Dashboard Spotlight: Your Path to an Experience MOD Below 1.00

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

Rancho Mesa’s Safety KPI Dashboard allows businesses the ability to clearly visualize their path to an Experience MOD (XMOD) below 1.00 through goal setting.

In order to set your business goal, you will need to use three available metrics from your custom dashboard. 

• Lowest Possible XMOD – This is the best case scenario if you had zero claims for the three-year XMOD period.

• Claim Cost Per 1 XMOD Point – This is the amount of incurred claim cost that impacts your XMOD by 1 point.

• Unit Stat Date – This is the moment when your information is sent to the rating bureau for next year’s XMOD to be calculated.

Using these three metrics together, you can effectively set your goal and manage your XMOD accordingly.

The XMOD is calculated using a running three-year window of the most recently completed workers’ compensation policies. Each policy period will contribute a set amount of weight on the XMOD calculation based on payroll and claims.

Take your lowest possible XMOD from the KPI dashboard and subtract that number from .99.

You will be left with the amount of XMOD points your company can absorb while still keeping your XMOD below 1.00.

Divide that number by three and you can evenly distribute the amount of XMOD points you can have each year to keep your XMOD below 1.00.

Take the annual XMOD points and multiple by your Claim Cost Per 1 XMOD Point.** This will give you the maximum claim cost available per policy period.

Example:
Lowest Possible XMOD: 47
Claim Cost Per 1 XMOD Point: $3,100
Unit Stat: September 30th
(.99) – (.47) = .52 (Number of XMOD points available to absorb and keep XMOD below 1.00)
(.52) / (3) = 17.3 (Max XMOD points per year)
(17.3) * (3,100) = $53,630 (Max claim cost available per policy period) **

**Must consider your primary threshold, which is also a number available on the KPI Dashboard.

Knowing these numbers, along with when your unit stat date comes up, allows you to strategically plan.

If all of this seems complicated or you just want to see what your company’s dashboard would look like, request a personalized KPI Dashboard and we can discuss how you can develop a path to an XMOD below 1.00.

WCIRB Approves 2022 Construction Dual Wage Threshold Increase

The Workers' Compensation Insurance Rating Bureau (WCIRB) has approved the recommended increase in hourly wage thresholds for all 16 construction dual wage classifications.

The increases range from $2 to $5 depending on the classification and will go into effect for policyholders renewing September 1, 2022 and thereafter. The chart below outlines the increases for each classification.

Dual Wage Classifications	Existing Threshold	Approved Increase	Approved Threshold
5027/5028 Masonry	$28	$4	$32
5190/5140 Electrical Wiring	$32	$2	$34
5183/5187 Plumbing	$28	$3	$31
5185/5186 Automatic Sprinkler	$29	$3	$32
5201/5205 Concrete Work	$28	$4	$32
5403/5432 Carpentry	$35	$4	$39
5446/5447 Wallboard Installation	$36	$2	$38
5467/5470 Glaziers	$33	$3	$36
5474/5482 Painting Waterproofing	$28	$3	$31
5484/5485 Plastering or Stucco	$32	$4	$36
5538/5542 Sheet Metal Work	$27	$2	$29
5552/5553 Roofing	$27	$2	$29
5632/5633 Steel Framing	$35	$4	$39
6218/6220 Grading/Land Leveling	$34	$5	$39
6307/6308 Sewer Construction	$34	$5	$39
6315/6316 Water/Gas Mains	$34	$5	$39

With the continuing labor shortage in construction, employers have been doing everything possible to retain employees by offering richer benefits plans, pay increases and merit bonuses, when applicable. These approved wage classification increases could potentially push employers to extend additional pay raises to employees in an effort to minimize workers’ compensation premiums.

Rancho Mesa predicts that this information will become a major factor in payroll decisions based on overhead cost management and recommend this as a topic for discussion early, so that our clients and prospects can prepare.

