paper paycheck and they did us a favor because there might have been like four or five banks. We were on floor 20, like downstairs either in the bottom of our building or another building because we were in central Philadelphia. So they would let us go down and cash it. So there was no direct deposit or any of that. So you'd say like, "Give me 15 or 20 dollars of cash and put the rest of this into our account."

That would pay all the bills and from that, so that was kind of weird. Vacation was two weeks until I got five years with the company, so you only had two weeks. And of course, if you couldn't make it like one time, we had a guy that was going to install a carpet at our house, so I had to take the day off. And he calls me 10 o'clock and says, "I cut my finger. I can't come."

Well, I'd already taken the day, so you lose that day. You didn't like get it back. But the other thing was sick days, which is really funny because you only got three and you really had to sound sick because you had to call your boss at around seven in the morning or eight o'clock and say, “Hey I feel bad today.”

So you had to really sound sick because he was on the other end saying, like, “Are you really sick or not?”

But that came to pass because when I worked for another company for ten years I only had one sick day in ten years with that company. Well back then you just came into work if you were a little bit sick.

DG: Yeah right yeah I know it was a different world for sure very different. Absolutely. What about bond premium rates and dress codes and things like that?

MG: So the irony is over 40 years, bond premium rates really haven't changed that much. It's an archaic system where there's a preferred rate, there's a standard rate, and then there's a higher rate. But you would think it would go to a flat rate like 1% or 2% or whatever, but they've never done that over the years.

So it's all filed by state, which I assume insurance rates are also filed that way. But you had a manual that was handed to you and it had every state in there and it had all these rates. And to this day, I still have that manual.

DG: Really?

MG: Yes. And it describes just about all the different bonds. So I probably could give you the rate for like 5,000 bonds from that one little manual. Yeah, it's kind of crazy.

DG: Let's talk about dress codes 'cause it certainly has changed from the time I started working to now, how about you?

MG: Yeah, there was no casual Fridays for anything, no such thing. You had to wear a suit and tie, sport coat and tie at least. So when I got my first job, I went to, I think probably whatever was Men's Warehouse back then, bought a couple sport coats, a couple ties, and maybe two suits, and then you just had to keep them clean.

But a funny story with that was I used to iron all my shirts, and they had to spray starch that you could put on, but I decided one time, I’m going to take it to the dry-cleaners. And I said, "Do extra starch."

And the lady looked at me like, "Are you sure?"

And I got that back. I felt like I was putting cardboard on my face.

DG: Yeah, exactly.

MG: But you had to prepare every morning and you had to look decent. You couldn't go in looking sloppy or anything. Because think of it, any day you could be meeting a new account, so you had to make sure you made a great impression on them from the first time.

DG: And it was just common practice back then, you know, it's, I know in my Xerox days, it was a uniform, you know, blue suit, gray suit, white shirt, blue shirt, red tie, blue tie, that was your options. And, but everybody, you know, yeah, okay, you know, just it kind of shifted your mentality too. I don't know if you felt the same, but you know, when I put that suit on every morning, I went from being a dad or whatever to being a business person, and it just kind of shifted your perspective a little bit. So a little harder now, don't you think, Matt, with everybody's walking around with golf shirts on, at least we haven't gone to shorts in the office, right?

MG: Right, yeah, that would be crazy.

DG: But were you in the Pittsburgh branch at all?

MG: Yeah, so when I started at Reliance, after three years, they wanted you in the home office, they wanted you to go to a branch. So they offered us Louisville, Orlando or Pittsburgh and Pittsburgh was a six-hour drive and we just had our second daughter. So we decided on that. A lot of people said why not go to Orlando because Disney World, you know, it would be fun there and I went to visit the Louisville branch a great branch but again, we thought just being six hours away was close enough yet far enough to be away so went to the Pittsburgh branch and my manager said, “Hey if you want to get out of the office, you got to play golf.”

So that's where I really started picking up golf.

DG: Okay.

