Cash in the Bank Is Not Profit: What Home Care Owners Need to Know About Margins

Account Executive Raysan Benito sits down with Dana Charumbira, CPA and founder of Home Care CPAs, to explore how home care leaders can use financial insights to drive smarter decisions and sustainable growth. They break down key concepts like gross margin, automation, and financial clarity, offering practical ways to turn numbers into meaningful strategies for scaling a business.

Raysan Benito: 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. My guest today is Dana Charumbira, a CPA, MBA, and business leader behind Home Care CPAs, who brings a unique blend of corporate and international experience to the home care industry. With a passion for conscious business and social impact, Dana combines analytical expertise with a deep belief in human connection to help leaders scale in a meaningful and sustainable way.

Dana, welcome to the show.

Dana Charumbira: Thanks, Raysan, and thank you for that great introduction. I sound so professional and put together. I love it.

RB: Well, you are so professional and put together. You're very well known. I would have even added that you are going to be a conference speaker at CAHSAH as well. And we, I, yeah, there's so many, I get the list could go on, but I at least wanted to make sure that I had that locked in. So welcome to the show.

Dana, I appreciate you being available. You survived tax season. I think I want to jump into that. There's a little bit of a path I'd like to go on, but you survived tax season, so well done on that. How is that for you?

DC: Thank you. Thanks for having me on.

Yeah, we made it. It was, you know, each year we get better and better. Each year has its nuances. We support a lot of like the business returns. So once we get through that March deadline, there's a little bit of a sigh of relief. And then there's a couple of, you know, April 15th deadlines that we really support. But

Our team was really good this year about being proactive in Q4 prior quarter, just to kind of make sure we had a good start to 2026 to get filings done. So not too many sleepless nights. Yeah, and shout out to the team, shout out to the clients too that worked with us to make sure we got everything that we needed.

RB: Yeah, that is absolutely crucial. Having that team of people to work alongside you and then having your clients bringing things in a timely manner. I know that challenge all too well. So I am glad that it went well for you. You know, I was thinking about this beforehand. I'll jump into the problem and some of the solutions that we have, but it was so interesting to me because when I was preparing for this podcast.

I asked a couple of business owners about their profit and loss statement and how often they review it. So I talked to one business owner and I said, how often are you looking at your P&L? And their response was, almost never. My accountant. That's my accountant's job. My accountant does that. And so I want to address some of the, I want to address that statement, but I also want to address some of the individuals that may be listening. What I'm really excited from our conversation from yesterday and preparing for this was that I really believe that there's going to be something for everyone. So you can have the startup, home care agency that's learning as they're going and they have a heart to serve, but they're not entirely sure how financials fit into it or how to leverage it. And then you have people who are scaling and then some of the more legacy agencies that are there. But I want to camp a little bit on that phrase and I'd love to hear your perspective on it. When someone says, I don't usually look at my P&L, that's the accountant's job.

DC: Yeah, so there is. I think first, let's say just acknowledge that home care is, you know, a business or an industry that pulls people in a lot of directions. So home care agency owners or home care leadership vault has a lot on their plate at all times. And even if they're not actively doing something, they're probably thinking about their business and, you know, maybe it's marketing, maybe it's recruitment, maybe it's a shift that needs to be staffed. So I think a lot of the times, you know, the accounting piece of it, because it's not so in your face every day does kind of fall into that list of like, I'm going to engage with it when I'm filing my taxes and it becomes more of this like passive, I say compliance based activity and that it's just something that needs to get done when you're filing your taxes at the end of the year. And so I don't think that's an uncommon approach or sort of, you know, comment that we do here. And sometimes it's just easier to manage your business from your bank account. So like if you have the money to make payroll and there's some leftover to, you know, pay whatever else you need to like workers comp and rent and utilities, you know, sometimes that can feel like that's enough.

And it can be scary because you know if that number on the bottom isn't where you want it to be, sometimes not engaging with it or just like hoping it's going to get better might feel safer. But really it's just kind of kicking that can down the road a little bit for like that inevitable day that comes when there isn't the cash in the bank or that number just really starts to become zero or negative. So yeah, that's not an uncommon, you know, starting point. But and even, I mean, I would say that's agencies of all size. And there's a lot of different ways you can look at your numbers that aren't looking at your profit and loss, which we, you know, we encourage. But for us, the profit and loss really brings everything together. And for me, it really tells the story of the business and you can see like operational decisions that the business is making and how they play out in the financials

RB: I agree. And it's interesting that you bring that up because as we work with home care agencies as well, you're talking to these CEOs or owners or what have you, and they're going, listen, I've got an intake to do. I probably have to do some type of marketing.

There's networking that needs to be done. I also need to look at operations. Also, we're constantly hiring, so I have to do that as well. And interestingly enough, I was talking to another owner and they were going, I'm also HR, so I'm handling that as well. To your point, I think it's helpful for us to just take a beat and go, okay, well, we acknowledge a lot of the aspects of actually leading a home care agency and the difficult conversation that needs to be had around the profit and loss statement. It can be daunting. It can be scary. I think of the quote by Tim Ferriss, right, where he says that your success, and I think it's Tim Ferriss, and he says, your success in life is predicated upon how you can have difficult conversations.

Now, I think about that phrasing in with others, but as I was preparing for this podcast, I was thinking, oh my gosh, well, I think it's difficult conversations even with yourself and using the profit and loss statement as a guide, really, not as a guide, but as a helpful barometer to have that conversation. It's a conversation starter and it sounds like for you and your organization, you really act more as a guide to help people look at that story and be able to have that conversation. I'm wondering, because you had a phrase that resonated with me when we talked about this, and I'm hoping you can elaborate on it. What do you mean when you say that many agency owners feel like if they can make payroll and have money in the bank, then that's all they need to do when it comes to the profit and loss statement?

DC: I think it's really just probably one of the... When you're being pulled in a bunch of different directions, like you just described, it's probably one of the easiest, like most accessible way to like gauge the financial success of the business because you can open your banking app on your phone and say like, hey, there's this many dollars left over after payroll came out. Like, okay, that's where I need to be right now.

And that's, that is, I mean, looking at that cash balance and also, you know, not to get into the accounting vault weeds, but sometimes the profit and loss isn't telling you that cash story as well. So there's like different, there's the cash aspect of it, then there's like the profitability aspect of it, but understanding like how those work together. You know, really take some of that fear of the unknown away and I would say the more you engage with it, the more that it becomes familiar and easier to look at the profit and loss. And then going back to...Just, you know, thinking about like a home care agency owner, a lot of the times that is like their livelihood. So their personal and their professional like success and wealth are like very closely intertwined. And so the performance of that business oftentimes like can impact lifestyle.

And I think as part of that, there's this feeling around like the books, as people will say, of like pride or like, I don't want maybe something to be seen that, you know, is happening or, you know, just this guarded feeling towards it, which is completely understandable. And I always say that we're accountants, but we and we were like strategic partners and we lead strategy sessions with our clients. But sometimes it feels like we become therapists because we're seeing like things that are going on in those books that like family members might not even know about. So there's balancing like, yes, there's the business aspect of things and like responsibly we should be looking at, you know, the financial statements. But then there's also like that personal piece of it that we have to tap into and understand like, this person did this, this and this to get to this place right now in terms of like financial success. And so we need to like appreciate that, understand it. And then like, how do we help guide them, as you said, you know, to continue to grow and build on that success.

RB: That's so good. I'm thinking already in my brain, I'm going, oh my gosh, we need to make another podcast on personal stories around and how they're crafted through the profit and loss statement. That's actually what I thought of when I thought of a P&L. I go in, okay, sure, there's numbers and that can be daunting, but really, it's a story.

It is a story and thankfully you have individuals like yourself that are able to hold people's stories well. Not what I was originally intending to talk about, but so glad that we went to that, we went down that way because what I, if I was to go back to the path that I was thinking of originally, I think the word I want to go back to is clarity. That's what I have found with our conversation together is really for you, Dana Charumbira, is you are looking to provide clarity. And it's interesting you bring up some of the differences, right? You were talking about cash and then income and some of the differences between that.

And I want to get into the meat potatoes of it, which is a phrase that may be, you know, that may not be as noticed, but is absolutely important, which is gross margin. I mean, if you were to stand on a soapbox and from some of the interactions that we've had, I'm almost sure that that is one of the soapboxes that you're going to stand on and really let people know about is the correlation between gross margin and the fact that it is truly the driver for everything. So can you explain a little bit more about that and why this is a hill for you and why it's so important to you?

DC: Yeah, so kind of just to reinforce the reason I find it to be so important is we looked at profitability. So like bottom line return on sales, which is just a measure of like income relative to your revenue, which is a lot of the times like a measure of success, you know, after you've paid all your bills. And so the higher the return on sales, the better the business is doing.