Understanding the Impact of MEP Contractors’ Dual Wage & Total Temporary Disability

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

What is a dual wage threshold? According to the Workers’ Compensation Insurance Rating Bureau (WCIRB), in California there are sixteen (16) construction operations that are divided into two separate classifications based on the hourly wage of the employee. There are different advisory pure premium rates for the low wage employee and the high wage employee. For mechanical, electrical and plumbing (MEP) contractors, the class codes used are all included in the recently approved increase which will go into effect September 1, 2022. The table below outlines the changes for the MEP class codes by year.

Classifications	9/1/2021 - Current	9/1/2022 - Proposed
5140/5190	$32	$34
5183/5187	$28	$31
5538/5542	$27	$29

© 2021 Workers' Compensation Insurance Rating Bureau of California. All Rights Reserved.

Why does this matter to MEP contractors? The higher wage employee’s workers’ compensation rate is significantly less (on average 46% less) than the lower wage employee. Therefore, if a company has any employees that are currently just barley in the high wage classification, this would drop those employees into the low wage classification and the employer would pay the higher workers’ compensation rate on those individuals. Depending on how many employees an employer has in this situation, it may be advantageous for the employer to calculate if it makes more sense to give those impacted employees a raise to push them back up into the high wage classification or keep them in the new low wage classification. It should be noted and understood that this change will not impact the employer until their next renewal after September 1, 2022. So while most employers will have time to evaluate the impact, it is crucial to begin the evaluation sooner rather than later.

As with any form of wage inflation, an increase in wages, to keep an employee in the higher wage category will increase the claim costs of a total temporary disability claim if they are injured on the job. While increases in wages are necessary, they will also impact the total cost of the claim, which then can increase the company’s experience modification rating (XMOD).

To mitigate this increase and reduce the likelihood of a lost time claim, employers can take several actions:

• Review and update their existing safety programs.

• Revisit their hiring practices.

• Develop a sustainable return-to-work program.

What should employers do next?

• Work with your trusted insurance advisor and run a needs/benefit analysis on increasing employee wages.

• Understand your numbers.

  • What is your primary threshold and why does it matter?

  • What is my claim cost per point of XMOD?

  • How does my frequency of claims compare to the MEP industry?

  • How does my lost time claim average compare to other MEP contractors?

If you would like assistance understanding how these and other data points impact your company, request a proprietary Key Performance Indicator (KPI) dashboard that puts this information at your fingertips.

You still have time to be proactive, do not let these critical changes catch you by surprise!

Changes Are Coming to California Contractor License Bonds

Author, Matt Gaynor, Director, Surety Department, Rancho Mesa Insurance Services, Inc.

Currently, all contractors licensed in the State of California are required by the Contractors State License Board (CSLB) to have a $15,000 contractor license bond on file with the state. This amount has been in effect since January 1, 2016.

Effective January 1, 2023, State Bill 607 will require the contractor license bond amount to increase from $15,000 to $25,000 (California Business and Professions Code Chapter 367).

If you are a contractor and currently have a $12,500 bond of qualifying individual (BQI) for your company, the BQI bond is also required to increase to $25,000 effective January 1, 2023.

Although we have several months to get this in place, touch base with your bond agent to discuss the timing of the increase relative to the anniversary date of your CSLB bond.

You may be required to pay a prorated additional premium to cover the increase.

The term of your bond may be prorated, which would change the renewal date.

Bonding companies may not offer renewals on their current bonds. If this is the case with your bond company, you will need to put a new bond in place on the effective date of the cancellation.

If you would like more information on how your particular CSLB bond might be affected, please contact me at (619) 937-0165 or mgaynor@ranchomesa.com.

Staying Ahead of the “Hard Market”

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

Over the past 15+ quarters, California employers have been experiencing a soft workers’ compensation marketplace. At some point, however, this will start to pivot and the companies that will secure the more favorable pricing must be able to differentiate themselves to their insurance carriers. As we continue seeing signs of the hard market coming, without this solid explicit differentiation, it will become harder for our carriers to be aggressive with their pricing. With all of that said, as a business owner, you may be asking how you differentiate yourself to the insurance marketplace and protect your company from large premium increases. Following are some proven methods.

