Construction Law and the Future of the Industry With Carlin Law Group

Rancho Mesa's Director of Surety Matt Gaynor interviewed Kevin Carlin of Carlin Law Group on Wednesday, March 23, 2022 to learn about his background, where he started his law career, and current hot topics in the construction industry. Kevin is a well-respected construction attorney here in Southern California who represents a number of Rancho Mesa clients.

One topic of discussion centered on payment disputes.

MG: Are you seeing a lot of payment disputes right now?

KC: No, as your listeners know, the construction economy is on fire right now as there has been a ton of money sloshing around as a result of low interest rates and stimulus. While there are a few payment lawsuits going on right now, contractors seem to be more focused on getting the next job rather than chasing the money they are owed on the last job. Most of my cases right now seem to involve demands for defense and indemnity on large complex public, commercial and hospitality projects. These cases are highlighting how important, and frightening, indemnity language in prime contracts and subcontracts is, and how important it is to have good insurance. Most contracts contain indemnity language where if you are 1% at fault, you agree to pay 100% of the liability. Most people in the construction industry do not know about this or appreciate this risk because it’s never a problem until it’s a problem. These are the risks that make it so important to have the right coverages and policies of insurance, which is where you guys come in.

Listen to the full episode to learn more about Kevin and the Carlin Law Group.

Preventing Stress Claims

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

Specializing in non-profit insurance has opened my eyes to how difficult it is for some non-profit employees to deal with the stress related to their jobs. It’s the nature of the work. Helping people through difficult situations can be rewarding for an employee, but it can also be emotionally draining when they become invested in their clients to the point where it can lead to burnout.

Employees can suffer from emotional and mental illness as a result of their working environments, which can lead them to file workers’ compensation claims. Depending on the nature of the non-profit’s mission, employees may witness a variety of disturbing realities that the general public isn’t used to experiencing.

Since psychiatric injuries are based on an employees' personal experience, it’s much more difficult for physicians to verify these types of claims. Plus, these conditions can also develop from multiple stressors in an employee’s professional and personal life like when they are dealing with a death, going through a divorce, or filing for bankruptcy. So, it’s hard to determine what percentage of the claim is work-related and what percentage is caused by outside factors.

Workplace stress can trigger mental and physical illnesses and injuries, so identifying and correcting stressful situations early, can prevent costly health care costs and workers’ compensation claims.

Managers should periodically check in with their employees to see how they are doing with regards to their workload, relationships with clients, co-workers and vendors, etc., but also their personal lives. If there is an issue in the workplace, it can be addressed quickly before it causes extreme stress to the employee. If something is happening at home, it could be affecting their productivity and performance on the job. And, the employer may be able to refer their employee to resources to assist them as they deal with whatever stressors are in their personal lives. This also helps to establish if the stress felt by the employee is work-related or personal.

Employers can reduce workplace stress by ensuring effective communication from supervisors to employees. Whether the communication is about job duties and expectations, career growth within the organization, or a traumatic event and relevant resources to help employees cope, being transparent with employees can relieve some stress caused by not knowing what’s to come.

Stress claims take a tremendous toll on both employees working for non-profits and the organizations themselves. Rancho Mesa provides an extensive library of training offered through our Risk Management Center and the RM365 HRAdvantage™ Portal. These trainings can be easily accessed and allow for our non-profit clients to be proactive in mitigating the severe impact of stress claims. 

Contact me at jmarrs@ranchomesa.com or (619) 486-6569 to learn more about these options.

Signing Up for Safety

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

There are many tips, ideas, and systems involved in creating a safe culture in the landscape industry. The most common practice landscape companies implement with regards to safety are regular safety meetings.

For these meetings to be effective, you need to ask yourself three questions:

1. What should be discussed during these safety meetings?

2. How often do we really need to have these meetings?

3. Where can I find content for these meetings?

Let’s take a look at each question in more detail. 

What should be discussed in these safety meetings? The easy answer is we will just talk about an accident that has recently occurred. That seems like a good approach, but it’s more of a reactive approach than proactive. Make no mistake about it, it is very important to go over safety regarding a previous incident, and take the necessary steps to help prevent that incident from happening again.  However, a great safety culture includes a more proactive approach by covering safety topics before an incident occurs.  Examples of good topics for safety meetings include something as simple as “Operating a Leaf Blower” to more pressing issues like “Handling Medical Emergencies and Jobsite Injuries.”

Secondly, how often do we need to hold these meetings? The quick answer as often as possible, but we recommend weekly safety meetings as they are the best way to create and change culture for the better. Weekly meetings build consistency. And, these good habits create a safety first culture by emphasizing safety and showing your employees that their wellbeing is a top priority. Plus, OSHA requires safety meetings at least every ten working days, so scheduling them weekly ensures you are meeting that requirement.

Finally, and what seems to be the most important question, is where can I find content for these safety meetings? Rancho Mesa wants to help provide that content. We publish a weekly landscape specific safety tailgate email. These emails arrive in your inbox every Tuesday and range from proper equipment use like “Avoiding Mower-Related Injuries,” to specific injury topics such as “Preventing Heat-Related Illness.” Our 52-week tailgate topics are not only landscape specific, but they correspond to the seasons, as well. So, you will not be receiving a topic on Heat Illness in the middle of winter, instead that topic is more likely to come out in the summer months. There are both English and Spanish versions of these tailgate topics that can be downloaded. These safety emails are something that our clients are taking full advantage of, and is a great way to take the burden of finding landscape specific safety topics off your plate, every week.

In an effort to serve and support the overall health and safety of the landscape community, we offer these trainings without charge to any landscape company that is interested in receiving them. Sign up to receive these trainings every week.

If you have any questions or would like more assistance in developing your safety program, contact me at 619-438-6905 or email me at ggarcia@ranchomesa.com.

Understanding the DART and TCIR Calculations

Author, Lauren Stumpf, Media Communications and Client Services Specialist, Rancho Mesa Insurance Services, Inc.

When a project owner asks you to provide the company’s DART or TCIR rate, it may seem a little overwhelming at first. But, the two numbers are really a score that can be used to compare contractors’ safety history. These numbers can be important during the bidding process when comparing multiple bids and could be a determining factor for who is awarded the contract.

DART stands for days away, restricted, or transferred. A DART rate is used to track any OSHA recordable workplace injury or illness that result in days away from work, restricted duty, or transfer of duties.

On the other hand, the TCIR is the total case incident rate (also known as the Total Recordable Incident Rate or sometimes referred to as the OSHA Incident Rate). It measures a company's past safety performance based on their incident rate. A TCIR is found by looking at the number of work-related injuries per 100 full-time workers during a one-year period.

The TCIR will likely be higher than the DART because it includes all incidents, not just the ones that results in lost time.

Project owners are increasingly requesting these numbers along with the project bid. Not only do they want to see how much it’s going to cost them to build the project, but they want to know how safe their contractor is on the jobsite. These numbers show that.

OSHA also uses these calculations to monitor high-risk industries.

Rancho Mesa’s Risk Management Center features a tool that helps contractors generate their DARTs and TCIRs. Contractors can use the Incident Track application to enter and track an incident’s details. Once that incident has been saved, the system will allow them to generate OSHA logs based on that data and generate the DART and TCIR.

“It’s an easy-to-use tool that ensures the numbers are accurate and available whenever they’re needed,” said Alyssa Burley, Media Communications and Client Services Manager with Rancho Mesa Insurance Services, Inc.

