Ep. 507 How Changes to the Expected Loss Rates Will Impact Concrete Companies

Rancho Mesa's Alyssa Burley sits down with Sam Clayton, Vice President of the Construction Group to discuss how the expected loss rates will impact concrete contractors in California.

Show Notes: ⁠⁠⁠⁠⁠⁠Subscribe to Rancho Mesa's Newsletter⁠⁠⁠⁠⁠⁠

Host: ⁠⁠⁠⁠⁠⁠Alyssa Burley⁠⁠⁠⁠⁠⁠

Guest: ⁠⁠⁠⁠⁠⁠Sam Clayton⁠

Editor: ⁠⁠Megan Lockhart⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠

Music: "Home" by JHS Pedals, “Breaking News Intro” by nem0production

© Copyright 2025. Rancho Mesa Insurance Services, Inc. All rights reserved.

Transcript

Alyssa Burley: You’re listening to Rancho Mesa’s StudioOne™ podcast, where each week we break down complex insurance and safety topics to help your business thrive.

I’m your host, Alyssa Burley, and today I’m joined by Sam Clayton, Vice President of the Construction Group with Rancho Mesa. And, we’re going to talk about how expected loss rates will impact concrete contractors in California.

Sam, welcome to the show.

Sam Clayton: Hi, Alyssa. Great to be back in StudioOne.

AB: Well, we're happy to have you. Now, you've been talking about the Workers' Compensation Insurance Bureau’s proposed 11.2% pure premium recommendation since mid-April, but we haven't really talked about updating the 2025 Expected Loss Rates.

Will you explain the ELR and why it's important for artists and contractors like concrete companies to understand and what it means to them?

SC: Sure, each workers comp class code has its own expected loss rate and is used in the Experience Modification Rate calculation. The expected loss rates are an average rate at which losses for a classification are as estimated to occur during an experience rating period. They are expressed as a ratio per 100 of payroll and can have a significant impact on an insured’s experience modification.

AB: So what do you expect to see in the coming months for the ELR?

SC: Well based on the published ELR rates, they'll be dropping. For class codes 5201 and 5205, which are the governing class codes for concrete contractors, they both will be dropping 19 and 10%. With this reduction in the expected loss rate, concrete contractors can expect their experience mod to be a few points higher than what it was previously.

AB: So even if they have the same number of incidents, everything else has stayed the same, their experience month could go up. Is that what you’re saying?

SC: Exactly.

AB: Okay. All right. So what are you recommending to your clients so that they can prepare for this.

SC: Quite a few things. First, we would audit any open reserves on claims that are impacting your current and future expected experience modification rate. Set up an action plan where we conduct open claim review meetings, either on a quarterly or semi-annual basis. Use trade-specific key performance indicators that benchmark you to other concrete contractors and work with your broker to project your EMR as early as possible.

AB: So Sam what you're saying is that the ELR is going down which means that anybody in that industry needs to be even safer than they were last year and even if they are the same then their X-Mod could be going up. So, in order to combat that they really have to be for than they were last year and do all of those things and be proactive and do trainings and all of those things that you recommended in order to try to control or prepare for these changes, right?

SC: Right. And for someone who's got a low experience mod, say in the mid-70s, you may see a point or two increase. Where we see this really impacting insurers is people who are in the high 90s, who are on the fence as far as when they pre-qualify with the different municipalities or general contractors, when they require your experience modification rate to be below 100 in order to bid their work, this could potentially push you above that 100 mark, which obviously would be a challenge.

AB: Yeah. Through no fault of your own, even if you've stayed the same.

SC: Absolutely.

AB: All right. So, Sam, if listeners have questions about this and how it's going to affect their companies, what is the best way to get in touch with you?

SC: Yeah. My email address is sclayton@ranchomesa.com, or you can call me directly at 619-937-0167.

AB: All right. Well, Sam, thanks for joining me in StudioOne.

SC: Thanks, Alyssa.

AB: 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.

 
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Ep. 506 Reducing Risk in the Landscape Industry Series with Bill Arman: Asset Protection