Return to Work Programs

Do you have a return to work program in place? We all would like to prevent injuries from occurring but need effective return to work programs to help control the total cost of a claim after it has occurred. The fewer dollars that are paid in temporary disability can directly save points on your experience modification (MOD), lower your overall loss ratio, and reduce litigation. All three of these benefits will help you in the marketplace and keep future premiums in check. Watch our “Return to Work Program: A Cost Effect Solution” webinar to learn more about these types of programs.

Hiring Practices

Take an in-depth look at your hiring practices. Many employers are experiencing an uptick in post termination claims that can turn into cumulative trauma claims. This can have severe impacts on your MOD and loss ratio, so it’s vital that you are bringing on the right employees. Pre-hire physicals and drug testing, formal interviews, checking references and job offers with job descriptions are great ways to make sure you are onboarding the right people who are clear in what is expected of them. Fraudulent claims consistently arise from employees who feel undervalued, underpaid, or underappreciated. Hire people with defined roles and make sure they are acknowledged when they are performing well. Employees who are consistently recognized by management and have strong relationships with their supervisors are less likely to file fraudulent claims. Use our Job Description Builder to quickly create job descriptions within the RM365 HRAdvantage™ Portal.

Provide and Document Safety Trainings

Utilize training materials that are provided by your insurance broker. As the hard market trend continues, it is going to be even more important to show the carrier that you are preemptively stopping claims from happening by actively training your employees. Showing your carrier partner that your employees are properly trained and management is prepared when claims occurs will go a long way to getting you the savings you deserve. Rancho Mesa has developed the RM365 Advantage Safety Star™ certification program for foreman/supervisors that is endorsed by the insurance marketplace as a way to both raise the level of safety awareness but also provide subjective credits to your premiums. Rancho Mesa also provides many additional training materials and workshops through our Risk Management Center for clients to use in conducting and documenting their safety.  

Now is the time to make sure that you are taking the necessary steps to differentiate yourself from your peers. As you look forward, consider Rancho Mesa and our myriad of resources to help start that process. Contact me at ccraig@ranchomesa.com or (619) 438-6900.

Four Factors Contributing to Employee Theft

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

Crime insurance policies act as one line of defense against financial loss to an employer. At times, guarding against theft can feel like an uphill battle with many factors outside of our control. One common form of crime insurance claims may be more preventable than ever with some quick education. We are talking about employee theft.

Employee theft can come in the form of stolen petty cash, liberal use of gas cards, or payroll fraud. A review and understanding of the most common reasons why employees steal from their employer can help prevent such crimes.

1. Financial Need

Real or perceived, a financial crisis can drive an employee to steal. Examples include family illness, falling behind on bills, personal debts, or even the desire to have clothing or material possessions the employee cannot afford on their own.

2. Perceived Unfair Treatment

Employees justify stealing when they believe the employer has overworked and underpaid its employees. An employee may also blame management when job performance does not warrant a pay increase. Employees may feel the company owes them.

3. Opportunity

One theory suggests that even honest people will steal if there is ample opportunity. It would make sense then that the incidence of theft increases for employees near unsecured cash or valuable property. This is especially true for employees who understand the worth of company property.

4. Workplace Norms

Employees who see co-workers get away with stealing from the company are more likely to commit theft themselves. Conversely, a quick reminder to a new employee that theft of an any kind is not condoned can adequately communicate what is and what is not to be tolerated.

Understanding factors that drive an employee to steal from an employer can help organizational leaders identify suspicious behavior. This may also lead to management decisions made to influence company culture in a positive way.

Please contact Rancho Mesa Insurance if your private company or non-profit organization has questions about crime insurance and employee theft.

CA Insurance Bureau Recommends 7.6% Rate Increase

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

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) voted to submit a September 1, 2022 Pure Premium Rate Filing to California’s Insurance Commissioner Lara.

The filing will suggest a 7.6% average rate increase above last year’s approved September 1, 2021 pure premium rates.