And one of the drivers of higher return on sales was a higher gross margin, which makes sense because that's like a bulk of home care, right? It's the people that are delivering the care. And so the more that we can improve our gross margin, the more that we have to cover our overhead costs and grow the business or, you know, do it, what needs to be done to improve the bottom line.

And so we focus heavily on gross margin as the industry does, and I'll just define it quickly just to kind of make sure we're on the same page with how we think about it, which is pretty in line with industry standards. So it's caregiver wage, the employer tax on that, which we assume to be 7.5 to 10, sometimes 11% depending on the state, and then your workers' compensation associated with that wage that's being paid.

There's like other minor things that'll flow through there. So like if there's supplies or, you know, merchant fees that you're paying, but the bulk of it is like that caregiver wage and the associated cost for delivering care. And so focusing on getting that, we like to see that 40 to 45%, which is usually you're taking your caregiver wage and doubling it as like your sort of starting point for what you're charging clients. And again, that varies based on like the tax and your workers' compensation rate that you have in there as well. But really starting to, you know, track that over time, because you can do like a snapshot of it and say like, here's where we're at right now.

And that's fine, but like really we start to look at that over time and then understand like what's driving that, the levers behind it, so that the agencies can like make more informed decisions.

I can give a couple of examples that I think help bring that to life a little bit, just because it kind of, I think sometimes accounting sounds very theoretical, but then when you like bring it into practice or like how a business owner would use that information. So when I'm looking at a gross margin, I'm thinking, okay, in home care, really, there's a few drivers, which, and I don't want to oversimplify it, but you have your volume of hours, you have your price per hour on like your income side.

And that's typically what makes up your revenue fluctuation. And then on the cost side, you have your caregiver wage as the main driver, because everything else is really a function of that. So we oftentimes track like what's the average price per hour you're charging clients and what's the average pay rate per hour you're charging or you're paying your caregivers.

And I would say there's actually a lot of meaningful conversation around both. But what I find what we uncover more is like on the pay rate per hour is when we present an average pay rate and we don't layer on like, it's not just the total loaded cost with the employer tax and the workers comp. It's purely just like, here's on average what you pay a caregiver per hour in this time period that we're looking at. We get pushback a lot from owners. They're like, no, you're telling me my average is $22.50. Our starting point is $21 an hour. That's what we pay our caregivers. And it's like, well, let's take a look at the data.

Okay, well, we went into overtime. So, you know, overtime was 10% of total cost, and we can only pass on 5% of that.

Another big one is there'll be call-offs, especially with the caregiver shortage and like just, or if you're going up in hours, you don't have the caregiver bench to fill those. You're going into overtime or you're paying staff incentives. So you say, hey, there's a call-off, there's a last minute shift that came up because we onboarded a new client. We're going to pay 50 cents more an hour than our, you know, $21 standard.

All these things add up. And so when an owner steps back and they're like, oh my goodness, I thought we were paying $21, we're paying $21.50. It has this impact on my gross margin. And that's when you can start to have conversations with like your scheduling team and, hey, help me understand, like, what are we doing to fill these shifts? You know, how are we going about it? Maybe the scheduler has a favorite caregiver that they're going to, and that person's already in overtime. So then they're making incentive on top of that overtime.

So you're starting to understand like your employees' habits. How do you coach them? How do you improve what they're doing? Not like it's right or wrong because scheduling is a tough job in home care, but just guiding them and saying like, here, if we did this instead, you know, this would have this impact and here's how you're contributing to the company as well. Same thing on the recruiting side of like the caregiver bench isn't there. You can bring that recruiter into that and say like, here's the number of caregivers that we want to bring on in this period. So that's where I mean, like it starts to tell a story and it starts to help that business owner feel like confident in some of the conversations that they're having, because it's not just from like a theory that they have. So that's one example on like the price per or the pay rate per hour side. Price per hour, I would say is a little bit like.

I do think everyone's trying to improve that and push that up as much as possible, but the agencies that are more strategic about it will say like, okay, we know we have to bring our caregiver rates up by this much based on merit or based on the current labor market. What do we need to look at in terms of like incoming price per hour for clients? Or how do we bring up like our current client's price per hour to make sure we're protecting our margin? So that, yes, I will go on for a long time about gross margin, but those are just some like examples that are relatable around like how an agency owner, when they start to kind of understand and get comfortable with those numbers, can, you know, start to make informed decisions and have conversations with their staff.

RB: I want to go back to a concept and I appreciate you sharing that. And you had mentioned when it comes to caregiver rates and how it relates to that double amount. So I was hoping you can elaborate a little bit more on bill rate versus caregiver pay rate, and then and how those two relate.

DC: Yeah, that's a great question. So gross margin is typically like a percent, so it's 40 to 45 percent as a target. And then your gross profit is the difference between your price per hour that you're charging your client and the pay rate per hour that you're charging your, that you're paying your caregiver.

If you basically take that pay rate and double it, so you're saying like, well, I'm paying my caregiver, let's use a simple example, $20 an hour, and I'm going to bill then $40 an hour. When you load on the employer tax and the workers' comp, then you typically will hit that 40 to 45% of like that gross margin target on obviously, the higher that price per hour can be, the more like comfort you have with, you know, some of the pay rate. But I think sometimes we also run into you know, if there's a really good reimbursement rate with like the VA pays really well, sometimes people are like, well, we're paying our caregivers more because we're getting paid more. And I caregivers do very meaningful work and there's, you know, I definitely think that there's a conversation around that. But it's also the question is like, you don't want to pass all of that on to your labor cost. Do you want to, you know, see if you can use that to maybe offset like a 24-7 case that you might not be able to double that rate because sometimes the volume of hours makes up for that lower gross profit or gross margin that you might see.

RB: Okay, that's really helpful to consider that. And that percentage is also really, it's very tangible as well. And I think you're taking something from the theoretical, ethereal, accounting vault, intimidating to going, okay, let's shoot for 40 to 45 percent. And that's very,

It's very realistic. Not necessarily realistic, but being able to go, okay, I can see this now. This is a helpful target or goal for me to have. I want to move on to another topic that also seemed to, you really seemed, for lack of a better phrase, you seemed really stoked on this type of topic, which was, you know, I'd go, okay, so gross margin, that is, that's Dana soapbox, but then the other idea, and I suppose they connect, but it's this idea of automation and systems. And so I'm hoping because I think at times we use these buzzwords, right? Like a circle back kind of situation. You're going, all right, come on. Let's start making these things a little bit more, again, tangible, going from the ethereal theoretical to something very practical. But when we had spoken about this, preparing for this podcast, you said, okay, well, one of the topics that was really important to you was that automation and systems set in place. So can you explain that and how they correlate with gross margin or in general?

DC: Yeah, and I love that you're talking about this because there's such, like you're saying, buzzword right now is like AI, and so like AI and automation, like all these things happening, and like they're going to take over all these jobs, which maybe, I don't know, but so I, and I do think about them separately. So like, hey, there's AI and then there's automation, and we try to really, when we first start working with agencies, focus heavily on the automation between their client management system and their accounting software. We pretty much work exclusively in QuickBooks Online because everything talks to it. And then their payroll software and QuickBooks Online. And that sounds like so basic. And I would say maybe 60% of the time there is some connection already between the client management system and the accounting software, but it's not configured in a way that gives that agency like the data that it wants on the accounting side. And what I mean by that is they see like their revenue coming in, but they, if they're working with different payer sources, they might not know that, you know, 50% is private pay, 30% is VA and 20% is other. And so I'll get to why that's relevant when we talk more about like how that plays in with financial reporting. Payroll is like the bigger one and I just think that's because it can feel so...overwhelming. Like if you look at a payroll software configuration to the accounting software, it's called like general ledger interface, which like, I mean, that just sounds like confusing when you think about it, right?

RB: All right, sweet. Yeah, exactly.

DC: And so, and then they start asking you like for your chart of accounts and like, where do you want these things to go? And you know, it's like, I'm not an accountant, I'm a home care agency owner. So wherever you think they should go. And that's even if the payroll software hand holds their way through this. So oftentimes that's a very underutilized feature, but so critical. The reason that these are critical for us, like underlying sort of structures and foundations because that's how we get information to our clients very timely. So one of the kind of jumping back to the opening question or like the opening kind of conversation we were having around, you know, I don't look at my P&L. Well, oftentimes that's because people don't have it done for like 3 months after the month's done. So you're like, hey, I don't care what happened in January, I'm in April, I'm almost in May.

And so if we can click a button and get that information into the accounting software, like we're able to turn around financial statements in a time period that makes sense for that owner to like really look at and say like, okay, I know that this happened two, three weeks ago, I can still do something about it today. So that's why those like automation pieces are important. And then going back to like looping in, you know, why is that client management software information coming into the accounting vault software and like a structured way?