To learn more about the Risk Management Center’s capabilities, sign up for an upcoming webinar at www.ranchomesa.com/workshops-and-webinars.

Artisans Captive – Risk Control Workshop Recap

Author, Amber Webb, Account Executive, Rancho Mesa Insurance Services, Inc.

On January 20th and 21st of 2022, Captive Resources hosted the Artisans Captive Risk Control Workshop at The US Grant in San Diego, CA. The workshop was intended for all Artisans’ risk and/or safety mangers, human resources, claims managers, supervisors, owners, brokers and any others who wished to attend.

The workshop began with a brief introduction to the members of Captive Resources and Zurich Insurance Group, along with quick summaries of each of their responsibilities. Then, immediately following was an overview of how the captive is operated and how each member company can earn points which ultimately contribute towards the calculation of their year-end dividend. The group was able to hear from Rich McElhaney from The Real Cost of Safety, as the keynote speaker on the 20th. His story was captivating and eye opening to just how quick something can go wrong on a jobsite without the proper safety protocols in place. He stressed the importance of getting supervisors and employees to report their near misses. Each time a near miss is reported, it gives the company an opportunity to do a training and possibly make changes to their safety policies and procedures to avoid future incidents. Reporting near misses also gives companies a chance to look at areas where trends are taking place and make the appropriate adjustments.

The first day of the workshop ended with dinner and a tour of the USS Midway. This was a great time for member companies to network and chat about what each other are doing with regard to their risk control and safety programs.

The second day of the workshop on the 21st, we all met early for breakfast which also allowed for more networking and learning about different member companies. Immediately after breakfast, we all broke out into our different session groups to learn about specific topics. The first session focused on the, “Do’s & Don’ts of Accident Investigation.” In this session, we went over a twelve-step process for what to do when there is an accident on the job. We were given several great tips for what to do and what not to do. One recommendation was to take pictures of all four corners of your vehicle, then all four sides and repeat for all other vehicles at the scene. The presenter also encouraged not using the phrase, “no comment” if the media becomes involved. Instead, showing empathy and compassion while still not commenting can lead to a better outcome while the investigation is still ongoing. Another takeaway from this session was the importance of reviewing all of your policies to ensure they do not stress productivity over safety. Then, make sure to train your employees to understand that their wellbeing is top of mind, while actually enforcing a safety culture.

The second session we attended was “Driver Safety: Lucky vs. Good” where we learned that the highest auto expenses result from rear end accidents. Also, according to the Bureau of Labor Statistics’ national census of fatal injuries released in December of 2021, transportation incidents have the most workplace fatalities, followed by falls and struck by objects. We also learned with new vehicle technology, such as high-intensity headlights, forward automatic braking, forward collision alert, lane departure warning and rear vision cameras, employers can help reduce vehicle crashes. The speaker went on to explain the importance of utilizing the data given by fleet analytics to help with reducing collision and use as a tool for focusing on trends happening within your fleet.

The final keynote speaker was Sean Bott and he spoke on the “Safety Dance: Creating the Courage to Connect on Site through Three Simple Steps.” His session was not only comedic, but also entertaining. He was able to teach us the 3 steps of meaningful connection; 1) Interrupting, 2) Introducing and 3) Inquiring. We have to start by interrupting people’s defenses and fears and can do this simply by a genuine compliment, a smile, a wave, etc. Then, once the walls are down, we are able to introduce ourselves while slowly saying our name with a pause between our first and last name, all while using the triple nod technique. He also encouraged us to smile and even throw in a wave during this process of introduction. Finally, we were taught to inquire in a clear and meaningful way to get to know the other person on a deeper level. He related these skills back to how employers interact with their employees on all levels, but specifically when it comes to safety. He suggested that we all combine these three skills to make others feel seen, heard, felt and valued. He displayed the value in bringing the human element to safety and reminding the group that the ultimate goal is to make sure all employees go home safely.  

Overall, this workshop was very informative with some fun mixed in and ample time for networking to get to know the other companies involved in the Captive. As a Rancho Mesa broker attending with several of our clients, it allowed us to see the value of not only this workshop, but the additional benefits of being a member of the Artisans Captive and what it offers.

For those interested in learning more about Captives and their potential place within your organization, we will be hosting an informational Captive workshop for the Artisans Captive on April the 28th. Register online, today.

If you have any questions or would like to discuss this option further, you can contact me at awebb@ranchomesa.com or call me at (619) 486-6562.

Nonprofits Insurance Alliance® Discusses Their Mission

On February 8th, 2022 Sam Brown, Vice President of Human Services Group, welcomed Nonprofits Insurance Alliance® (NIA) founder, president, and CEO Pamela E. Davis to Rancho Mesa’s StudioOne® podcast.

Pamela shared how she turned a graduate school project and a vision for insuring nonprofits into $250 million in written premium.  

Sam and Pamela discuss how a nonprofit specialist broker serves clients, and how NIA provides cost-saving tools tailored for nonprofit leaders and brokers.

Listen to the full interview below.

How is Payroll Inflation Impacting Your Workers' Compensation Premium?

Author, Dave Garcia, President, Rancho Mesa Insurance Services, Inc.

Inflation is rampant everywhere, from consumer goods like groceries and gasoline to increased housing costs and labor. Today, I want to talk with you about the specific impact that payroll inflation is having on the workers’ compensation marketplace and ultimately on your premium cost.

Any and all businesses have felt the impact of increased payrolls both to retain existing employees and also to attract new ones. For the sake of discussion, let’s use an inflation wage percentage of 6.5%.

On the surface, this 6.5% wage increase is hard enough to manage on profit and loss statements, but below the surface there is also a deeper impact on businesses that for many will catch them unaware.

The two areas I want to talk about are:

• The impact the wage increase has on temporary disability claim amounts.

• The financial impact that higher wages will have on workers’ compensation carrier P&L’s.

First, temporary disability claim amounts are generally equal to 2/3 of the average weekly earnings of the injured employee. This payment does have a minimum and maximum amount, but for our discussion we will assume the injured worker falls somewhere in between.

So, if the injured worker’s average weekly wage increases by the 6.5%, the disability payment will follow suit. This 6.5% will have several negative impacts. The higher cost of the claim will have a negative impact to the business’ Experience Modification Rate (EMR). 

This can be significant to a business since it will not only directly affect the future year’s premium but if the business is a contractor, an elevated EMR can potentially limit pre-qualification approval from many builders. 

This is so critical to a business success that here at Rancho Mesa we developed a proprietary Key Performance Indicator (KPI) Dashboard that has the capability to tell our clients the actual claim amount per point of experience modification so they can plan accordingly.

An additional consequence of the claim costs increasing is that a company’s individual loss ratio (claim amounts/premium) with their workers’ compensation carrier will increase. Suffice to say as the loss ratio increases, future premiums will need to increase to offset those higher claim costs. Ideally, to continue to receive the most aggressive pricing, we like to see our clients’ loss ratios stay below 30% so these potential inflation increases need to be understood and addressed proactively.

Shifting gears, let’s look at the impact of payroll inflation on the insurance carrier as a business and what impacts it may have on you the business owner as well.

One of the measurements workers’ compensation carriers look to and monitor for their financial health and well-being is their combined ratio. As a general rule, combined ratios measure dollars collected in premium divided by claims costs and overhead. A good combined ratio indicating a profitable and strong company would be in the low 90%’s.