There are multiple reasons for the WCIRB’s Governing Committee to suggest the rate increase. Most notably,

• There is an 11% projected increase to indemnity claim cost by the end of 2024.

• The industry predicts a 6.5% increase in medical costs per claim from 12/31/21 to 12/31/24.

• We expect increases in frequency of injuries and claims.

• Wage inflation will increase claim cost and the cost to adjust claims.

• Expected future costs of COVID-19 claims are likely to increase, which were previously excluded when underwriting considers claims history.

Before the increase goes into effect, the WCIRB will submit a proposal to the Department of Insurance. Insurance Commissioner Lara will decide to either approve the rate increase, or reject it and suggest a different outcome.

Although the commissioner cannot mandate any sort of rate increase or decrease, it is common for workers’ compensation carriers to cooperate with his recommendation and follow his lead.

This news is another sign that the California workers’ compensation insurance market may be hardening. With that in mind, it is crucial that employers are implementing trainings and safety programs to ensure workplace safety.

In addition, a strong broker partner must truly understand the clients’ industry, operations, and service needs.

Please contact Rancho Mesa to understand how to better prepare for an increase in claims costs and the hardening workers’ compensation marketplace.

Five Contract Provisions to Consider

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

When the surety provides the performance and/or payment bond required by a contract, that contract is the basis of the surety’s guarantee. Simply put, the bonds follow the contract. Because of this, there are a few key things that the surety is going to want to review, and you should do the same. The goal is to make sure you, as the contractor, have everything in place to ensure your success. 

1. Liquidated Damages

Typically, contracts will have a liquidated damages provision. This is generally the per day penalty imposed in the event you are the cause of a delay for the completion of the project. If you are acting as a subcontractor and can only find vague verbiage in your contract with the general contractor (GC), it probably implies that you are held to the same liquidated damages as the GC is to the owner. Make sure you know the actual value or dollar amount of the liquidated damages and consider your bid amount accordingly. Just because you don’t see a dollar amount per day in the contract doesn’t mean you won’t be held to that flow down provision from the prime contract.

Private jobs may be more flexible. Most all public jobs will have something in the prime contract about liquidated damages and they can get pretty steep. We’ve recently seen invitations for bids that include $40,000/day liquidated damages. How many days delay would it take to eat up your profit on a given job? If you do run up against these higher liquidated damages, consider either conditioning your bid to include verbiage that either caps those liquidated damages to some dollar amount that is reasonable, or include a provision that you will only be responsible for a proportionate share of the liquidated damages based specifically on your work that may have caused any delay.

2. Retention

The standard retention for public works contracts in California is 5% for the prime contractor as a result of the efforts of our subcontractors association. Notably, this standard practice is scheduled to sunset in 2023. There is a bill in Sacramento to make the standard permanent. You can bet groups are lobbying to support the 5% standard as it has proven to be a good number.

Knowing the standard retention is important when negotiating your contract. If you are a subcontractor to a GC on a public works project, review the contract for the retention provision. You may be agreeing to abide by a percentage that is higher than what the GC is having withheld by the prime contract. For example, you may be asked to agree to a 10% retention instead of the standard 5%. That is a business decision you can make, but at least you know the law and consider it in your negotiations.

On private works projects, the owners can set their retention amount. And, we continue to see that being set at 10% for the prime contracts.

3. Indemnity

California law sets a limit to some extent on what one party can be liable for to another party. That said, some contracts may be out of date (i.e., broad form indemnity was the law of the land years ago), or the contract may have been drafted in another state. So, make sure that your indemnity provision clarifies that in no event will your duty to indemnify the other party be greater than what is defined as your scope in your contract and that you are not responsible for work performed by other trades.

4. Insurance Provisions

Insurance requirements are greater in some contracts than others. Limits of liability needed can change from contract to contract. It is best practices is to have your insurance agent review the contract before you sign. Make sure you have the coverages you need and include the cost in your contract amount. We’ve seen umbrella limits increasing with some public and private owners, so account for those increases.