So we'll look a lot at, you know, like what is your payer source mix over time and what are the reimbursement rates or prices that you're charging. So like if you're working with the VA, typically the reimbursement rate is at the private pay level or higher. You have the private pay segment and then maybe you have some sort of Medicaid or another reimbursement source.

And so when we start to look at like the shift or the difference month on month of what revenue is coming from those payer sources, we can track like, okay, your price per hour is going in this direction because the revenue is coming from these different sources. And that's how we know like why gross margin is going one way or the other. So I think of it as this like layering of like foundational, just like getting the data into the accounting software. Okay, let's get it organized and in a timely manner and then the top is like, let's actually have, you know, numbers that an agency owner can look at that aren't just, you know, numbers on a profit and loss. It's like, hey, because you signed on this contract, it did this to your price per hour and therefore like your gross margin went up or down by this percent. You're making this much more money this month because of it. So sounds super simple to like connect the systems, but getting that done can like unlock this whole new level of like timely reporting.

RB: You're absolutely right. So you're right that it is simple, but at the same time, I want to go back even further and you were talking about stories, right? And this goes back to the story and appreciate professionals like you that are able to hold stories well in that way and just find ways to make those connections.

As we're sort of landing the plane here, one of the things I absolutely love to do is just, and it sounds like you and I both resonate with connection and human connection. And so a question I like to ask my guests to add a human element to it is, what is something hobby interests that your professional network would be surprised that you are interested in right now.

DC: Probably a surprise that I don't talk about often is I do, well, I'll say do because I'm getting back into it. I have a three-year-old, so I kind of got off this for a little while, but endurance road cycling. So I've done like very long endurance rd cycles, predominantly when I was living abroad. So I've done three major races a year, for like a series of a few years. So that was like, for me, a very like therapeutic being on that bike outside is just like an incredible experience. Cycling in a race with like a group is very cool just to see everyone like working together and just like the mental perseverance that you have to have when it's like wind in your face.

You're like, why is the wind coming at me right now? Who put this wind gust right here? Is this cycle over yet? But like you persevere through it and that feeling afterwards is just like so amazing. And just being on a bike is like so much fun. I always say that.

I couldn't, I jokingly say, because I swam and played water polo when I was younger, I can't do land sports, like I'm not good at running, but like being on a bike is just like such a fun activity for me, and I just find a lot of enjoyment from those long cycles.

RB: Love it. When you're saying long distance, in my mind, I'm like 20 miles is really long. So what, oh, you're laughing. Oh, okay. Sounds good. Like, okay, but what's the distance that you've gone that would be considered long?

DC: Yeah. So this, no, no, that's like a, that's probably for me right now that is a long ride, but we, so there it was in kilometers because it was overseas. So like the longest one was like 110 kilometers and I'm trying to think that's probably like 70 miles maybe if you divide I think yeah.

RB: Yeah, that's not, okay. Yeah, my legs would cramp and I would need a lot of those little Gatorade gels.

DC: Yeah, those help.

RB:  Gosh, well, thank you so much for, you know, it's so interesting. I was thinking, okay, accounting. I'm in the same boat. I'm going, oh my gosh, accounting. It's so theoretical. How can I even, make this practical or tangible, and then you said stories, and you really tied it all in together very well, and I feel like I could talk to you for much longer about many different things. My brain is making all sorts of connections and different ideas for another time. But gosh, I appreciate you taking the time, Dana.

If people want to connect with you or get a hold of you somehow, what's the best way for people to reach out?

DC: Yeah, so our website is thehomecarecpas.com. I'm dana@thehomecarecpas.com on email. But there's, we're on LinkedIn. We're very active and very visible. So really out there. Yeah, for sure. Happy to have chats. We love talking to new like owners and hearing what's going on in their agency and how we can help. So just really open to conversations.

And I will be at CAHSAH, so I'll be in the desert in Palm Springs, end of June.

RB: Perfect. Be sure to say hi to Dana at CAHSAH. Dana, thank you so much. I really appreciate it.

And thank you 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.

Staying Safe in the Heat: Preventing Heat Illness for Employees

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

As we enter into the summer months, warm weather conditions create a new level of risk for employers.

High temperatures and greater sun exposure can pose a danger to employees working both outdoors and indoors. Proper heat protection and preparation are necessary to keep employees safe.

The Occupational Safety and Health Administration (OSHA) reports over 70% of fatalities from heat illness occur in the first week of work. OSHA attributes this statistic to a lack of acclimatization, or proper adjustment to the changing temperatures.

Training employees on how to build tolerance to and protect themselves from the heat, and what to do if a person is showing signs of heat illness is essential when temperatures are high.

Rancho Mesa has a number of training and reporting resources available for clients through the SafetyOne™ platform and the RM365 HRAdvantage portal. These resources include:

SafetyOne™

• Heat Stress Online Training Courses

• Toolbox Talks for weekly safety training

• Observation Reports for documentation and issue identification

• Mobile Forms to collect safety data

• Heat Advisories that can be sent through the Company News function

RM365 HRAdvantage™ Portal

• OSHA 300 logs for incident documentation

Register to attend Rancho Mesa’s Heat Illness Prevention workshop on June 12th, 2026 at 9:00 am.

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

Rising Impact of Cumulative Trauma Claims in California Workers’ Compensation System

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

Claims involving Cumulative Trauma (CT) injuries are growing significantly, across California.

Data collected by the Worker’s Compensation Insurance Rating Bureau (WCIRB) shows growth of these types of claims accelerated in 2022, 2023 and 2024. The WCIRB now estimates that more than 25% of indemnity claims involve CT.

The Los Angeles area continues to see the largest concentration of CT claims; however, the recent increases have been observed state-wide.

Most CT claims are filed after an employee is terminated. Based on WCIRB claim survey data, approximately 60% of recent CT claims were filed post-termination, that’s an increase from prior studies which indicated only 40% of CT claims were filed post-term.

The rise in claims involving CT is having real effects on costs to employers, and underwriting losses.

The WCIRB reports combined ratios have exceeded 100% for the last six years and have been above 125% for the last two years. In accident year 2025, higher claim frequency, rising average medical costs, and increasing average allocated loss adjustment expenses (ALAE), led to a combined ratio of 129%, marking the highest ratio in over 15 years.

Rancho Mesa is seeking to reform California’s CT claims situation by drafting and sending letters to legislators asking for reform. If you are interested in taking action, templates are available addressed to California Senator Lola Smallwood-Cuevas and California Assembly Member Lisa Calderon at both their regional and capitol offices.

A Strategic Approach for Insuring HVAC and Plumbing Contractors in California Requires an Industry Specialist

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

The insurance landscape that California plumbers and HVAC contactors currently face looks noticeably different than that of recent years. A prolonged period of sharp economic and social inflation has driven up claim costs for carriers, forcing many to exit or reevaluate their positions in the market. As carrier appetite shifts and capacity is constrained, contractors are largely experiencing frustration arising from limited carrier options, reduced coverage, and rapidly rising insurance premiums.

In this challenging environment, renewal outcomes are heavily influenced by carriers’ understanding of the specific business’ risks, as well as the processes and procedures used to effectively control them.

Mechanical contractors rely on their insurance broker to represent them and their operations to carriers. Partnering with an insurance broker who specializes in these trades allows HVAC and plumbing contractors to highlight favorable characteristics of their risk profile and provide more detailed insights that address potential underwriting concerns.

Proactively addressing underwriter concerns also provides the opportunity for the contractor to learn how to build or enhance their risk management strategies for common claims within their industry, leading to more favorable pricing. A specialist broker can help their clients:

• Strengthen their fleet safety program to reduce accidents within their service fleet,

• Understand the importance of a thorough subcontractor agreement which can direct liability to the appropriate party, and

• Closeout procedures to mitigate the risk of damage from latent defects.

While the ability to favorably represent a mechanical contractor’s risk profile is beneficial, knowing which carriers to approach  is also critical. As carriers reevaluate their market positions, their willingness to entertain an HVAC contractor working on rooftops, a plumber serving HOAs, or a refrigeration contractor involved in the life sciences industry may be impacted.

A specialized broker regularly has conversations with carriers about their appetite and proactively recognizes subtle shifts in the market. Working with a broker who specializes in your industry enables them to develop an insurance program tailored to the specific needs of the individual business.

When using a broker who is a generalist, coverage gaps can arise in a variety of ways that jeopardize a contractor’s financials, like:

• A residential exclusion for a plumber performing work on custom homes,,

• Inadequate installation floater limits for an HVAC contractor installing custom designed chillers,,

• Water intrusion claims that lead to mold, and

• Coverage limitations like work performed by subcontractors or work at height.

Rather than relying on a generalist using a generic mass marketing strategy that leads to market fatigue and diminished leverage, aligning with a specialist broker allows mechanical contractors to approach renewals strategically and to consistently secure more favorable outcomes.