So, logically speaking, if a carrier is experiencing an increase in temporary disability claims costs and an internal payroll inflation of the same 6.5%, which direction will their combined ratios be going? Obviously, it will be going up, so what are they to do?  The most likely choice would be to raise premiums to help offset those increases – unfortunately we know who pays those premium increases.

Now that we understand the impacts that payroll inflation will have on workers’ compensation, what can you do as a business to help mitigate them. The answers are easier than you might think.

This first step is to help reduce the likelihood of claims occurring, thereby reducing the impact of the increase to temporary disability claims on your company.

• Conduct a thorough review of your current safety program and look for ways to improve it. How often are you meeting? Are the trainings current and specific to your needs? Is there a tracking system in place where these trainings are documented? At Rancho Mesa, our Client Services Group works closely with our client teams, drawing from our library of over 3,000 specific trainings to help you create meaningful trainings specific to your needs.

Should a claim occur, what are the steps to help mitigate the impact:

• Report the claim timely – the quicker your insurance carrier is aware of the claim the better the claim outcome.

• Select a carrier that offers “nurse triage” so that in addition to reporting the claim quickly you are able to have an assessment of the injury without going to a clinic and potentially reducing the need for a lost time claim.

• If you have implemented all of the above but still have a lost time claim, offer modified work to meet the injuries work restrictions. By offering modified duty, you are able to either pay the injured workers whole salary or a portion of it which eliminates the temporary disability cost from the claim and/or will dramatically reduce the cost. In addition to these claim cost savings, statistics will show when modified duty is offered the potential for litigation is reduced saving even further potential costs.

To create an active and sustainable safety program, look to your trusted advisor (insurance broker) and see what services they have that can assist you. 

• Do they have a client services team that can provide industry specific trainings, workshops, webinars, certification programs to take your safety program to the next level?

• Are you having regular claims meetings with them to review performance, spot trends, look for root causes?

• What tools are there to assist you in reviewing your claim data?

• Are they able to provide industry benchmarking? 

• Do they have an in-house workers’ compensation claims advocate to assist you with your open claims to create a better outcome?

Payroll inflation is now a reality and not likely to subside any time soon. As we have shared though, there are proactive steps all businesses can take to help mitigate the impact on your workers’ compensation program today and in the future.

If you are looking for assistance in managing through this or have any additional questions, please reach out to us or email me at dgarcia@ranchomesa.com.

Be informed, be proactive, and implement a plan to make your 2022 the best year ever.

What is the True Cost of a Lost Time Workers’ Compensation Claim?

Author, Dave Garcia, President, Rancho Mesa Insurance Services, Inc.

There are many insurance professionals that have tried to quantify the real cost of indemnity or lost time claims, using multipliers anywhere from 2 to 4 times the claim amount in an effort to determine what the real cost of a claim will be to a company.  While this may be true, it remains subjective to many. Let me help you understand the ways this type of claim will impact you and then you can decide the real impact to your business.

Let’s assume a claim where the injured worker will be out for 2 to 3 months and the claim’s total incurred amount (which is the combination of paid dollars and reserves) is $50,000. This claim can and will impact your business.

The first direct hit will be your experience modification (X-Mod). While a claim in your current term is delayed a year before going into the calculation, you’ll feel the effects of the remaining 3 years. So, assume the claim is in your 2022-2023 policy year, claims from that year will not go into your 2023-24 policy year but will be in the next three policy terms, 2024-2025, 2025-2026 and 2026-2027. 

Each company develops their own “primary threshold,” a term used to describe the maximum incurred loss or cap that any one claim can impact the experience modification.  It’s confusing to many policyholders, but this amount regularly changes year-to-year for most companies, as it is derived by the Workers’ Compensation Insurance Rating Bureau (WCIRB) based on the payrolls and class codes a particular business uses and reports. 

To simplify this for our clients, we developed a proprietary Key Performance Indicator (KPI) Dashboard that calculates client’s individual Primary Threshold, also detailing how many points to the X-Mod it would add giving them a true indication as to the cost of the claim as it pertains to the X-Mod. Request a personalized KPI for your company.

Now that we understand the impact to the X-Mod, what other areas will be impacted? The next most obvious is the workers compensation carrier’s loss ratio.  Adding claim dollars will negatively skew percentages and undoubtedly cause an increase in premium of some amount at renewal.

While the impact to the X-Mod and loss ratio are easy to understand, they are really just the tip of the iceberg. Let’s go below the surface and look at other ways this claim will impact your business.

Losing an employee for any length of time is impactful, but losing the employee for a month or two would likely require the business to fill that person’s job and responsibilities within the company.  In many cases this means trying to hire someone new to the organization. 

Without going into great detail, the business is likely going to experience additional payroll and benefit costs, training, and likely a decrease in expertise which will most certainly impact the productivity of that particular job. 

I think we can all now understand how a lost time claim affects the X-Mod, loss ratio, and a business’s productivity and profitability, both immediately and into the future. 

So, what can I do to avoid this or at least minimize the impact should a lost time injury occur?  The great news is that in many instances you can prevent these injuries from ever happening or at least reduce the frequency of them occurring.  Start with these strategies and enlist your insurance broker for their guidance in the process:

• Perform a complete overview of your safety program.

• Make changes in training that address your specific needs.

• Increase awareness and accountability of those employees responsible for the implementation of your safety program – consider adding this as an area of their annual performance appraisal.

• Identify new employees so that your experienced people can mentor them in training or in watching how they are performing. Statistics show that new employees (defined as less than 6 months) have the highest percentage of injuries. New hires in construction can wear different colored hard hats, gloves, vests or even a sticker on their clothing, anything that might let the crew leader know who might need a little more oversight.

• Choose the right workers compensation carrier. In general, look for a carrier that offers in-house claims handling, loss control services, can show you statistically both their performance in closing claims vs. the industry, claim costs vs. the industry, medical cost containment performance, length of time doing business in the state you are in. These are just a few items to consider that can result in the best claim outcome should one occur.

• Choose the right insurance advisor (broker). Are they a specialist within your industry? What client services do they offer pertaining to trainings you need? Do they offer workshops, webinars and safety certifications? Do they have an experienced workers compensation claim advocate in house to assist you in both understanding your claims and mitigating costs? What tools do they have to help you benchmark yourself against your industry? Can they help you identify trends and root causes?

We’ve seen how one lost time claim can have a negative rippling affect for your company in both your productivity and your profitability.  It may feel overwhelming in how to understand and fix your issues with all the other areas of your business that you have to be involved with.  It really doesn’t have to be, it’s just time to look at who you choose to work with from your carrier to your broker differently. 

Contact us via our website or reach out to me directly at dgarcia@ranchomesa.com.

Increasing Your Productivity and Profitability Through Your Insurance Program

Author, Dave Garcia, President, Rancho Mesa Insurance Services, Inc.

“What?” You’re probably asking yourself; “Did I read that wrong? How can my insurance program improve the productivity and profitably of my company?” Trust me, I understand your confusion. 

I’ve been working in the insurance industry for 35 years and this is a premise I heard about, but thought was impossible, until I dug a little deeper. Once I did, I was able to share this concept with my clients over the years and it changed how they approached this vital part of their businesses.

I have examined four current insurance issues facing you and your companies, and share the steps needed to make this premise a reality. To do this I will inspect each issue in some depth and help you build a foundation of understanding so that you can begin to increase your productively and profitability through your insurance program.