5. Warranty

The standard warranty for workmanship in California is one year after completion. We do see some public owners wanting to extend that to a two-year warranty. In some trades and in some contracts, it might be longer. When presented with a longer term warranty, ask yourself if it is reasonable to expect you will be in a position to respond to a warranty item in X number of years after completion. We strongly suggest that you limit the warranty to no more than two years. In some cases, where bonds are required, the surety may ask for verbiage to be added to the contract to limit the surety’s liability to one or two years, and we will then include that in the bond form, if the provision exceeds the two years.

I have always held the belief that knowing a good construction-oriented attorney is as important as any other professional service provider you have to support your business. Consider that it is probably cheaper to have an attorney review your contract before you sign it, then to be put in a position to have to defend yourself later. A good legal resource can provide valuable input if you come across something new, or not well understood. We have some good resources that we can recommend. Contact me at (619) 486-6570 or awright@ranchomesa.com if you would like to discuss your surety needs or if we can provide other resources to support your business.

Automobile Rental Reimbursement for Tree Care Companies

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

A tree care company’s auto fleet includes specialty vehicles like bucket and box trucks. These vehicles are important assets for the company and critical for completing jobs. Getting into an auto accident is already stressful, but what can add more grief is if the vehicle that gets damaged is vital for your business. In this case, you will be looking to rent a replacement vehicle during the repair window so that your business can maintain productivity and profitability. With this in mind, rental reimbursement coverage helps cover the rental cost incurred while your vehicle is repaired after a covered loss.

In the tree care business, renting a specialty truck is no easy task. Rental bucket and box trucks are expensive and limited. Renting these specialty trucks can cost up to $600 per day. In addition to the cost, the COVID-19 pandemic continues to cause problems with the supply chain of products, including auto parts. So, not only is it expensive to rent these specialty trucks, but it is also taking longer than normal to get vehicles repaired.

The standard rental reimbursement coverage will offer between $50 and $100 per day for 30 days. With how costly the tree care specialty trucks are and with the amount of time it is taking to repair these trucks, you can see how you might find yourself in a sticky situation if one of these key trucks goes down. However, certain insurance carriers will offer to increase the per day amount as well as extend the period of rental reimbursement coverage, if needed.

Partnering with an insurance professional who specializes in the tree care industry is important to make sure that your bucket and box trucks have the correct rental reimbursement coverage in the case of an auto accident.

To discuss this potential gap within your current insurance program or any other commercial insurance for your tree care business, contact me at (619) 486-6437 or randerson@ranchomesa.com.

Three Changes to Your Routine That Increases Safety

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

Every landscape company wants to be safe. So, I want to discuss three ways to improve safety in your workplace, starting today.

1) Routine Equipment Maintenance

Routine maintenance and cleaning of equipment is essential for any landscape company wanting to make sure all of their equipment is running properly and is ready for a day’s work. From a safety standpoint, we see the biggest risk comes from those companies who use sprayers to fertilize lawns and plants for their clients. By not cleaning the sprayers out daily, landscape companies are putting their employees at risk of being exposed to pesticides and herbicides, which can be detrimental to the employee’s heath. Therefore, routinely checking and cleaning pieces of equipment can not only improve your productivity and profitability by making sure equipment is ready for work, but can also lead to a much safer working environment for your employees.

2) personal protective equipment (PPE) checks

Personal protective equipment is one of the most important things landscape employees can use to protect themselves while they work. Whether it be thorny bushes to cut back, the use of loud chainsaws or mowers, or just the effects of being out in the sun, it is important to assess the job site hazards and make proper PPE choices. A few examples that landscape companies are doing to help their employees fight the effects of being exposed to the sun are: wearing long sleeve shirts, wearing sun hats that provide shade to the face and neck, and wearing proper sunglasses to help with the heavy glare. Always keeping up to date and staying informed on proper PPE will ensure that your landscape company is doing all they can to stay safe.