To learn more about the ways our specific focus on plumbing and HVAC contractors can benefit you, contact me at mgorham@ranchomesa.com or (619) 486-6554.

“All in Together”: Construction Safety Week 2026 Kicks Off May 4

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

May 4-8 is Construction Safety Week. The annual event is designed to improve industry safety culture through increased awareness and access to resources.

This year’s theme is “All in Together,” with a focus on three pillars: Recognize, Respond, and Respect all with the goal of preventing serious injuries and fatalities on high energy, high hazard job sites.

Recognize

The first step in addressing serious risks is identification. The Construction Safety Research Alliance finds construction workers identify only 45% of the hazards they face during typical planning briefings. Increasing recognition of high energy and high hazard activities can improve ability to respond quickly to a dangerous situation, and ultimately prevent serious injuries or death.

Respond

Once hazards have been identified, the next step is to respond. That means putting direct controls in place before any work begins. When planning turns into prevention, teams are able to eliminate, substitute, or engineer out serious risks.

Respect

Respecting job site hazards means taking seriously all potential risks to health and safety. Taking the time to plan and implement direct controls, and adapting to changes as they arise builds and strengthens a safety culture that lasts.

Digital safety resources are available for organizations participating in Construction Safety Week.

A Planning Playbook is available for download and includes information on how to organize events and communicate goals with leadership and employees. Sample agendas, social media resources, and daily toolbox talks are available throughout the week.

Toolbox talks and safety observations are also available through Rancho Mesa’s SafetyOne™ platform.

Building a Scalable Safety Program with SafetyOne™ for Landscape Professionals

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

Rancho Mesa provides our clients the key components for building the infrastructure of a modern-day safety program through the SafetyOne™ Platform.  By fundamentally layering your safety program through SafetyOne™, you will build a system that can keep up with your growth, measure your goals, and keep your organization engaged.  

In a report from Travelers Insurance Company titled, “2025 Travelers Injury Impact Report,” they noted within the last 5 years, more than a third of all injuries stemmed from an employee’s first year on the job.

Establishing an effective safety program can help prevent new-hire injuries. Avid SafetyOne users saw a 27% decrease in claim frequency over a 3-year period by implementing effective onboarding of their safety program, performing ongoing safety activities and maintain compliance:

Onboarding

The ability of an organization to effectively hire and train new employees is critical to maintaining a safe workplace. Safety onboarding ensures that site, equipment, and tool hazards, along with policies, processes, and emergency response protocols, are clearly communicated and understood to meet core safety expectations.

Ongoing

Manage your safety program on a regular basis with near miss reporting, job hazard analysis, tailgate training and more. By accessing your mobile forms and observations within SafetyOne, you are able to manage your team’s ongoing efforts to stay engaged.

Compliance

Pulling reports can be critical to evaluating the program you established and an efficient way to gather critical information when you need it quickly. This allows you to monitor the standards that are in place to help prevent injuries, ensure expectations are clear and change behaviors which ultimately impacts risk predictability.     

Build a safety program that works for you today that has the ability to adapt, grow and change with you. Talk to your broker or client technology team to learn more about a SafetyOne-based safety program.

Representing Independent Agents in Washington: Key Legislative Takeaways from the Big “I” Conference

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

On April 22-24, I had the opportunity to attend the Big “I” Legislative Conference in Washington, D.C. The Big “I” is the national organization affiliated with IIABCal and IIAB San Diego. It represents and supports independent insurance agencies at the federal level and maintains a strong presence in Washington, advocating tirelessly on behalf of independent agents and our carrier partners.

Each year, IIAB San Diego sends the President‑Elect to its national conference. This year, I attended as the President-Elect, alongside IIABCal and leaders from other local California chapters. During the conference, we received detailed briefings on key legislative issues and bills that the Big “I” is actively supporting. In addition, we were asked to engage directly with our representatives to help build awareness and support for legislation that impacts our industry and, ultimately, our clients.

Our California delegation met with representatives and staff from each of our respective districts on Capitol Hill to discuss these bills and explain their real world impact on the insurance marketplace. Below is a summary of the legislation we covered.

Legal Reform

Rising litigation costs are directly increasing insurance premiums and limiting market availability. The rapid growth of third‑party litigation funding (TPLF), particularly by foreign entities, lacks transparency and benefits from unfair tax treatment.

We urge support for:

• The Tackling Predatory Litigation Funding Act (H.R.3512 / S.1821) to ensure litigation funders pay fair tax rates and close foreign tax loopholes.

• The Protecting Our Courts from Foreign Manipulation Act (H.R.2675 / S.3180) to require disclosure of litigation funding arrangements and prevent foreign exploitation of U.S. courts.

Disaster Mitigation

Increasingly severe natural disasters are disrupting insurance markets, driving premiums higher, and increasing reliance on federal disaster aid. Proactive mitigation reduces losses and long‑term costs.

We encourage Congress to:

• Advance the Fix Our Forests Act (H.R.471 / S.1462) to reduce wildfire risks through improved forest management and infrastructure hardening.

• Support the Disaster Mitigation and Tax Parity Act of 2025 (H.R.1849 / S.336) so homeowners are not taxed on mitigation grants.

• Pass the Fixing Emergency Management for Americans Act (H.R.4669) to modernize FEMA and streamline disaster response.

Flood Insurance

The National Flood Insurance Program (NFIP) remains essential for homeowners and businesses in high‑risk areas. Repeated short‑term extensions have created uncertainty and left consumers vulnerable.

We urge Congress to:

• Reauthorize the NFIP on a long‑term basis.

• Support the Continuous Coverage for Flood Insurance Act (H.R.6620), allowing consumers to move between private flood insurance and NFIP policies without penalty.

• Protect the Write‑Your‑Own program and avoid proposals that weaken or eliminate NFIP.

Terrorism Risk Insurance

The Terrorism Risk Insurance Act (TRIA) provides a proven, cost‑effective federal backstop that allows insurers to offer terrorism coverage for an inherently unpredictable risk.

We strongly support a clean, long‑term extension of TRIA to maintain market stability, protect taxpayers, and ensure coverage availability, especially ahead of major national and international events.

Health Care

Employer‑sponsored health insurance remains the backbone of America’s health care system. Stability, transparency, and affordability are critical.

We encourage Congress to:

• Protect the tax exclusion for employer‑provided health insurance.

• Pass the Patients Deserve Price Tags Act (H.R.5582 / S.2355) to require clear, standardized disclosure of actual health care prices.

• Support expanded access to telehealth and reduced administrative costs.

Please reach out to me at jhoolihan@ranchomesa.co or (619) 973-0174 if you have questions about our efforts in Washington.

Construction Risk Management in Action: Century Painting Making Safety A Priority

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

StudioOne™’s Episode 603 was packed with safety knowledge as I had the opportunity to interview and spotlight Rancho Mesa’s long time client, Century Painting Corp.

In this episode, I had the pleasure of interviewing Brian Escalera and Eddie Lopez with a main focus on safety, work family, and project pride.

Brian is the son of the founders, Rosa and Arturo Escalera. His insight into what it took to build Century Painting is invaluable. In our discussion, Brian dove into some projects that he is personally proud of and also expressed the importance of high level synergy that sparks innovation daily in the Century Painting office.

Eddie Lopez is their full-time safety director who lives, breathes and teaches safety daily. Eddie was Rancho Mesa’s first ever Safety Star™ recipient and he proudly earned the certification in 2017.

In our discussion, Eddie talked about the transition in teaching safety topics he has witnessed as they are consumed by the newer generation. Hands-on over written-word seems to really drive it home. He also reminisced on projects that are visible from the freeway, standing as quality finished work performed by Century Painting.

This podcast interview intertwined a great conversation regarding safety, the topic of work families becoming real families, and the challenges faced in the world of construction safety.

If you enjoy what you hear, please share this episode and subscribe.

Well‑Being at Work: Observing Mental Health Awareness Month

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

Since 1949, May has been recognized as Mental Health Awareness Month. It is a time to raise awareness on mental health and share resources within your organization.

According to the Centers for Disease Control and Prevention, over 50% of the people in the United States will be diagnosed with a mental illness at some point in their lives. And, the World Health Organization (WHO) reports conditions like anxiety and depression lead to a trillion dollars of lost productivity worldwide, every year.

Both employers and employees benefit when mental health is addressed in the workplace, and when proper resources are available to support staff members. In fact, the WHO also found that for every $1 invested into treatment for depression and anxiety, there is a return of $4 in improved health and ability to work.

Mental Health resources are available in the RM365 HRAdvantage™ portal, including law breakdowns detailing what kind of mental health coverage employers are required to offer, Q&As that cover common questions about employee mental health, and guides outlining ways to support employees’ mental health.