I will be covering the following topics:

• “What is the True Cost of a Lost Time Workers’ Compensation Claim?”

• “How Payroll Inflation is Impacting Your Workers Compensation Premium?”

• “Is Now the Time for a Performance-Based Insurance Program?”

• “Actual Impact of Auto Claims on Bottom Line”

I hope you find this information as a pathway to improve both your productivity and profitability in 2022. 

California Prepares to Restore COVID-19 Paid Sick Leave

Author, Kevin Howard, Account Executive, Rancho Mesa Insurance Services, Inc.

On January 25, 2022, California Governor Gavin Newsom announced he had made a deal with legislative leaders on a framework that would provide up to two weeks of supplemental paid sick leave to those who are unable to work due to COVID-19, quarantining or experiencing side effects from the vaccine. As of February 7, 2022, the California legislature passed the bill and we are waiting for the governor to sign it into law.

Previously, the federal government’s Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which expired September 30, 2021, had provided supplemental sick pay for workers.

California’s proposed employee COVID-19 paid sick leave law would retroactively apply to employers of more than 25 employees from January 1, 2022 through September 30, 2022.

The law would replace wages for:

• People who are unable to work or telecommute because they either have COVID-19 or have symptoms and are seeking a diagnosis,

• Individuals caring for a child or family member who is required to quarantine or self-isolate, and,

• People experiencing vaccine-related side effects.

With the recent wave from the Omicron variant, employees are wondering if and when they will be paid. The proposed law would allow employers to be reimbursed for wages paid to employees who need to stay home due to COVID-19 and prevent the further spread of the virus to co-workers.

The governor announced employers would likely be reimbursed for wages through business tax credits and funding through a small business COVID-19 relief grant program.

Providing a state-sponsored mechanism for employee COVID-19 supplemental sick pay should be welcomed by California employers and employees who may otherwise be tempted to file COVID-19 workers’ compensation claims as a way to replace some wages. Keeping non-work-related COVID-19 cases out of the workers’ compensation system benefits everyone involved by keeping costs, and ultimately premiums, down.

Visit Rancho Mesa’s COVID-19 page for the latest Cal/OSHA COVID-19 Prevention Program Template, articles, podcasts and other resources.

For questions about your workers’ compensation insurance, contact me at khoward@ranchomesa.com or (619) 438-6874.

Top 5 OSHA Violations for 2021

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

Every year, Federal OSHA conducts thousands of inspections and issues costly citations to companies. So, it is imperative for business owners and safety managers to be aware of the most common citations and how to avoid them through effective safety programs.

Back in September 2021, Rancho Mesa highlighted the top Cal/OSHA citations issued during the 2019/2020 reporting period in podcast Episode 136.  Now that the 2021 Federal OSHA data is available, we can analyze the citations that were most common across the United States to see what’s changed and evaluate our safety programs to avoid being another statistic.

Although OSHA violations can be issued for numerous reasons, there are 5 citations that continue to show up on the list year after year, though their order may change slightly. 

1. Fall Protection, General Requirements (29 CFR 1926.501)
   This Standard outlines where fall protection is required, which systems are appropriate for given situations, the proper construction installation of safety systems, and the proper supervision of employees to prevent falls.  It is designed to protect employees on walking/working surfaces (horizontal or vertical) with an unprotected side or edge above 6ft.

   There were 5,295 fall protection violations in 2021. To help avoid fall protection citations, take advantage of Rancho Mesa’s fall protection resources like the online awareness course and safety videos, a webinar on how to implement a fall protection and prevention plan, along with a library of fall protection training shorts (i.e., tailgate talks) that are designed to reinforce the company’s policies.

2. Respiratory Protection, General Industry (29 CFR 1910.134)
   This standard directs employers on establishing or maintaining a respiratory protection program.  It lists requirements for program administration, worksite specific procedures, respirator selection, employee training, fit testing, medical evaluation, respirator use, cleaning, maintenance and repair.

   There were 2,527 respiratory protection violations in 2021. The best way to avoid these types of citations is through training and documentation. Rancho Mesa’s Personal Protection Equipment (PPE) for Management and Respiratory Protection courses address implementing and enforcing the PPE program and information the employee needs to know about their respiratory protection, respectively.

3. Ladders, Construction (29 CFR 1923.1053)
   This standard covers general requirements for all ladders.

   There were 2,026 ladder violations in 2021.  The RM365 Advantage Safety Star™ Program’s Ladder Safety module provides an in-depth practical overview of ladder safety from seasoned risk control experts.

4. Scaffolding, General Requirements, Construction (29 CFR 1926.451)
   This standard covers general safety requirements for scaffolding, which should be designed by a qualified person and constructed and loaded in accordance with that design.  Employers are bound to protect construction workers from falls and falling objects while working on or near scaffolding at heights of 10ft or higher.

   There were 1,948 scaffolding violations in 2021. Safety is everyone’s responsibility, so utilizing Rancho Mesa’s scaffolding online course and safety videos to provide a general awareness of best practices to all employees is a proactive way to help comply with OSHA regulation 29 CFR 1926.451.

5. Hazard Communication Standard, General Requirements (29 CFR 1910.1200)
   This standard addresses chemical hazards, both those chemicals produced in the workplace and those brought into the workplace.  It also governs the communication of those hazards to workers.

   There were 1,947 hazard communication violations in 2021.  Proper hazard communication in construction environments can save lives. Consider utilizing the variety of hazard communication resources in the Risk Management Center like online courses for both employees and management along with video training specific to hazard communication in construction environments and a sample Hazard Communication Program template.

Rancho Mesa knows these top five citations can be avoided by reviewing safety programs often and ensuring they are effective.  Clients can take advantage of the RM365 Advantage Safety Star™ Program that specifically addresses some of the most common citations.

To discuss your safety program, workers’ compensation or other insurance needs, contact me at (619) 937-0167 or sclayton@ranchomesa.com.

OSHA Posting and Submitting Guide

Author, Alyssa Burley, Media Communications and Client Services Manager, Rancho Mesa Insurance Services, Inc.

Rancho Mesa Insurance Services, Inc. would like to remind its clients that February 1, 2022 marks the start of the OSHA Form 300A Summary posting period. The OSHA Form 300A is a summary of the company's annual work-related injuries and illnesses. It must be posted from February 1, 2022 to April 30, 2022.

To learn more about maintaining all the OSHA logs, listen to Rancho Mesa's StudioOne™ podcast episode 168 where Alyssa Burley and Megan Lockhart discuss the Forms 300, 300A and 301.

REQUIRED TO POST

According to Cal/OSHA, “If your company had more than ten (10) employees at any time during the last calendar year, you must keep Cal/OSHA injury and illness records unless your establishment is classified as a partially exempt industry under Section 14300.2.”

POST FORM 300A SUMMARY

The Form 300A Summary must be posted in a conspicuous place at each workplace, where notices to employees are usually displayed. Make sure that the posted annual summary is not altered, defaced, or covered by other material. Employers must send a copy of the summary to employees who do not report to the workplace on a regular weekly basis.

NO RECORDABLE INJURIES

Companies with no recordable injuries or illnesses in 2021 must post the OSHA Form 300A Summary with zeros on the “total” lines.