MG: Yeah, so I would play in a different tournament, just say the AGC or whatever they had. And I really, as you got it, like you get bitten by the bug and you want to improve and you want to get better. So those three years, I really played a bunch of golf.

And the other story that sticks out in that branch was they gave you a company car after like a year in the branch and they gave me this Chrysler with this terrible color, and my wife Donna says to me, like, "Turn that in, I don't want you driving that."

And I'm like, "Donna, I'm just happy to have a car."

Like, I'm not going to tell them I don't want this color or anything like that, no. But the good part was when I went back to the home office, they gave me a stipend to buy a car, because they said, "Okay, you had a company car,” and you could use it for your personal time, too. You didn’t just use it for work time. So it was a big positive for working for the company.

DG: Sure. How have some of the other things changed, Matt, like the bond reporting initiatives and things like that?

MG: Yeah. So nowadays, again, we can make a copy on a computer and it's no problem. But back then, they had these carbon pages. So our administrative assistant would take three pages and stick these carbon, which if you got on your fingers, it was all messy and all. So she had to do it exactly. And if she made a mistake, she could probably use some whiteout to fix it, but making two mistakes, they just threw it out and started over again. So it was a lot of work just to, because one copy was for the agent, one was for the home office and one was for the branch.  So they had to have these copies here, you know, so that's the way they did it.

DG: I know. It's just crazy to think back like, but that's how it was. It wasn't antiquated at the time. And then did you become a senior contract underwriter at some point?

MG: Yeah. So then when I went back to the home office, one of the big positives was that I was trained with five other people. We all started together and I was the only one that accepted the three year transfer to a branch. So when I came in, I came in as a senior contractor over all them. So because they didn't get that branch training, which was important because you had to deal with contractors and agents directly so it really boosted your career from that.

But when I got back, I had three branches that I was in charge of and one funny story was we were down at Alabama meeting a road contractor and they were like all excited to do the home office guys coming in to meet me. So they baked a cake for me. So we're sitting there and they gave us these little bottles of coke because back then, you know, down in Birmingham…

DG: Coca-Cola, right.

MG: Yeah, right, yeah, yeah, Coca-Cola. And they give us a piece of cake and it was like really warm and all that. And they expected that by me eating that, I would approve a bigger line of credit for them and all that, but yeah, they went out of their way to really, the hospitality was great, but it just goes to say that they did, you know, extra work just to try to get us to like

DG: And they thought a cake and a Coke were going to…

MG: That a cake and a Coke, we're going to prove that job. I might have approved that job but it wouldn't have been because of the cake.

DG: Exactly right. Well, how did you, when did you make your change from the company side to the agency side, then how did you find your way to us here at Rancho Mesa?

MG: Yes, so after being in a branch and getting to deal with agents and contractors directly, it was tough to go to the home office and sit behind a desk. So after probably two and a half years of that, I decided, let's go to the agency side and try something new. So I had two stints, one company, 10 years, one seven. And then in 2011, I joined Rancho Mesa’s surety operations.

And it was a blank slate because as you know, we didn't have an operation at that time. And you kind of said, “Hey, here's the keys.”

DG: Yeah, it was a complete gut feel and faith, you know, because we know we wanted to add that such a vital side of our business, but we for years never found the right person to lead it. And then when we met you, we're like, okay, this is the person that can take us from zero to where we are today.

So, let me stop now and just say thank you for those wonderful 14 years, but talk a little bit about how it's changed over that time for you.

MG: Yeah, so we might've had like five little accounts but fortunately through your insurance operations you were able to introduce me to a lot of your current clients and they had a need for bonding so it was a great fit but over that 14 years our department's grown to five employees six if you count me but we have three producers and we have two people that do the data work for us.

We have over 150 surety clients that do like decent size bonds but another 100 that might need a bond each year like a license permit or a contractor's license bond or whatever so in theory we have over 250 surety clients. During that time our smallest bond—because bonds are all over the place—was we issued a thousand-dollar bond and the minimum premium is a hundred dollars but we've also issued a 60-million-dollar bond so they're all over.