Some of the ways our HR experts recommend employers provide support to their employees include:

• Providing time for employees to slow down and rest

• Offering paid time off, mental health benefits, and flexible schedules

• Offering an Employee Assistance Program (EAP)

• Making accommodations when possible

• Creating spaces for non-work related connection

• Promoting good mental and physical health in the workplace

For assistance accessing these resources, contact your client technology team. Rancho Mesa clients can also submit HR questions to a live expert through the HR portal.

New State Overview Screen in the RM365 HRAdvantage™ Portal

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

Staying in compliance with state laws is key to an organization’s success. Rancho Mesa’s RM365 HRAdvantage™ portal is making compliance easier for business owners and HR managers through the new State Overview screen.

Accessing the State Overview Screen

The State Overview screen can be found under the HR Compliance tab.

Hover over the “HR Compliance” in the navigation bar and click on “State Overviews.”

You will then see an interactive map of the United States. On the left side of the screen, you can switch between a Map and a List view.

Select the state you want to view an overview of.

State Overview

Select a state from the map or list to view the overview.

The overview includes:

• State minimum wage rates and laws

• Key laws specific to the state you have selected

• Toolkits for hiring, recruiting, and termination

• Recent law alerts and updates

• List of all state-specific laws available in the portal library

For questions about accessing State Overviews or other HR portal resources, contact your client technology team member.

Building Protection Through Strong Subcontract Agreements

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

As insurance requirements become increasingly stringent across California’s construction industry, specialty contractors are facing more scrutiny from both general contractors and insurance carriers. It has become standard practice for prime contractors, and sometimes project owners, to require specialty contractors to sign detailed subcontractor agreements outlining scope, pricing, claims procedures, termination rights, indemnification, and strict insurance requirements.

The bigger concern is what happens after those agreements are signed. Specifically, how little due diligence is applied when specialty contractors hire their own lower‑tier subcontractors. From an insurance and risk perspective, this gap creates serious exposures.

As a non‑prime contractor, your ability to control a jobsite is limited. You typically do not control the master schedule, access to the site, or coordination among trades. Yet when you hire a secondary subcontractor, you become responsible for their performance, their timing, and their compliance. If a lower‑tier subcontractor fails to show up when scheduled, causes delays or creates safety issues, the responsibility does not always land with them, it very often can stay with you.

One of the most common misconceptions among specialty contractors is that collecting a certificate of insurance is enough. If your subcontractor does not carry adequate limits or allows coverage to lapse mid-project, the liability ultimately falls back on you. The same potential issue can occur if they are improperly classified for workers’ compensation. From an insurance carrier’s standpoint, you hired that subcontractor; if their coverage is insufficient, or disappears, you are absorbing that exposure.

This directly impacts:

• General liability and workers’ compensation claims

• General liability and workers’ compensation payroll audits

• Experience modification factors

• Renewal pricing and carrier appetite

In many cases, if you cannot provide proof of compliant insurance for your subcontractors, your company may end up paying the premium for their payroll, even though they were not your employees.

Most specialty contractors are acutely aware that if they fail to meet a prime contractor’s subcontract requirements, consequences can be severe. This may mean payment withheld or back charges, to liability being pushed downstream or contracts terminated. Yet that same level of diligence is often not applied when engaging lower‑tier subcontractors. This double standard leaves specialty contractors squeezed in the middle where they are held to strict contractual and insurance requirements upstream, while remaining fully exposed downstream.

Whether you use subcontractors occasionally or on a regular basis, having a strong subcontractor agreement is no longer optional, it is a key business protection tool.

A strong agreement helps:

• Clearly define scope and responsibility

• Enforce insurance and indemnity requirements

• Protect against uninsured claims

• Prevent premium leakage during audits

• Reduce disputes with both carriers and prime contractors

Most importantly, it helps ensure that risk is allocated fairly and intentionally, rather than by default when something goes wrong.

In today’s California construction market, insurance carriers are paying close attention to how risk is managed at every level of a project. Specialty contractors who lack strong subcontractor agreements put themselves at risk of uncovered claims, higher premiums, and long‑term insurability issues. Working with an insurance broker who specializes in your trade, alongside a qualified construction attorney, can help ensure your subcontractor agreements align with your insurance program and business objectives.

If you have questions about subcontractor agreements, insurance requirements, or how these issues may be affecting your premiums and renewals, feel free to reach out to me at (619) 438‑6900 or ccraig@ranchomesa.com.

Underbillings and How They are Viewed by the Surety

Surety Group Leader Andy Roberts sat down with Marc Henry, Region Vice President for Sompo International and Damian Pintor, underwriter in the Western Region for Sompo International. They shared valuable insight about underbillings in the construction industry and discussed how surety companies handle them.

Andy Roberts: 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, Andy Roberts, and I’m joined by Marc Henry, Regional Vice President for Sompo International and Damian Pintor, who’s an underwriter in the Western Region for Sompo International.  Welcome to the show, guys.

Marc Henry: Thank you.

Damian Pintor: Thank you. Thanks for having us. Yeah, glad to be here.

AR: Yeah, thanks for making the trip down. This is going to be a lot of fun. We're going to be diving into an important topic here kind of regarding underbillings and how they're viewed by you guys on the underwriting side. But before we get into that, why don't you guys give me a little background on what you guys do, how you got into the industry?

MH: So my name is Marc Henry, and I am the Western Regional Vice President of the Sampo Contract Surety in the western part of the United States. So I oversee all of the operations west of the Mississippi, and that includes seven regional offices. And one of the best things about my role is I get to work with a really talented and exceptional group of people that are committed to working with our producer partners and the success of our contractor clients.

AR: Yeah, that's great.

DP: Yeah, my name is Damian Pintor. I've been with Sampo now for four years, straight out of college. And I kind of stumbled into the industry just as straight out of Cal State Fullerton, majored in risk management and insurance, looking to go into insurance underwriting, came across this thing called surety. And then from there, I kind of figured to fit my strengths a little more and kind of went down that rabbit hole of getting into surety and bonding itself and no looking back for me.

AR: Yeah, I feel like that's one thing whenever you know I hear about your background is I’m a little jealous of that you found it right out of college it took me eight years of working in insurance to realize the surety opportunity is going to be way better and such a much more fun industry that I feel suits myself as well too. So yeah that's great so let's jump into kind of what we're going to discuss here and so you know from a basic standpoint, like what are underbillings? That's what we're going to kind of dive into here. If one of you guys want to just give us a basic rundown of what that looks like or what those are.

MH: Sure, I'll jump in there. So basically what underbillings are is it's the difference between the work that a contractor has completed and what they have billed for. So essentially it's like a contractor saying, I have completed so much work, but I've yet to bill for that work. So that underbilling then sits on the balance sheet as an asset representing money that the contractor is going to receive in the future.

DP: Hopefully.

MH: Hopefully. It's a great point. That's what we're here to talk about. I didn't want to get too far into it, but that's a great point. Absolutely.

AR: That's the thing I think they look at it too is like most people that don't really understand it look at it as just like it's on their current asset. It helps their working capital. But like within relation to working capital, like what do you guys, how do you guys dive into it more deeply?

DP: Yeah. And I think when it comes to in relation to working capital, I mean, first of all, it's going to be shown, it's not going to say underbilling, right? It's going to show as cost in excess of billings. And that's going to be classified under the current asset section on your balance sheet, but also on your work in progress report as well. So I think that's important to know. And so when it comes to looking at it that way, I mean, the way we analyze it, you know, we'll typically take note of those larger underbillings that may be present on their WIP reports and at the beginning stages of those project.

I think it's important to at least make note of you know what large ones outstanding and then track those as you know you get future statements and WIP reports too really analyze you know how that billing process is going and I think for us where we really start to analyze and make adjustments is going to be for those late stage underbillings. And when I say late stage that's going to be projects that are in your back half of completion. So that'll be 80 to 85 percent complete or more. When we start to see those underbillings still on there that's typically when we'll start to ask the questions we'll request updates or what's going on there because for us looking at it when you have those underbillings at the beginning stages I think that's completely normal.

But then once you start to get on to the later stages, eventually you start to see that even out and catch up. So when you get into that back part, usually there's a story there, and I think for us, that's important to understand. But when you get to those points, that's when we'll typically make those adjustments depending on the notes we get. Or just looking at the numbers because we're only looking at the numbers, we understand there's a whole story to what's going out there actually in the field.

AR: Yeah. So at that point too, so you guys are kind of looking at it and as you're tracking those and you're seeing those late stage ones, that's when they kind of become a concern in your guys' eyes.

DP: Right.

AR: But so when you're having that conversation and getting that story with the contractor, like what would their reply be that would be to distinguish between a healthy underbilling versus like something that's problematic in your eyes with regard to those late stage underbillings?

MH: So it's all about context, right? Because at the core, an underbilling is an asset like we just talked about, but it's not a celebrated one, right? It's not one that we would love to see the makeup of your working capital, but it's how quickly can that underbilling be converted to billings and then be collected and then be converted to cash? And cash flow is really the name of the game.