HOW TO GENERATE THE FORM 300A SUMMARY

Through Rancho Mesa's Risk Management Center, clients can generate the OSHA Form 300A Summary using the incident tracking feature. Individual employers are required to maintain the OSHA Forms 300, 300A and 301 throughout the year. So, when it is time to generate the Form 300A Summary, it can be printed from the Risk Management Center, as long as the employer has been documenting the information in the platform throughout the year.

To print the OSHA Form 300A Summary, login to the Risk Management Center and navigate to Incident Track. Ensure you have entered all your incident information, then go to the Reports section and choose the Form 300A Summary from the available list. You'll be able to choose the year and locations (Sites) that you want to print.

SUBMITTING THE FORM 300A SUMMARY TO FEDERAL OSHA

In addition to posting the Form 300A Summary in your workplace, the data must also be submitted to Federal OSHA by March 2, 2022. If you have entered your incident data into the Risk Management Center, you'll be able to generate the electronic .CSV file that is used to upload the data to the Federal OSHA website. Watch out short video on how to generate the electronic Form 300A Summary.

Data Entry and Generating the Electronic Form 300A Summary

There are some minor differences between Cal/OSHA and Federal OSHA requirements. Check with your state’s OSHA division for specific differences for your state.

Visit the California Recordkeeping Standard or Injury & Illness Recordkeeping Forms webpages for more information.

What to Consider When Hiring a Bond Agent

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

With the passage of the Infrastructure Investment and Jobs Act, there is $125 billion of federal funds available for procurement. This provides a significant amount of federal construction work which will be put out to bid, with a vast majority of it requiring bonding. For contractors that may have never bonded before or bond infrequently, this is a clear opportunity to build revenues. With that in mind, it is critical that these contractors have a good surety bond agent on their side to help them navigate this process. Here are some questions and things to look for when evaluating if an agent is the right fit.

Experience  

It is important to note how many years an agent has been in the industry, but it’s more important to make sure they are a surety specialist. Surety bonding is a very specialized insurance product, and an agent that focuses solely on surety will have a better understanding of what the different bond companies value when they are reviewing a new contractor because each bond company has a different appetite. Additionally, agents that focus solely on surety will have developed stronger relationships with bond companies. This relationship is important because bond companies want to work with agents that are knowledgeable and have good reputations within the industry. 

Agent Appointments

Which bond companies does the agent have an appointment? This is an important question to ask, as bond companies are very conservative and the better bond companies are much more selective with the agents that they appoint. When asking this, it is also important to note how many bond companies the agent is appointed with. Having access to numerous sureties, while maintaining key relationships with the main companies, allows an agent to find the best bond company for each contractor.

Additional Value Adds

Surety bonding is a complicated industry, and if a contractor's goal is to increase their bonding capacity, it is vital that the agent provide additional services, like a detailed review of the company’s financials, and yearly analysis of a contractors single and aggregate bond limits. These services are important because they help the agent and the contactor get on the same page with regards to the current bond program, while also allowing them to game plan for the future, and set goals for how to increase bonding capacity. In addition to these in-house services, an agent should be able to recommend a good construction CPA and reputable banking contacts that know what a contractor needs to maximize their bond credit.

Bond agents play a vital role and partnership for contractors, which makes it very important that a contractor performs proper due diligence when hiring an agent. At Rancho Mesa, we have surety only specialists whose expertise is used to ensure our clients are placed with the right bond company to suit their needs. 

To answer any questions from this article or discuss if we can assist with any bond related needs, contact me at aroberts@ranchomesa.com or call my direct line at (619) 937-0166.

Revised 2022 COVID-19 Prevention Program Template Now Available

Author, Alyssa Burley, Media Communications and Client Services Manager, Rancho Mesa Insurance Services, Inc.

Rancho Mesa has revised its written COVID-19 Prevention Program Template based on the Emergency Temporary Standards (ETS) adopted by California’s Department of Industrial Relations Occupational Safety & Health Administration (Cal/OSHA) in December 2021 and effective as of January 14, 2022.

To access the revised template, clients can access the editable version from the Risk Management Center, or request to download the PDF, below.

The template is designed to assist organizations in the development of a COVID-19 Prevention Program that is specific to their organization and locations.  Rancho Mesa highly recommends organizations using this template also consult their state’s Occupational Safety & Health Administration and local Public Health Department for specific requirements for their area as requirements can vary from state to state and municipalities. For example, California’s Department of Public Health’s recent guidelines supersede some of the requirements in the ETS.

A discussion on the differences between the previous version and the current version can be found in Ep. 162

Remember, this template alone is not enough to be in compliance. It must also be adapted to each organization and specific locations, as well as implemented. Organizations’ programs may require additional information if the company provides employee housing.

For current COVID-19 information, visit www.RanchoMesa.com/covid-19.

Download COVID-19 Prevention Program Template

Revised COVID-19 Prevention Program Template

Your Commercial Vehicle May Require a Motor Carrier Permit

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

When a company has vehicles on the road, it’s important to understand all the commercial vehicle requirements in order to stay in compliance.

We recently had a client purchase a new medium-sized truck from a commercial dealership. A few weeks later, an employee driving that new vehicle was pulled over by the California Highway Patrol and fined for not carrying a Motor Carrier Permit (MCP). Our client immediately contacted Rancho Mesa confused by the citation. They have other similar trucks that they have been on the road for many years and never received a citation like this. To avoid a similar situation, it’s essential to understand the MCP and the types of drivers and vehicles that are required to carry one.

The MCP provides proof that the motor carrier is legally operating on California highways. In order to get a MCP, the Department of Motor Vehicles (DMV) verifies that the motor carrier has complied with all the requirements for both registration and insurance.  It includes specific information about the motor carrier (e.g. name, mailing address, USDOT number, California Carrier Identification number (CA #), and effective/expiration dates of the permit. MCP terms only last 12 months, so make sure not to miss the deadline. 

There are many drivers/companies that are required to have MCPs. If your drivers fall under any of these scenarios, they must have a MCP:

• Any person, business or entity who is paid to transport property in their motor vehicle regardless of the vehicle’s size, type or weight. This applies to for-hire carriers.

• Any person, business or entity operating a motor vehicle with Gross Vehicle Weight Rating of 10,001 pounds or more.  This applies to businesses transporting their own property (i.e., private carrier).

• Operators of any vehicle or a combination of vehicles transporting hazardous materials.

• Operators of a combination or a motor truck and trailer, semitrailers, pole or pipe dollies, auxiliary dollies, and logging dollies that exceed forty feet in length when coupled together.  For purposes of an MCP, a “trailer” excludes camp trailers, utility trailers, and trailer coaches.

While there are many scenarios where a MCP is required, there are still some instances where the MCP is not. A MCP is not needed for:

• Vehicles operated by household goods and/or passenger carriers.

• Vehicles operated by household goods carriers to transport used office, store, and institutional furniture, and fixtures when operated under a household goods carrier permit.

• Pickup trucks with gross vehicle weight rating of fewer than 11,500 pounds, an unloaded weight of fewer than 8,001 pounds, and equipped with a box-type bed not going over 9 feet in length when operated in non-commercial circumstances.

• Utility trailers, camp trailers, or trailer coaches.

• Vehicles providing transportation of passengers only, a passenger stage corporation transporting baggage and express upon a passenger vehicle incidental to the transportation of passengers.

• Vehicles used only for personal use and are 10,000 pounds gross vehicle weight rating or less.

• Two-axle daily rental trucks with a gross vehicle weight rating of  than 26,001 pounds when operated in a non-commercial use.