DG: Yeah, that's a big range right there.

MG: Yeah, it is right.

DG: Yeah. Do we just do work in California or do we do bonding in some of the other states?

MG: So we're licensed, as you know, in 50 states. We've done bonds in 15 states, but we've also done bonds in Canada and Guam. Now, when I say done bonds, like in Guam, we're not allowed to issue bonds. You actually have to have a relationship with an agency over there. And through the years we've just developed that and we work with them and they're happy to help us with that.

DG: So what do you think are some of the most significant things that have changed in the industry?

MG: Yeah. So speed of transaction, that's got to be the top thing. As I previously mentioned, we didn't have computers and every transaction involved paper. But today, if I need an updated financial statement, I can call our contractor or email them, and within 15 minutes, they can put something together. In 1986, that would take several days, but I was just thinking today, I asked someone for their bank statement, and they just went into their Bank of America, whatever, and pushed a button and sent me something. Well, back then, they would have had to call their bank, stop, drove over, got there, and then got actually a copy of a statement, and would have had it figured away either. They could have faxed it, but probably would have mailed it to me. So that's kind of, yeah. So what we can do nowadays is so much quicker, which is sometimes good and sometimes bad.

Because sometimes, like we just did a bond yesterday, for a bid today, and we had one day to get it together. So we had to do first overnight Federal Express to get it there by the time so they could deliver it. Now, we don't complain about that. I'm just trying to get across how it's changed in this environment.

DG: You know, it's changed and expectations have changed, right? We live in a society now where they want it now. You know, they don't want to wait. Nobody wants to wait for anything. And we adapt as an agency, as a surety department. We just adapt. We use technology to try to help us with that. But when there's guys like you and I that remember pads of paper and pencils and checking the mail for different things, it's completely different today than it was. Not that it's bad. It's probably better. But it's just something that the new people to the industry never knew what it used to be like. So they're a little bit spoiled, right, Matt?

MG: Right, yeah.

DG: Yeah, they don't know why that's old timers you just have to go through.

MG: That's right.

DG: So what would you tell someone who's just starting their career about working in surety?

MG: Yeah, I would say it's a great industry to be involved with. I mean, the work involves finance, reading contracts, and a basic understanding construction because I know a little bit about what our clients do, but I would never be able to explain or do what they do.

Most important are the relationships with our contractor clients and our surety partners. I mean, over the 40 years, I developed lifelong friendships with a lot of the people I've worked you know, some contractors, I would invite them to my daughter's wedding. I mean, we just get so close because you learn so much about them and you forge a great relationship. So it's an incredible industry to be part of.

DG: Yeah, well, hats off to you, Matt, because you're a big part of developing those relationships. You're approachable, you're knowledgeable, you're timely. So I think those people, like the trust in you allows for those deep friendships to occur. So congratulations to you, congratulations.

Everybody listening. I've tried to talk Matt into hybrid retirement, which I'm not a big hybrid guy, but I was hoping that would just stay, but he's not, he's really ready for retirement, so he'll be retiring June the 30th of this year, but he's not leaving, he'll be in town, he'll be here, I'm sure we'll get out and play around the golf, but Matt, I just want to thank you, not just for today, but for those 14 wonderful years and your guidance and counsel that you provided me to help grow Rancho Mesa.

So Matt, thanks for joining me today in StudioOne.

MG: Yeah, thanks Dave. I appreciate you hosting and I enjoyed it.

DG: Thanks everyone for tuning in to our latest episode produced by StudioOne. If you enjoyed what you heard, please share this episode and subscribe. For more insights like this, visit us at RanchoMesa.com and subscribe to our weekly newsletter. Thank you.

A Proactive Approach to Insuring Your Commercial Property

Author, Jeremy Hoolihan, Partner, Rancho Mesa Insurance Services, Inc.

Wildfires in California over the last several years have had a dramatic effect on the insurance marketplace. With expected losses of the recent Los Angeles fires alone to exceed $30 Billion, insurance companies have been taking action to stop the bleeding. These actions include non-renewing policy holders in high hazard zones as well as pulling out of California all together. 