So when you're saying when is an underbilling sort of healthy or manageable and when is it not? Kind of what Damian said, when you're seeing underbilling sort of pile up and grow as the job progresses, that's where, you know, as a surety, we should be working with you guys and having that communication, that dialogue as to what's going on. What's the context behind this? And not just jump to conclusions because it could be sometimes there's certain contractors or certain trades. They have large, upfront costs that they incur that they're not able to bill for sometimes until they're actually on the job or for however their contract is structured so when that happens they do show up as an under billing but if you understand that that underbilling is good and it's going to be converted over very quickly you're able to kind of say okay I can I see that I understand that we don't have to discount or analyze that. But it's when you get into the late stage of the job, like what Damian said, when a job is almost completed, the job should be almost billed.

AR: Absolutely.

MH: The billing should match the work. And so when you don't have that, then it's like, okay, what do we have here? Is this a billing process issue? Is this a lack of communication internally? Is this a problem between the contractor and their client?

And again, it just all comes down to communication and asking those questions and understanding what's going on behind that.

AR: Do you guys have something you hear most frequently from contractors like what they're reasoning behind or is it just kind of run the table based on different circumstances?

Like when you come to them they might go, “Well we're just behind on billing,” or, “The owner--we're on like the back side of a billing cycle from the owner we missed like a cut-off date,” or something?

MH: I feel like a lot of times most of the time, I feel like what we see is change orders. It's waiting for change orders to be approved, and they're following up on the approval process, but they expect them to be approved. Those kinds of updates of keeping us into the loop, I think, are very valuable to us because it gives us some insight onto why that may be. I mean, there's some added work in there that is expected to be approved, and it's not going to affect their profit margin.

Or there's even approved change orders that we're getting an update on after the fact because I think it's also important to remember that when we get these WIP reports and um and financial statements there's already two to three months that have gone by and you know there's most likely already updates that that are available for us to get. So if there's approved change orders that's I mean that's great I mean then we can mark it as like all right well it's addressed it'll be billed and they should be able to collect down the line.

AR: That all that all makes a lot of sense um what happens in a situation say you get with a contractor and they're like. “Oh well this is an internal issue we're way behind on our billings.”

You know, it's like, does that affect in your guys’ mind, like bonding capacity? Because there's like now there's like some sort of management issue maybe or processes issue?

MH: So, yeah, sometimes it is a personnel issue. I mean, you know, at the end of the day, these companies are run by people and, you know, life happens. Right. And so we've had situations where the person that's responsible for billing is out, you know, medical leaves, things like that. So. There's legitimate reasons as to why they fall behind.

But I think the contractors who make it a priority, make the billing a priority, and really take a proactive approach in staying on top of that help to avoid running into those issues. Sometimes it's converting software. They're changing from different softwares, and there's issues that way. And again, I'm trying to provide you where these are legitimate reasons where it's, you know, from a surety standpoint we can hear that we can understand that and we know that there's not an issue out in the field, there's not an issue bigger than, you know, what's going on internally because again one thing to just to kind of come back to on the underbilling is because that contractor has performed work and they have yet to bill for it essentially who's funding that job now, right? It's the contractor's money funding that job and when you have that, back to what you were saying earlier, Andy, it starts to squeeze their working capital. And I think that creates, from a surety standpoint, greater risk exposure.

AR: Yeah, well, now we're looking at more of a liquidity issue.

MH: Exactly.

DP: And I think going back to Marc's point, like underbillings themselves, they're not generally like a bad thing. At the end of the day, they're an asset. They’re a current asset looked at that way on the balance sheet. But the other side of that is when you as a contractor are heavily reliant upon those underbillings for the makeup of your working capital and your net worth then on the surety and bonding capacity side then we're heavily reliant upon the updates we're getting regarding any late stage underbillings and, you know, the quicker you can turn that into you know being able to bill and collect I mean we can't ask questions on cash right cash is cash.

AR: Get a bank statement.

DP: Yeah, exactly. Yeah. So we're not going to ask questions there. So I think that's just an important thing to know. And, you know, it could affect your liquidity overall. So, yeah, I mean, I think I think it's important to take that in consideration that, you know, they're not a bad thing, but if not addressed appropriately, you know, it could lead to a problem.

AR: Yeah. Well, I think you said it's not a bad thing, but, you know, it's a marker or something to pay attention to that. Could be a sign of how things are trending or what's going on. Like if it's a consistent thing, that's going to affect their, you know, liquidity down the road and then ultimately their bonding capacity.

MH: Exactly.

AR: How deep of a dive do you guys do, you know, your initial underwriting when you're looking at, you know, a new submission and, you know, you're tracking all these stuff. Like, does that go into your mind right away of like what kind of capacity you guys could maybe offer? Or is it, you know, are you guys looking to go to the agent with a lot of questions about underbuildings right away, to kind of figure out what the issue is up front?

DP: Yeah, and I think there's a difference too when we're talking about new submission versus long-time existing account. With the new submission, we're getting a few periods, a few years’ worth of financial data you know job schedules so we're able to properly trend um those jobs individually and the underbillings individually so we can look at the earliest statement that we have and some of those jobs and what those underbillings look like and then how they progressed.

So, I think when it comes to that um you know that plays a that plays a factor into how we look at it because if you if you see that the project margin has hold that has held across you know like two three four years of data depending on how long the project is then you know that goes to show you that historically this contractor does a good job of managing their billings, being able to bill and collect so I think I think that certainly helps and I think that's the deep dive that we typically take.

It’s different when you're jumping into a new relationship but at the same time you have you know a strong relationship with your agent that you can trust so I think you know that's the deep dive that we take. And there's a whole other side of you know if it's an existing relationship then you have a long-term understanding of that contractor's history.

MH: Exactly I was, and that's what I was going to add to that is that when it's an existing relationship there's a trend, there's a historical pattern, there's questions that we've asked in meetings so if that contractor is historically showing underbillings but those underbillings do get billed out. We have a track record we can look at and we can hang our hat on our decisions, knowing that they don't typically have issues with their underbillings not being billed and collected.

AR: Right. Absolutely.

MH: Whereas with a new submission, you're getting to know that account. So it's, you know, yes, you can look at the financial information, but it definitely it all comes down to communication. And it's the communication that we have with good producer partners like yourself. But it's also the open communication that we have with the contractors too. And just being able to ask those questions is, “Okay, tell me about this underbilling. You know, why are you essentially funding this job based on what we're seeing? And you've been carrying this for a while and it's starting to grow. Walk me through this and when you're going to get collected,” because, you know, it's important to us, but let me tell you, it's important that contractors too, because it's immediately hitting their cash flow.

AR: Yeah, absolutely. Just something kind of off the top of my head. In a situation where it's like, you know, there's maybe a dispute on the job near the end and the contractor comes to you and says, “Well, I think I'm in the right here. I think I'm going to collect this. I'm going to get this back from the city or the entity.”

Like, do you take them on their word? Do you look for any documentation from them or anything along those lines that help ease it? Or do we take that out until we know it's going to get realized for sure?

MH: That's a good question. I think what we try to do is obviously we want to hear a contractor story and we do want to take them for their word. But, you know, usually disputes and things like that, there's a there's a time frame that's going to have to play out. So even if they're right, that money is not going to be something that's coming in the door tomorrow.

So we have to apply some type of something to our analysis as to, okay, how are we going to treat this? Because this is not something that's going to be converted to cash tomorrow. So we may apply some kind of discount. But what the best tools that we have as a surety is kind of what Damian mentioned is the job schedules, the WIP report, being able to produce that timely. And quickly and accurately helps us kind of gives us an indication of that, you know, the contractor's health, being able to see those underbillings and what's going on there.

But also documentation. Hey, this was a change order that was approved, but now there's some kind of dispute on it. Like any kind of documentation like that helps. And I think the more documentation that we can get helps us make a much more informed decision. And it's better for the contractor because then we can choose, we’re making an adjustment to our analysis that is a little more accurate than based on just an amount we see on the web. And we just, if we have no communication, then we're left to just say, okay, we just got to discount this whole thing. We don't know when they're going to collect this.

AR: Yeah. No, I guess that probably leads into the next question too, of like what separates. It's a good contractor who manages their underbillings well versus those who might struggle, like documentation, financials. Is there anything else you guys can think of off the top of your head?

DP: Yeah. So, I mean, going back to the change orders thing, I think documentation of approved change orders, you know, that certainly helps. And then documenting whether or not that long-standing relationship, you know, because when it's when it's long-standing relationship it certainly helps and we know that the contractor is good for their word. When it's a new submission and we're getting to know them then that's completely different I think that documentation of things you mentioned along with the change orders I mean those things definitely help us to get to understand them and their billing process their internal systems which is another key part for us and just overall, you know, get the full picture.