• Vehicles that are exempt from vehicle registration fees. These includes all publicly-owned vehicles, special construction equipment, special mobile equipment, and any other vehicle used primarily off highway and not required to be registered.

• Motor trucks or two-axle truck tractors with a gross vehicle weight of less than 26,001 pounds, when operated singly or when used to tow a camp or utility trailer, a trailer coach, a fifth-wheel travel trailer, or a trailer designed to transport a watercraft, and is never operated commercially.

There are potential fines for not carrying a MCP when its required. If a motor carrier caught operating with a suspended MCP, they could be fined up to $2,500, charged with a misdemeanor and/or receive up to three months in jail. The CHP may also find it necessary to impound the vehicle.

It is important to know the classification of your vehicle prior to purchase in order to determine whether a MCP filing is required. 

Manufactures classify their truck based on the Gross Vehicle Weight Rating government guidelines. The GVWR indicates the maximum truck weight plus what it is able to carry fully loaded. That includes the truck’s own weight plus the fuel, cargo, passengers, and even the trailer tongue. Typically, ¾ and 1 ton trucks are referred to as “heavy duty,” though they are technically classified as light duty vehicles.  MCP’s are typically required when your vehicle falls into the medium classification (GVWR 10,001-26,000). 

Do your due diligence ahead of purchasing the vehicle in order to know the specific licensing and permitting requirements.  Also, consider working closely with an insurance broker who can assist with the required insurance coverages and documents needed during the application process.

Rancho Mesa Insurance has extensive experience helping business owners with fleets of all sizes. If you need assistance with your commercial insurance needs, please contact me at (619) 937-0174 or via email at jhoolihan@ranchomesa.com.

2022 Workers' Compensation Expectations for CA Landscape Industry

Transcript

Alyssa Burley: Welcome back, everyone. My guest is Drew Garcia, Vice President of the Landscape Group with Rancho Mesa. Today, we're going to set the stage for insurance expectations for 2022. Drew, thank you for joining us.

Drew Garcia: Alyssa, thanks for having me.

AB: Since you specialize in the landscape industry, what do you see for the insurance marketplace, for these companies as we move into 2022?

DG: Great question, and I think a lot of companies are always wondering this each year as they come up for renewal. So what I want to do is just, I'll give you a little insight to all the lines of insurance that most landscape companies are going to be renewing in 2022.

And this is basically what we do at a pre renewal, very low level. But I'll start with work comp, which has been a soft market now for four or five years where there's been pressure for rates to continue to go down as a group, as a whole.

And each company's obviously individually underwritten by a carrier, and they're looking at the losses for that particular company. But in general, the work comp market has been soft and that's led to, you know, general decreases for most businesses over the last four or five years.

We think that trend is going to continue in 2022, and we'll see if there's any change in 2023. But for the foreseeable future through this policy period, we do believe that the work comp market is going to stay relatively soft, and that just means rates are going to stay down as a whole.

Again, there could be some individual things that you're experiencing as a landscape business that's causing your pricing to increase, whether that's your ex mod or you've got claims in the current year that haven't gone into the mod calculation or you've changed operations, things like that could impact your own pricing.

But as a group, we feel like the market's going to stay relatively soft. And I'm going to share a little detail that we do individually, myself and Greg, who helps me here with the landscape group at Rancho Mesa. We track a lot of industry data and then we use that when we're having our conversations with our customers.

So one thing we like to pull is we measure every contractor that has a C-27 license in California. There's about 5,465 of those companies that have work comp policies, and that's businesses that are landscape companies that only carry that license. They don't also have other licenses so strictly landscape, which helps us keep our data clean when we're looking at it. So there's 5,465 of those companies, 125 carriers, insurance carriers for work comp, right? At least one policy for all of those companies.

So there's 125 insurance carriers writing at least one landscape policy. Now there's only 25 carriers that have more than 20 policies, so we really start to limit down, you see carriers become niche when trying to write a particular business, in this case, landscape. Of those 125, only 25 of them have more than 20 policies. So there's probably a little bit of an appetite there that's aligning for those carriers. And then when we really might it down, there's only ten carriers they have more than 150 policies, and those are the bulk of the businesses of the insurance carriers riding the business or writing work comp policies for landscape companies in California. The top five are going to be familiar names, Berkshire Hathaway, Insurance Company of the West, State Fund, Markel and then Am Trust.

Those are the top five carriers in terms of market share writing those 5,465 C-27 license landscape companies that have work comp policies. So a little bit of an insight into the market and what carriers are interested in writing business or work comp policies for landscape companies.

And then when we look at the numbers, we always like to watch the pure premium rate for the 0042 class code and just a quick refresher on pure premium. Every year the bureau, the rating bureau, will recommend a rate that the carriers should charge per $100 in payroll for every particular class code to strictly just cover claim costs. So, this rate doesn't include carrier overhead or expense. So, that number went from $4.93 last year to $4.57 this year, effective September the first of 2021. That's a 7% decrease, and when you're watching that recommendation come from the bureau to the insurance carriers, what happens next is insurance carrier’s base rates come down a little bit. Normally, the rates should come down a little bit on the base rate side, and last year, the average base rate for an insurance carrier, which is the rate that they're going to start at when they're going to underwrite a landscape business, and that rate is going to be different for every insurance carrier. The average rate that they started at was $9.92. That's down to $9.52 on average. So 4% down on the base rate for work comp carriers. Again, those are indicators to us that the market is still soft.

There's still plenty of carriers trying to write the business and that, we should see rates stay relatively down for 2022 as a whole. Again, we talked about the individual aspect of underwriting, but as a whole, those are good indicators that the market still is pretty soft.

And I'm going to share my screen really quick. This is a factor here that nobody really talks about. But California is so diverse with how work comps are handled throughout the state. So there's individual territory factors that most carriers apply when they're underwriting based on where you're doing your business and the reason why they use territory factors is because the claim outcomes, the claim activity can be higher in certain areas than in others. So the screen that you're looking at right now shows Berkshire Hathaway's territory factors based on 2021 and then 2022. And what I did is you can see, based by zip code, I've got different colors indicating the severity of territory factors that could be applied depending on where you're doing your business. So the lighter colors that you're seeing, the more yellow, lighter yellow that you see, those are the preferred areas and then the heavier, darker red that's going to be where maybe there's some territory debits that increase, and most carriers are using something like this when they're underwriting and looking at the business, but you can see some movement in some of the color from last year to this year. You can see San Diego's lightened up a little bit as a territory, so rates are probably a little bit more favorable in San Diego.

But there really is always been some heavy focus on L.A., Orange County, Riverside County, San Bernardino, where carriers really look at implying a debit on territories just because of claim outcomes and claim activity in those in those particular regions.

And then San Jose in Northern California, those have always been generally lighter intel. There's a less territory factor that that happens up there based on better claim activity and claim outcomes that are associated with the zip codes up in that area.

So I wanted to share that, I'll pull that screen down. And then now exiting work comp kind of just highlighting a couple of the other lines of insurance that we think are going to be impacted in 2022. And we've talked about it for many years with our customers, but the auto market is still very difficult.