It is critical that property owners now take a proactive approach to prepare for their upcoming insurance renewals. Insurance companies have tightened up underwriting guidelines and are much more selective with the buildings they are willing to insure. Knowing what insurance companies are looking for and addressing these concerns in advance can be the difference between being insured in the standard marketplace or having to resort to the California FAIR Plan. 

Some of the top insurance concerns underwriters are currently facing include the following:

• Brush Clearing – It is commonplace for insurance companies to require a pre-inspection before offering an insurance quote. General maintenance such as weed abatement and brush clearing are two important tasks that can determine whether an insurance company is interested in insuring a building.

• Fire Zones in California, fire zones continue to grow as a result of climate change, urban expansion, and new technology such as AI modeling that provides a more accurate prediction of where high hazard zones exist.

• Building construction type also has a huge impact on an Underwriter’s appetite. A concrete building will obviously be more appealing than a wood framed building, especially in a mid to high level fire zone.

• Building Updates – Insurance companies now expect building owners to keep their buildings well maintained and up to date. Underwriters will inquire about the age of a building’s roofing, plumbing, electrical, HVAC and fire sprinkler systems. If a building is over 20 years old, replacement of any one of these systems is a common risk control requirement.

Knowing some of these challenges in advance, building owners can take proactive steps to make their building more attractive to underwriters.  Here are a few of those examples:

Property Maintenance

• Roof – Regular inspections and timely replacement is key, especially if the roofing material is fire-resistant.

• Electrical Systems – Upgrade outdated wiring and panels, especially if you have a Zinsco Panel. They have been known to spontaneously combust and will almost certainly cause carriers to decline offering a quote.

• Plumbing – Updating the plumbing system can prevent water damage claims. PEX or copper is preferred over galvanized steel or polybutylene.

• HVAC – Upgrading and/or regularly maintaining heating and cooling systems can help avoid fire and mold risks as well as creating a more efficient system.

• Fire Suppression System – Installing or upgrading sprinklers can often times determine if an insurance company is willing to insure a building.

Risk Mitigation Features

• Fire Alarms – Fire alarms, extinguishers, sprinkler systems, smoke detectors are critical features.

• Flood Protection – The installation of sump pumps and proper drainage systems are important, especially in flood zones.

• Security Systems – Monitored alarms, cameras, and controlled access points will help reduce theft.

Documentation and Compliance

• Inspection reports – Keep updated reports (i.e., roof, HVAC, electrical, fire) ready and available to show underwriters.

• Maintenance logs – Document routine maintenance. This helps to show that you are a responsible owner.

• Permits and certificates – Make sure upgrades are properly permitted and compliant so that you are able to provide evidence to the insurance underwriter.

While there is reform in the making to California’s property insurance marketplace, it continues to be very difficult to navigate.  By implementing many of these recommendations and being proactive as you approach your property insurance renewal window, you will improve your chances of securing the most competitive terms and pricing.

If you have any questions, I can be reached at (619) 937-0174 or jhoolihan@ranchomesa.com.  

Construction Safety Week 2025

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

From May 5th – 9th, 2025 businesses across the country have the opportunity to participate in the annual Construction Safety Week. Since 2014, Construction Safety Week has been providing companies with free resources to help promote a culture of safety in the industry. For employers, this is a chance to focus on jobsite safety and make a continued commitment to keeping your employees free from harm.

Daily Safety Trainings

Alongside the number of free resources available through the initiative, Construction Safety Week provides daily safety training in English, Spanish, and French. The Daily Topics are built around this year’s theme All in Together, meant to emphasize the entire industry’s dedication to safety.

Monday, May 5th – Plan with Precision

Monday’s Daily Topic focuses on planning and preparation, placing a strong emphasis on identifying high-risk activities, implementing control measures, and ensuring collaboration in safety planning.

