Author, Greg Garcia, Account Executive, Rancho Mesa Insurance Services, Inc.
Now that we’ve turned our calendars and 2024 has come to an end, I wanted to give a brief review of the current state of the auto insurance and workers’ compensation markets within the green industries (i.e., lawn, landscape and tree care).
Auto Market
The auto markets continue to harden year after year and unfortunately it does not look like it will be softening anytime soon. Increases to auto claims cost is the biggest culprit for the hardening market. The rise in auto claim cost stems from medical cost inflation, increases in auto nuclear verdicts (i.e., any claim amounting to more than $10 million), and an uptick in frequency.
For the green industry, most of our clients have large fleets, and thus navigating this challenging market is difficult. A few things that we stress to our clients to help minimize cost increases is to have a strong written Fleet Safety Program in place. Training drivers on a consistent basis, as well as having strong driver criteria for the company, is also important. Make sure the employees that are allowed to drive company vehicles are capable and take that role seriously. Finally, staying up to date with the advancements in technology such as dash cameras or GPS systems can help as well. Forecasting another hardening auto market with rising premiums in 2025 makes staying on top of fleet safety a top priority for all.
Workers’ Compensation
The other major market segment to review is workers’ compensation insurance. This market has been relatively soft over the last 7-8 years where employers were seeing decreases and flat renewals year after year. Reviewing 2024 and looking into 2025 and beyond, experts believe that this line of coverage may begin to harden for some risks with many of the same reasons as the auto market. Medical cost inflation, wage increases, and litigation rates (particularly in California) all are impacting carrier bottom lines who are, in turn, pushing for rate increases. Two focal points for our landscape clients that allow them to control their premiums continue to be their Experience MOD (XMOD) and partnering with strong workers’ compensation carriers. Controlling the XMOD begins with making sure the company is doing everything they can to control risk. Weekly safety tailgate topics, wearing proper PPE, and recording JHA’s (job hazard analyses) are crucial in building a company’s safety profile. Along with those proactive strategies, choosing to partner with a strong workers’ compensation carrier can also help control the XMOD. Aligning with the right carrier that understands the exposures of the green industry, handles and closes claims timely, and offers in-house services such as loss control inspections, will all help in keeping the XMOD as low as possible.
As we start 2025, now is the time to make positive steps toward navigating these two major insurance markets. Your first step can be a conversation with our landscape and tree care green team to review and advise on your fleet safety protocols, best practice safety techniques, and how managing these well can dramatically reduce insurance premiums and your bottom line.
To discuss how the auto and workers’ compensation market will affect your company, contact me at (619) 438-6905 or ggarcia@ranchomesa.com.