And if you're a landscape maintenance company, you have a heavy fleet and a lot of vehicles. So it's really important for you to continue to monitor your cost per unit. And we wrote that article a few weeks back, measuring your cost per unit at each renewal so you can kind of see where your insurance has gone over the years. And so landscape companies really need to pay attention to their cost per unit because we do believe there's still more pressure on the auto market for rates to continue to increase. There's a lot of things that Rancho Mesa provides, and so many of our landscape companies are taking advantage of our Fleet Safety trainings that we have in the Risk Management Center and client services on our end has done a great job when we've had claimed activity with our customers to recommend certain driver trainings, you know, as a result of those claim outcomes - or those accidents that have occurred.

So, we've been happy with how we're helping our customers manage the auto side and then really everyone should watch out on the excess or the umbrella layer of their insurance that's really taking its toll and we've seen rate increases coming on that line in particular. A lot of carriers are limiting their capacity, so a lot of carriers usually go up to 10 million for that limit. But now it seems five is the most that any one carrier wants to go to.

So if you carry more than 5 million, you're probably going to need to stack that with multiple carriers to achieve that limit, which could be different than what you've seen in the past, and also watch out for wildfire exclusions. A lot of excess of reinsurance carriers are trying to apply a wildfire exclusion to landscape companies in California, which would be a detriment to your policy if you have it. So always pay attention for that. You can also look out for that wildfire exclusion on your general liability policy. Those are new things that are potentially coming to the liability side. There are still carriers out there that don't offer that exclusion, so you would want to make sure that you're aligned with a carrier that's doing that. But for the general liability property inland marine policies, we think rates are staying relatively flat.

So we don't see a lot of movement coming there. More of the pressures coming on the auto and excess lines. And I think we'll see that for the next couple of years, there should be should remain some pressure on those lines.

That basically wraps it all up for us, covers the basic lines that most companies are looking at. And again, kind of an overview, but hopefully it gives some insight to business as they're moving into 2022, what to expect and where to focus their attention when it comes to their renewal.

AB: Drew, if listeners have questions about their workers compensation insurance, what's the best way to get in touch with you?

DG: Email, they can email me at drewgarcia@ranchomesa.com, call my office (619) 937-0200, and then I'd also encourage them just to check out our website, we've got a ton of content that we've created, all designed for landscape companies to help them better manage their risk. And we have, you know, different tools that aren't really available online that we'd be happy to introduce to companies and let them use to better manage their risk.

AB: Drew, thank you so much for joining me in StudioOne™.

DG: Thanks for having me, Alyssa.

The Field Guide to Navigating Your Insurance in 2022

Author, Dave Garcia, President, Rancho Mesa Insurance Services, Inc.

As a business owner preparing for 2022, what areas of insurable risk should cause you the biggest concerns?

During the 2021 year, we experienced a hardening insurance market. All lines of insurance were negatively impacted as a result of the catastrophic events we experienced such as wildfires, flooding, hurricanes, and the emergence of COVID-19. Large national and worldwide crises like these caused underwriting losses in the billions of dollars to both front line insurers and reinsurers. 

COVID-19’s impacts included:

• The loss of income/revenues

• Labor shortages

• Health concerns

• Relocation of labor forces

As the year comes to a close, we now have some answers but even more questions about what challenges 2022 will bring. Below are a few remaining questions that create uncertainty.

• Will Property, Auto, General Liability, Excess, Cyber, and EPL insurance continue to see pressure? The short answer is yes.

• What can I do today as a business owner to prepare and better mitigate these increases?

  • Start your renewal process a minimum of 120 days away from your expiration date. Learn more about the pre-renewal process in our article, “3 Reasons Your Pre-Renewal Meeting is Key to your Success.”

  • Be willing to meet and discuss your particular situation, needs and goals.

  • Choose a broker that specializes in your industry and can negotiate with the marketplace from a position of expertise.

  • Evaluate the services that you receive from your broker’s agency to assure they align with your specific risk management needs. Are they proactive or reactive?

Where is the Workers’ Compensation Industry Going in 2022 and Beyond?

What is expected of Workers’ Compensation in 2022? The short answer is that this market will remain soft.

The Workers’ Compensation Insurance Rating Bureau (WCIRB) has asked for a modest decrease in overall rates and most carriers’ filings have reflected that recommendation. However, these are averages and many industries will find these decreases harder to come by.

What is expected of Workers’ Compensation in 2023? There are several leading indicators that present early signs of a hardening market.  Here are a few:

• Wage inflation for most businesses. This will lead to higher temporary disability payments to injured workers thus increases in overall claim amounts.

• Wage inflations within insurance carrier’s personnel. This will cause a rise in their overhead costs and then a subsequent rise in their combined ratios which will impact their bottom line.

• The likely inclusion (September 2022 and beyond) of COVID claims in the Experience Modifier Rating formula (X-Mod). While this is not yet official, approval appears likely.

Preparing for the hard workers’ compensation market starts today with our checklist.

We will explore those at length in a series of articles beginning in January 2022. Subscribe to our newsletter to receive those articles. For now, here are a few tips:

• Utilizes a Workers’ Compensation Gap Analysis and Opportunity Assessment (through the Risk Management Center).

• Benchmark your performance to industry standards to look for areas of improvement. Learn more about Rancho Mesa’s KPI.

• Choose your workers’ compensation carrier wisely. Learn more about selecting a carrier in the article, “How to Choose a Workers’ Compensation Carrier Partner.”

• Have you ever considered performance-based programs? If not, maybe it’s time to bet on yourself. Watch the “Deductible Workers’ Compensation: Understanding performance-based insurance programs” webinar.

With workers’ compensation premiums representing a significant line item on many profit and loss statements, staying up to date on the rapidly changing environment should be a priority for all businesses. And, preparing for the expected rate increases is more important than ever with inflationary costs already choking profitability for so many operations. Our series of articles starting in January will help in this education process and allow you to better understand steps you can take now to weather this building storm.

Incorporating a clear strategy as it relates to your insurance portfolio is perhaps more critical than ever leading into 2022. With pricing increases across all lines of coverage becoming more and more common, managing this line item on your financials should be a proactive process with your broker. Start that dialogue now and develop the right plan to design and coordinate the most comprehensive and competitive program possible.

Wage Inflation’s Impact On Workers’ Compensation

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

Following up on a great article by fellow construction team member Kevin Howard, about anticipated wage threshold increases coming in 2022, I wanted to highlight the building problems resulting from substantial hourly wage increases.

I specialize in painting, drywall and plastering contractors and have been asking my clients over the past few months about the health of their business and any new challenges. The most common answer: there is a substantial amount of work to bid on, but a labor shortage limits the possibility of growth.

Paying an employee higher wages creates new issues. Employees tend to inform co-workers when they get a raise. Employees may also try to leverage another company’s higher wage into a raise. The combination of a labor shortage and overpaying employees may result in hyperinflation, leading these employees to believe their value has skyrocketed.

Tying back into Kevin’s article, it is easy to see why these thresholds need to be increased. The wage threshold is meant to separate historically safer employees from newer employees who are less safety conscious. These increases in payroll are pushing less skilled employees into the higher wage category, resulting very likely in higher claim frequency as they are historically less experienced and safety conscious on the jobsite. This is leading to a smaller gap in workers’ compensation rates between the above and below class codes for each industry.

For example, a painter had a separation of 56% from 5474 to 5482 (painters making above or below $28) for their 2021 renewal. For 2022, they are only looking at a 46% difference. From the carrier perspective, more losses are expected in the 5482 (above $28) than the previous year, leading to a rate increase in that class code. I wish I could say that this was industry specific, but from conversations with multiple underwriters, most industries are dealing with these same employment issues and have struggled to find meaningful solutions.