Tuesday, May 6th – Identifying High Energy Hazards

Tuesday’s Daily Topic is centered on identifying, controlling, and eliminating hazards that could result in fatal accidents before any work begins.

Wednesday, May 7th – Own Your Part

On Wednesday, the Daily Topic emphasizes each team member’s responsibility when developing a safe work environment. Accountability, communication, and leadership are key objectives in this Daily Topic.

Thursday, May 8th – Engage and Empower Team Members

Thursday redirects attention to team members, providing them with the tools and resources they need to foster a culture of safety. The Daily Topic centers on how training, communication, and trust can empower employees to make safe choices.

Friday, May 9th – Commit to Excellence

Friday’s Daily Topic asks team members to commit to building a safe work environment through planning, preparation, and support of one another.

For companies taking part in Construction Safety Week, Rancho Mesa offers a number of toolbox talks and trainings through the SafetyOne™ platform that can be used alongside the Daily Topics.

Along with the daily trainings, companies and employees can register to commit to a daily safety statement, and enter for a chance to win $1,000.

Key Dates that Will Define California’s Workers’ Compensation 2025 Rates

Author, Kevin Howard, Partner, Rancho Mesa Insurance Services, Inc.

In California, September 2025 will be a pivotal month for the state’s workers’ compensation marketplace. With inflated post-Covid-19 payrolls still affecting premiums, both the Workers’ Compensation Insurance Rating Bureau (WCIRB) and California’s Insurance Commissioner Ricardo Lara have been working to establish appropriate pure premium rates that are reasonable for both insurance carriers and employers.

Many California worker’s compensation carriers have shared that their combined ratios continue to rise. This means the cost of claims and expenses are increasing disproportionately to the collected premiums. And, at some point, a middle ground needs to be met based on the data analytics to ensure the carriers can continue to operate in the state.

Over the last few years, the WCIRB has provided Lara with recommendations to increase pure premium rates which should help to lower the carriers’ combined ratios, though the approved rates have trended lower than the recommendations. Now that the data shows carriers’ combined ratios are too high to sustain long-term, all eyes are on Lara over the next 5 months to see how this will unfold.

Pure premium rates are the WCIRB’s advisory rates, which change annually for each California class code. Pure premium rates do not include factors like commissions, carrier overhead expenses, or profit margins that are later added to the equation. The pure premium rates can be viewed as the starting point for independent carrier actuaries when they are deciding on annual increases or decreases based on the WCIRB’s posted pure premium rates.

A deep dive into the timeline of events that will shape the future of pure premium rates, dual wage thresholds, and carriers’ base rates per class code is important in order to understand the current workers’ compensation changes to come.  

January

Up until 2023, January 1 was the official date when carriers would file new base rates with the California Department of Insurance (CDI). However, moving the carrier rate filings away from the beginning of the calendar year helps carriers avoid the year-end crunch, analyze data more efficiently (including the prior Q4), and better synchronize their timelines with the WCIRB and CDI recommendations.

April

Around mid to late April, the WCIRB will make a recommendation for pure premium rates that would go into effect on September 1. This recommendation is based on actual data that has been analyzed by actuaries. This analysis offers tangible insights that the insurance commissioner, the Department of Insurance’s chief actuary, and independent carriers can use to make informed decisions.

May–June

At the San Francisco headquarters, the CDI hosts public hearings where stakeholders, unions, and insurers can comment on the WCIRB’s proposed changes that include, but are not limited to, pure premium rate recommendations.

July

Dual wage recommendations are issued by the WCIRB in July. Based on data collected since the prior 4th quarter, the WCIRB will make a split class code recommendation that takes into account wage inflation and economic shifts throughout each industry that utilizes dual wage thresholds.

September

Advisory rates approved by the insurance commissioner go into effect in September. For example, in the current year of 2025, the WCIRB has recommended a 11.2% increase in pure premium rates. The Insurance Commissioner and the chief actuary will make the advisory pure premium rates official, which could be the same, less, or more than the WCIRB’s recommendation.