MH: Yeah. I'll add to that, too. I think, like Damian said, it's understanding the systems. And that's why when we, you know, typically most sureties will ask what type of accounting systems and cost tracking and, you know, project management software do you use? Because if you, you know, if you have good systems and good policies and good people in place and you make it a priority to stay on top of your billings. Companies I feel that do that, they usually tend to manage the underbilling process much better.

And again, I don't want to leave here today with the thought process of underbillings are bad because they're not. To the question you just asked, there are times where they're healthy, they're manageable, and there's a lot of sense behind why or good reasoning as to why this underbilling is here. But it is an asset where you've got to be on top of it and making sure that this thing is eventually going to convert and convert as quickly as possible to boostering cash and working capital.

AR: Yeah, it's kind of like you said earlier, too. Like, you know, different trades have, you know, some trades might have more underbillings upfront.

MH: Exactly.

AR: And there's just understanding, like, kind of what's going on there. And that's going to be the case going forward, but they're going to convert it. You know that's going to happen. Any final advice you guys could give to contractors? I know we kind of talked about some of the management stuff, about what they can do to prevent underbillings from becoming an issue with regards to their bonding?

DP: Yeah. I mean, I think from a contractor standpoint, I think it's easy to see or easy to get lost in exactly what the surety is asking of you, especially financially or what they're looking at or their analysis or, you know, whether they set goals to reach a certain financial milestone or, you know, get to a certain point.

But overall, just working back and utilizing, you know, your agent. I mean, Rancho Mesa, you guys do a great job of just, you know, being able to provide that context to not only your surety, but translate exactly what the surety is looking forward to your contractor clients. So I'd say utilizing your agent because they have a plethora of resources that you guys can utilize as a contractor of just being able to be in the loop and what surety exactly is going to look for when analyzing your balance sheet and get you to the program and get the bonding credit that you want. So I think just getting an understanding of that and utilizing your resources is important.

AR: Fantastic.

MH: When I first told my daughter I was doing a podcast and when she found out it was about underbuilding, her excitement sort of left her face. But I think she would have been much more happier if this was about dating and relationships. But I'm going to kind of tie it back together a little bit here.

You know, surety is a relationship, right? And it's a lot more relationship-driven than, I would say, a lot of the other insurance product lines. So to really help in this process, it's really about communication because communication is kind of the foundation of any relationship. So it's having that open and transparent communication, being proactive.

And for contractors, you know, we don't have direct relationships with our accounts, but it's when you have a good surety professional like Rancho Mesa, you guys are very good at being proactive asking those questions you say see the WIP reports before we do and I like how you look at those and you'll see those underbillings and you're asking those questions before we even get that and that's important because we're saving time and we're getting to the core of what's going on, like what's the root of that? Is it something that we all need to be concerned about? Or is it one of those situations where, “Hey you know what it's a part of their normal course of operations it's not something that we need to be very concerned about.”

So I think it's having that transparency, meeting with your clients, having a good surety professional as your intermediary that's working between the surety and the contractor. Those are things that really help to make the process and make working through underbillings really work well.

AR: Yeah, that all sounds great.

Marc, Damian, just want to say thank you both so very much for taking the time to join me today here in StudioOne.

DP: Well, thanks, Andy. Hopefully we didn't say underbillings too many times.

MH: Yeah, really appreciate you, you know, giving us this opportunity. Thanks a lot.

AH: Yeah, this was wonderful. So 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.

Managing and Preventing Workplace Violence Involving Non‑Employees

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

When employers seek to address workplace violence, trainings are often centered around preventing violent acts from occurring in an office environment. But, serious occurrences of workplace violence can also happen outside of an office setting.

Utility or maintenance workers performing jobs late at night, social service workers dealing with patients experiencing mental health crises, or construction workers staffed in high-crime areas are some examples of employees who may be vulnerable to violence by non-employees.

These types of incidents are often recordable under the Occupational Health and Safety Administration (OSHA) guidelines. Section 1904.5(b)(6) of OSHA's recordkeeping regulation states injuries and illnesses are recordable if they occur while the employee was taking part in activities "in the interest of the employer."

If an employee is traveling to and from a jobsite, performing work on a jobsite, or dealing with clients, vendors, or outside contractors when the violence occurs, the incident will likely be OSHA recordable.

Precautionary actions can be taken in order to keep employees safe and reduce the likelihood of a violent incident. OSHA recommends employers establish a zero-tolerance policy. The policy should, “cover all workers, patients, clients, visitors, contractors, and anyone else who may come in contact with employees.”

No matter how you choose to incorporate a workplace violence prevention program into your company policies, training and clear communication are key for proper implementation. OSHA advises employers to “ensure that all workers know the policy; are trained on prevention methods, signs for potential violent behavior, and how to effectively react when an incident occurs; and understand that all claims of workplace violence will be investigated and remedied promptly.”

Workplace violence prevention training can be found in both Rancho Mesa’s SafetyOne™ Platform and RM365 HRAdvantage™ portal.

Other workplace violence prevention resources can also be found on the OSHA website, including specific guidance for health and human services workers.

Discussing The Hidden Levers Behind Lower Insurance Premiums with Drew Garcia and Bill Arman

During a recent interview at NALP’s ELEVATE Conference, RMI Landscape Vice President Drew Garcia joined Bill Arman from The Harvest Group to discuss how landscape companies can take greater control of their insurance outcomes. The conversation dove into practical ways businesses can reduce risk, tighten operations, and make everyday decisions that lead to stronger coverage and more favorable premiums. Fewer incidents in the field, better processes, and a proactive mindset can make a measurable difference.

For business owners focused on protecting margins and building stronger companies, this discussion offered valuable insight, proving that better insurance results are within reach.

Understanding Payment Fraud: Common Risks and Tools to Protect Your Business

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

Payment fraud is a threat to businesses of all sizes and can have a significant impact on a company’s bottom line.

Protecting your business from payment fraud is increasingly important, as scamming tactics continue to adapt to new technology. The Association for Financial Professionals (AFP) reports 79% of organizations included in their annual payments fraud survey reported have been victims of payments fraud attacks or attempts in 2024.

The same survey found that 63% of respondents reported their organization faced check fraud, making it the most common fraudulent payment method in 2024.

Wire transfers were reported as the payment type most vulnerable to business email compromise (BEC). ‍

According to the AFP, BEC scams like phishing attacks commonly include impersonation of a senior executive, vendors or a third-party. These scams use falsified identity to attempt to gain access to sensitive information including passwords, bank information, or credit card numbers. ‍

Effective fraud protection strategies can help insulate your business from these risks, and starts with proper training for employees. When employees know how to spot BEC scam tactics, they are less likely to share sensitive information and put the organization at risk.

Cybersecurity Awareness trainings are available through Rancho Mesa’s RM365 HRAdvantage™ portal. Participants will be taught how security breaches can occur and how to limit these risks.

Join us on Friday, May 1, 2026 from 9:00 am – 9:30 am for the Safeguarding Your Business: Fraud Protection & Smart Payment Strategies webinar.

Essential Steps Non-Profit Leaders Should Take in the Pre-Renewal Process

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

Non-profit organizations and their leadership often rely heavily on their insurance agent’s experience and insight, gained from working with similar organizations, when considering insurance buying options and risk management throughout the year.

Rancho Mesa strongly recommends holding pre-renewal strategy meetings to discuss, at minimum, the following items.

Claims History by Line of Coverage

Non-profits have diverse insurance coverage often spanning everything from cyber liability to employment practices liability to volunteer accident policies. A thorough review of the last 12 months of claims activity will shed light on future pricing as well as claim trends. This conversation should lead the agent to ask what resources can best support leadership, but also broach the topic of new or infrequently used tools the non-profit should consider employing.

Operational Changes that Affect Risk

We consistently ask clients at the pre-renewal strategy meeting whether any operational or programmatic changes have taken place or will be considered in the next year. Non-profit leaders face a changing landscape pertaining to funding, employee retention, and insurance affordability. While funding for a new program or service is often pursued and shared with the agent, the tougher subject of terminating a longstanding program is becoming more common. Non-profit leaders may assume coverage is no longer needed, which is a great time to educate clients on how to insure future claims for incidents that took place in the past.

Coverage Review: Limits, Exclusions, Gaps

Non-profit leaders are excellent at their jobs, but they should not have to be excellent at insurance. A review of the limits of liability can help policyholders understand how coverage is layered and which layers add the most cost. Affordability is now a very real concern. This subject should also promote a discussion about limits and deductibles required by contract versus an anxious board member wanting the highest limits available. Neither approach is incorrect and both warrant discussion. This is also the best time to remind Non-profit leaders of the insurance they do not currently have in the insurance program.