It is possible these dual wage threshold increases will help restore balance by bringing the less skilled employees back into the proper class code, securing the lower rates in the over class code. Employers have shared that these threshold increases are hurting them, but should assist with workers’ comp savings for the truly elite seasoned workers. Carriers have these thresholds to help you differentiate experience from inexperience.

This is a developing issue that we are trying to stay ahead of. The time is now to meet with someone who specializes in your industry and help you formulate a strategy for 2022 to mitigate these impacts and improve your profitably. To schedule a time to talk or meet with me or you can call me directly at 619-438-6900.

Timely Reporting of Workers’ Compensation Claims Lower Overall Costs

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

Leading into 2022, it is important for employers to examine their workplace injury reporting practices. Specifically, employers should report all injuries including medical-only workplace injuries to their workers’ compensation insurance company. Best practices dictate all claims should be reported within the first 24 hours in order to improve treatment to the injured worker and reduce the overall cost of the claim to the employer.

A recent conversation with an underwriting manager highlighted the fact that some employers are choosing to pay for occupational clinic visits rather than filing a claim, assuming that small medical-only claims will negatively impact the Experience Modification Factor (X-mod) and ensuing workers’ compensation premiums. However, in actuality claims of $250 or less do not impact the X-mod. Not only are employers legally required to report workplace injuries, but those small claims can easily turn into something bigger, if not reported in a timely manner. Further, the reporting of all incidences can assist a company in identifying trends and root causes thereby allowing for proactive measure to be taken. Rancho Mesa’s proprietary Key Performance Indicator (KPI) dashboard helps track these trends and compare a company’s performance to that of their industry. Request a KPI dashboard for your company.  

Why then does reporting lag result in higher claim costs? An insurance carrier’s ability to investigate a claim, determine compensability, and identify fraud may be hindered as details of the incident fade, witnesses may no longer be available or key evidence may not be preserved. According to Liberty Mutual, a 29-day delay in reporting an injury can lead to a 33% increase in lost time, 52% higher average claim cost, and 152% increase in litigation rates. This makes sense when one considers that a delay in seeking treatment could cause an employee’s condition to worsen, extending recovery time and temporary disability payments.

Lastly, an employer paying a medical bill will pay much more than a workers’ compensation carrier would pay for that same bill as insurance companies negotiate a reduced fee schedule for occupational injuries. Bottom line, failure to report workplace incidents in a timely manner can put any organization and its employees at risk for no benefit. Contact Rancho Mesa to learn more about our Risk Management Center and how our free trainings and webinars can improve your reporting practices.

Cal/OSHA Adopts Revised ETS Through April 2022

Author, Alyssa Burley, Media Communications and Client Services Manager, Rancho Mesa Insurance Services, Inc.

On Thursday, December 16, 2021, the Cal/OSHA Standards Board voted in favor, 6 to 1, of adopting the revised COVID-19 Prevention Emergency Temporary Standard (ETS). This is the third iteration of the ETS since it originally went into effect in November 2020 and it happens to be the second and final re-adoption that’s allowed. 

The newly adopted revised ETS goes into effect on January 14, 2022 when the current ETS expires, and it will be in effect until April 14, 2022, at which time the temporary standard must expire or Cal/OSHA has to adopt a permanent standard in order to keep some sort of COVID-related standard in place.

Based on the discussions at the Cal/OSHA Standards Board’s December 16th meeting, it looks like Cal/OSHA is moving forward with proposing a permanent COVID-19 standard in March or April 2022. So, we’ll keep an eye on that.

Changes to Cal/OSHA’s COVID-19 Prevention Emergency Temporary Standard:

COVID-19 TEST

Starting January 14, 2022, there is a new definition for what is considered a “COVID-19 test” to account for over-the-counter tests that are now readily available. The new definition specifically says if you’re using an over-the-counter test, it cannot be both self-administered and self-read unless observed by the employer or an authorized telehealth proctor.

So, if an employee wants to use an over-the-counter COVID-19 rapid antigen test, they’ll need to either have the employer or an authorized telehealth proctor witness the test being performed and the results generated. This is really to prevent employees from providing false results to employers.

FACE COVERINGS

The new ETS also provides more details about what types of face coverings are now allowed and what’s not. Acceptable face coverings include surgical masks, a medical procedure mask, a respirator worn voluntarily, or a tightly woven fabric or non-woven material of at least two layers that does not let light pass through when held up to a light source. There are exceptions for clear face coverings when worn strictly for accommodations purposes. Coverings must be secured to the head with ties, ear loops or elastic bands that go behind the head.

This means many of the cloth masks that are currently being used by employees will no longer be acceptable under this new standard. Scarfs, ski masks, bandanas and other make-shift face coverings will not be permitted.

FULLY VACCCINATED

The definition of “fully vaccinated” has changed a bit. The new language recognizes those who may have gotten their first dose of a two-dose vaccine series from one manufacturer and the second dose from another manufacturer.

WORKSITE

Another change is the definition of “worksite.” The new ETS clarifies that a worksite does not include locations where the employee does not have exposure to other employees. 

For example, if the employee is working from their home office, it would not be considered a worksite for ETS noticing purposes, nor would an office where the employee works by themselves and never is exposed to other employees.

TESTNG AFTER WORKSITE COVID-19 EXPOSURE

There are new requirements for testing employees after a COVID-19 exposure in the workplace. Regardless of vaccination status, employers must now offer testing to all employees who have had a close contact with a COVID-19 case in the workplace, regardless of their vaccination status. 

Prior to the revised ETS, employers did not have to offer testing to vaccinated employees who were exposed. This change is a result of break through cases in those who are fully vaccinated. The only exception for not offering close contacts testing, is for those who have recovered from COVID-19 within the past 90 days and do not have symptoms.

RETURN TO WORK

Another change for vaccinated employees includes wearing a face covering in the workplace in lieu of a quarantine. While those employees who are vaccinated do not need to quarantine if they have had a close contact with a COVID-19 case, as long as they are asymptomatic and test negative, they can return to the workplace, but must wear a face covering and social distance for 14 days following the last date of close contact. This rule also applies to those who have recovered from COVID-19 within the last 90 days and are asymptomatic.

For those who are unvaccinated and have had a close contact with a COVID-19 case, as long as they test negative and are asymptomatic, they can return to the workplace after a 10-day quarantine, however, they must social distance and wear a face covering for 14 days.

There is a 7-day quarantine option for unvaccinated employees that are asymptomatic if they test negative at least five days after the close contact. In this situation, the employee must maintain social distancing and wear a face covering.

TESTING DURING AN OUTBREAK

As for changes to how to handle testing as a result of an outbreak, vaccinated employees can no longer be excluded from being offered testing if there are three or more employee COVID-19 cases within an exposed group. So, employers just need to make sure they’re offering testing to both vaccinated and unvaccinated employees if they’ve had a close contact or were in an exposed group during an outbreak.

One last thing to consider, while Cal/OSHA’s revised ETS does not take into consideration the federal vaccination or weekly testing mandates, nor other state and local requirements, we recommend that you consult your local and state health departments for additional requirements.

Rancho Mesa will make available an updated COVID-19 Prevention Program template that incorporates the modifications, as soon as possible.

Visit www.RanchoMesa.com/covid-19 for all our COVID-related articles, podcast episodes, sample COVID-19 Prevention Program Templates, and links to insurance carriers, the CDC and other agencies.