In September, carriers also lock in their base rates according to their own predictions, needs, and actuarial results.

October

The WCIRB prepares for the next year by gathering actuarial data.

California has some really important dates to pay attention to this summer and into the fall. The current WCIRB-recommended 11.2% increase is the largest recommended increase in the past 5 years.  Communicating with your insurance broker and developing plans to prepare for this most certain increase will be critical to managing this line item on your profit and loss statement.

For questions about the pure premium rates and how they will affect your workers’ compensation premiums, contact me at khoward@ranchomesa.com or (619) 438-6874.

The Importance of an Insurance Pre-Renewal Meeting

Author, Greg Garcia, Account Executive, Rancho Mesa Insurance Services, Inc.

At Rancho Mesa, we conduct annual insurance pre-renewal meetings with all of our clients and it has always been a crucial part of the insurance renewal cycle.  Now with increased pressure on all lines of coverage, the importance of the pre-renewal meeting is even more critical. 

Typically, we schedule our pre-renewal meetings about 120 days prior to the renewal effective date.  For example, if an insured‘s effective date is January 1st, we will be conducting our pre-renewal meeting sometime in September.  Keep in mind that insurance carriers are able to accept submissions 90 days before the effective date, and getting a submission out at that 90-day mark is our goal. It allows the underwriter time to underwrite the account properly and gather any additional information they may need.  With insurance markets hardening year after year, underwriters are requesting more information with regard to operations, risk management, and safety procedures. Even requesting a loss control visit from the carrier’s risk consultants are becoming more common. By getting our submission out at that 90-day mark, it allows adequate time for all of that to occur. Additionally, by giving the underwriter ample time to do their job, it allows them to release renewal terms weeks in advance of the effective date.  This aligns with Rancho Mesa’s commitment to complete insurance renewal meetings well in advance of the effective date, allowing then for certificates of insurance to be issued in a timely manner. 

Now, let’s dive into what takes place at these pre-renewal meetings.  First, these meetings give our team a chance to sit down with our clients and go over anything and everything related to their current insurance program.  We talk about any changes in company operations from last year, we make sure all of the vehicle, driver, trailer and equipment lists are up to date, and talk about forecasting payrolls and sales for the upcoming policy term.  In addition to that, we inform our clients on trends in the marketplace while also providing educated budgeting figures for what they can anticipate come renewal time.  Overall, these meetings typically take somewhere between thirty minutes to one hour, with the goal of securing all applicable renewal information for our team to approach the marketplace.

As premium and pricing trends continue escalating, pre-renewal meetings are a great way to get an early start on your insurance renewal cycle, setting your team up for the most competitive terms and pricing well before your effective date.

To discuss your insurance renewal, contact me at (619) 438-6905 or ggarcia@ranchomesa.com.

Avoid Surprise Premium Increases by Collecting Subcontractor Insurance Certificates

Author, Jack Marrs, Associate Account Executive, Rancho Mesa Insurance Services, Inc.

In the nonprofit world, every dollar matters. Whether you are running community programs, providing housing, or supporting individuals with disabilities, it is important to keep operating costs predictable and under control.

There is one area where we are seeing many nonprofits get blindsided during workers’ compensation audits and it often leads to unexpected premium increases.

If your organization pays independent contractors or subcontractors like drivers, program instructors, consultants, and maintenance workers and you do not collect certificates of insurance (COI) showing they have active workers’ compensation coverage, your insurance carrier may treat them like your employees during the annual audit.

The consequences of not collecting proof of workers’ compensation coverage means:

• The amounts you paid those individuals will be added to your payroll,

• Your final premium could increase significantly,

• You will be paying more for coverage you did not intend to buy.

We have recently seen multiple nonprofits hit with unexpected audit bills, not because they did anything wrong, but because they were not aware of this requirement.

Examples:

• A nonprofit that hired a part-time yoga instructor for their afterschool program did not request a COI. At audit, the instructor’s pay was included as payroll, adding over $3,000 to the final premium.