Risk Management and Underwriting Narrative

Knowing risks, such as affordable housing, foster family agencies, and youth programs, are more difficult to place at affordable levels and helping an underwriter understand all programs and the exposure to risk, is now critical to a positive underwriting outcome. Sharing that a high risk program has been terminated can also help an insurance company accurately assess the risk.

The review of recent claims should allow the insured to share steps taken to prevent similar claims from happening. If the claims record is positive, this helps the underwriter understand the internal steps taken to improve their risk profile. The bottom line is applications do not tell the whole story. A well-developed narrative initiates more control over the process.

Renewal Strategy

The agent and non-profit should discuss whether the relationship with the current insurance company or companies is working well. If the goal is to maintain carrier longevity at a competitive premium, then discuss how to best achieve this result in a timeline that works for all parties. Also important, schedule a time to discuss the marketing process at least 30 days prior to the effective date. Perhaps the target premium is not achievable with the current carrier, but an alternative deductible strategy or competing carrier can hit the mark. It is best for everyone to feel informed and comfortable if circumstances change.

Working with a non-profit specialist agent to schedule a pre-renewal strategy meeting is step one in protecting the organization’s mission and future. The five items above should facilitate healthy discussion and help to answer questions and concerns.

For more information about your renewal process, please contact me  at (619) 937-0175 or sbrown@ranchomesa.com.

April is National Distracted Driving Awareness Month

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

April is National Distracted Driving Awareness Month, and a good reminder to reevaluate your company’s driver safety policies and enforcement.

The National Highway and Traffic Safety Administration (NHTSA) leads the yearly effort to minimize distracted driving, and the dangers that come from failing to pay attention to the road.

In 2023, the NHTSA reported 3,275 deaths caused by distracted driving, including using a mobile phone, eating or drinking, changing the radio station, or talking to passengers.

An increased law enforcement presence will be out on roadways from April 10 through 14 as part of the national Put the Phone Away or Pay campaign.

Rancho Mesa has resources available for companies looking to train new drivers or remind company drivers of safe practices.

Driver-specific toolbox talks and online driver training are available through the SafetyOne™ platform that can be used to company drivers. And, for employers whose employees drive company vehicles daily or weekly, Rancho Mesa offers a weekly Driver Safety Toolbox Talk subscription, where each week, subscribers will receive an email containing one of Rancho Mesa’s 52 driver-specific toolbox talks in both English and Spanish.

Register to attend our Fleet Safety workshop, hosted at the Rancho Mesa office on April 24, 2026.

Fleet Maintenance: An Overlooked Pillar of Jobsite Safety for Electrical Contractors

Author, Kyle Dunlap, Account Executive, Rancho Mesa Insurance Services, Inc.

Fleet maintenance is essential for electrical contractors that rely on service trucks, vans, and heavy-duty vehicles to transport employees, tools, and materials safely to job sites on a daily basis. When contractors prioritize clean, safe, and well-maintained vehicles on highways, back roads, and active construction zones, they protect their workforce, prevent costly mishaps, maximize fuel consumption and reduce insurance challenges at renewal.

In the construction industry, fleet maintenance is a direct extension of jobsite safety.

Electricians frequently operate vehicles loaded with tools, ladders, wire spools, and heavy equipment. Worn brakes, underinflated tires, malfunctioning lights, or unsecured cargo can lead to serious incidents before a worker ever steps onto a jobsite. Because these vehicles often travel long distances, navigate uneven terrain, and operate in high-traffic or work-zone environments, mechanical reliability is critical.

A vehicle-related incident can result in employee injuries, OSHA scrutiny, project delays, and third-party liability claims. For electrical contractors, a preventable accident caused by poor maintenance can be just as damaging as an on-site safety violation impacting both worker morale and company credibility.

Electrical contractors should implement formal fleet maintenance programs that include routine inspections, preventive servicing, and documented repair schedules. Pre-trip inspections and clear reporting procedures ensure issues are addressed before vehicles reach the road.

Clean and organized fleet vehicles help reduce risk and support safe operations in the field.

Service vehicles often become mobile workshops. When interiors become cluttered with loose tools, materials, or debris, drivers face increased distraction and the risk of shifting cargo. Dirty windshields, mirrors, and backup cameras further reduce visibility, especially critical when maneuvering in tight jobsite conditions or backing near workers and pedestrians.

Vehicle condition reflects a company’s overall safety culture. Insurance carriers and general contractors often view poorly maintained or unclean vehicles as indicators of broader risk management issues. Additionally, clean, well-kept vehicles project professionalism to clients, inspectors, and the public.

Establish standards for vehicle cleanliness, secure storage systems for tools and materials, and regular housekeeping requirements. Driver safety trainings, QR code-accessible vehicle inspections and fleet  management assessments offered in Rancho Mesa’s proprietary SafetyOne™ mobile app can help reinforce expectations and reduce preventable losses tied to vehicle condition.

“When the misuse of tools becomes routine, it sends the wrong message that shortcuts are acceptable and risk is secondary. Maintain a culture where precision and safety comes first.” Rear Admiral Dan “Dino” Martin USN Commander, Naval Safety Command.

Preventable vehicle mishaps can significantly affect insurance premiums and renewal terms for contractors.

Insurers closely analyze fleet loss history when underwriting, accidents involving brake failure, tire blowouts, poor visibility, or unsecured loads are often classified as preventable losses. Even minor incidents such as backing into fences or poles or roadside breakdowns can accumulate and negatively impact loss ratios.

A pattern or frequency of maintenance-related claims may result in higher premiums, increased deductibles, coverage restrictions, or additional underwriting requirements. In a tightening insurance market, contractors with poor fleet performance may face limited carrier options.

Proactive maintenance, documented inspections, driver accountability, and corrective action plans demonstrate to insurers that fleet risks are actively managed. Risk management partners like Rancho Mesa can assist electrical contractors by reviewing fleet losses, identifying trends, and helping prepare for successful insurance renewals.

For electrical contractors, fleet maintenance is not optional, it is a critical investment in employee safety, operational efficiency, and long-term insurability. Clean, well-maintained vehicles help prevent avoidable losses and position contractors as responsible, safety-driven organizations.

To learn about how Rancho Mesa can help streamline your fleet maintenance program, contact me at (619)798-2822 or kdunlap@ranchomesa.com.

A Letter from RMI President to California Clients: Take Action On CT Claims Legislation

Rancho Mesa would like to provide you with an update on our efforts related to the growing cumulative trauma issue impacting the California workers’ compensation marketplace. As many of you have experienced firsthand, cumulative trauma claims continue to rise and are having a significant, negative effect on premiums and experience modification rates (EMRs) across all industries.

Over the past year, we’ve worked to better understand the root causes of this problem. We’ve hosted podcasts with industry experts and recently held a Cumulative Trauma workshop with a leading workers’ compensation carrier. From these conversations, one conclusion is clear, meaningful reform is needed.

To help advance that discussion, I’ve written letters to both the State Senator and Assembly Member who chair the committees responsible for potential legislative changes. While major action is unlikely during an election cycle, it’s important that our representatives understand the real-world impact this issue is having on California businesses.

Our intent is not to limit legitimate cumulative trauma claims, but rather to establish sensible guardrails that help prevent the growing abuse of the system. I’m attaching drafts of the letters I’ve submitted on behalf of Rancho Mesa. If you are inclined to join this effort, please feel free to use or modify them as you see fit.

Your voice matters, and collective engagement is often what drives meaningful change.

I hope you will consider joining me in supporting this much-needed reform.

‍ ‍

David J. Garcia
President, Rancho Mesa Insurance Services Inc.

Send Letters to the Following

Senator Lola Smallwood-Cuevas
senator.smallwood-cuevas@senate.ca.gov

Assembly Member Lisa Calderon
assemblymember.calderon@assembly.ca.gov

New RM365 HRAdvantage™ Law Comparison Tool

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

A new tool has been added to Rancho Mesa’s RM365 HRAdvantage™ portal for businesses that operate in multiple states.

The new Law Comparison Tool simplifies multi-state compliance, allowing users to compare employment laws across multiple U.S. states and identify legal differences.

Users of the HR portal can now:

• Compare laws from up to 10 states and 4 law categories

• Sort by specific law categories or subcategories

• Export results in Word or Excel

How to Use the Law Comparison Tool

The Law Comparison Tool can be found under the “HR Tools” dropdown menu in the Navigation bar in the HR portal.

Using either the interactive map or the filters on the right-hand side of the page, select up to 10 states and up to four law categories, then click the “Compare” button.

The page will generate a list of corresponding laws in each state you have selected. Use the check box next to each law to select up to 10. Some laws will be state-wide, while others are specific to a city or county.

The portal will display your selected laws side-by-side for easy comparison. Click the “Email Comparison Download” button to generate a Word document or Excel spreadsheet comparison.

Contact your client technology team with any questions about accessing the HR Portal or Law Comparison Tool.