• Another organization paid an IT consultant $15,000 for a short-term project. The organization assumed since the consultant was not an employee, they didn’t need to worry about workers’ compensation. At audit, the amount paid to the consultant was included in the payroll calculation and the organization had to pay an extra $2,500 in premium.

Carriers are tightening their audit practices. If you cannot provide proper documentation that a subcontractor had their own workers’ compensation coverage, the carrier assumes your organization will be responsible if they get injured. Even if you never intended to cover them, they will count that payment towards your audited payroll and charge you accordingly.

To prevent an unexpected increase in premium at audit, always collect and keep on file a valid COI for any subcontractor or independent contractor you pay. The COI must show active workers’ compensation coverage for the time they performed work for you. If someone says they are exempt or does not have coverage, demand that they provide some form of documentation showing proof they do not need it. When in doubt, consult with your insurance broker and/or your workers’ compensation auditor to understand the potential issues.

If your organization is paying subcontractors or independent contractors, do not risk a surprise audit bill. Collect and retain COIs that prove they are covered. It is a small administrative step that protects your mission and your budget.

For questions about avoiding surprise workers’ compensation increases at audit, contact me at (619) 486-6569 or jmarrs@ranchomesa.com.

Workers’ Comp Rate Increases are Here — Are You Prepared?

Authors, Sam Clayton, Vice President, Construction Group, Rancho Mesa Insurance Services, Inc.; Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

The workers’ compensation market in California is hardening. After many years of rate decreases, it appears that the market has started to bottom out.

The Governing Committee of the Workers’ Compensation Insurance Rating Bureau (WCIRB) voted in favor of pursuing an 11.2% rate increase. If the California Department of Insurance approves the WCIRB’s request, it would make the first rate increase in more than a decade.

In recent years, wage inflation has helped to offset rising medical care and claims handling costs within the workers’ compensation system, while carriers’ reserve redundancy releases have also contributed to the soft market.

With reserve redundancies declining and wage inflation stalling, the effect of rising costs in the workers’ compensation system are becoming more noticeable. Added to that, the diminishing investment returns for carriers and the need for rate increases and stronger underwriting performance becomes even more pronounced.

Below are four ways that your insurance broker should be helping to prepare you for the coming change:

Understanding Your Workers’ Comp Claims

Meeting with your insurance broker throughout the year can help you identify trends and underlying root causes for your claims. This can help you to implement practices and procedures that reduce the likelihood of the same type of claim recurring.

As an example, we identified that lower back strains are among the most common work injuries in one of the industries that Rancho Mesa specializes in, which led our team to develop the Mobility & Stretch Program and A.B.L.E. Lift Protocol.

Providing Effective Safety Resources

A strong safety culture depends on individuals consistently making safe choices and having access to the tools they need. Among other resources, Rancho Mesa provides clients with the SafetyOne™ platform, a website and mobile app that offers a suite of tools to implement safe practices, such as a library of topics for toolbox talks, online safety trainings, and safety observations.

Utilizing Workers’ Comp Claims Advocate

The workers’ compensation process can be complex and costly. Rancho Mesa offers an in-house workers’ compensation claims advocate to help navigate the claims process, manage claims, and provide accountability to adjustors. Leveraging your broker’s claims advocate can help manage the overall impact of claims on your insurance costs.

Exploring Loss Sensitive Plans

Rancho Mesa can help you evaluate a variety of loss sensitive options, such as captives; self-insured groups; large, intermediate and small deductible options; or retro plans to see how they compare against guaranteed cost. Having access to more product options allows for more relevant, effective advice on which program best meets your risk tolerance.

That final decision and recommendation will be done and take effect September 1st 2025.

While these increases will not directly impact you until your next renewal, taking action to prepare for the coming change is critical. Rancho Mesa is informed, has the resources available and most importantly the proactive commitment to help you navigate the approaching storm.

If you would like to learn more about our resources and approach to this process, please reach out to Sam Clayton at sclayton@ranchomesa.com, or Matt Gorham at mgorham@ranchomesa.com.