3) assessing job site hazards

Finally, addressing job site hazards is vital for companies in the landscape industry. The safety manager, supervisor or foreman need to get out to job sites and really see what hazards are out there. For example, look to see if there are any poisonous plants at the jobsite and/or any pieces of debris or puddles in the walk ways that could create a trip and fall hazard. All of these exposures need to be noted to ensure everyone is aware of potential risks. Every jobsite is different, so it is crucial that your team remain proactive and really hone in on the potential risks at each particular jobsite.

If equipment checks, PPE checks, and job site checks are not currently in your landscape company’s safety routine, I would strongly suggest starting that routine, today.

Subscribe to our weekly landscape-specific safety emails to ensure you are getting relevant training materials every week.

If you have questions about how to mitigate your company’s risk, reach out to Greg Garcia at (619) 438-6905 or ggarcia@ranchomesa.com.

Work-Related Automobile Accidents and Their Correlation With Workers’ Compensation Claims

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

In California, motor vehicle accidents are among the leading cause of severe injuries on a daily basis. From a risk management perspective, a company’s fleet safety program has a primary goal of keeping employees safe while driving which lowers the amount of annual auto premiums paid.

What is not typically discussed when talking about fleet safety is the impact a work-related auto incident has on a workers’ compensation policy and experience modification.  This article will discuss some of those impacts.

EXPERIENCE MODIFICATION IMPACT

When broken down, workers’ compensation premiums are driven by many factors. A main factor for pricing is the experience modification. Experience modifications are a measure of safety for a company when compared to others in the same field. Workers’ compensation claims adversely affect experience modifications.

Typically, business owners invest time, energy and resources into their safety program in the form of personal protective equipment (PPE), stretching before labor, tailgate meetings and job hazard analysis. But, the “big claim” businesses are doing so much to avoid could come from an auto incident. A heavy dose of fleet safety training should be mixed into the safety topic agenda, tailgate meetings and discussions regarding minimal driving record requirements for employees to drive on behalf of a company.

Businesses in California are required to offer no-fault workers’ compensation insurance which means it doesn’t matter who is at fault, the injury will be covered by a worker’s compensation carrier.

When a work-related auto accident occurs and there is an injury involved with an employee, the experience modification will be affected adversely based on the incurred cost of the claim as well as the loss ratios.

SUBROGATION

If another party is at fault regarding a workers’ compensation claim, the insurance carrier who is tending to the claim can subrogate and try to recoup the paid amount from the responsible party.

The issue workers’ compensation carriers deal with regarding subrogating auto claims is that the California minimum required auto liability limit is only $5,000. This amount would not cover most injuries suffered by an employee in an auto accident. Also, there is a high percentage of drivers who are uninsured which makes subrogation impossible in a claim scenario.

Overall, subrogation is pretty difficult in this specific area of workers’ compensation. The best defense is to avoid auto incidents as much as possible.

MULTIPLE EMPLOYEE IN ONE VEHICLE

Especially with gas prices soaring, carpooling to jobsites can be a popular method of getting employees from one location to the next. Regardless of fault, this could create multiple workers’ compensation injuries at once. Multiple workers’ compensation claims will adversely affect experience modifications, loss ratios and DART rates.

These factors should be considered when creating a car pool scenario for employees travel from jobsite to jobsite.

Important factors to consider if you do utilize carpooling to jobsites could be:

• Does the driver meet out company standards with his or her driving record?

• Is the vehicle’s maintenance up to date? (e.g., tires, windshield wipers, etc.)

• Are there multiple high wage earners traveling in the same vehicle?

TEMPORARY DISIBILITY COST ON THE RISE

With a major labor shortage occurring in California, wages have risen in order to attract and retain labor and highly qualified employees. A severe motor vehicle accident which creates a worker’s compensation claim could adversely affect an employer’s experience modification because two-thirds of the amount of the injured workers’ pay is a larger dollar amount on average than it has been in the past.

This could create a larger claim because of the amount of temporary disability being paid while an employee is hospitalized or unable to come back to work with or without restrictions.

FLEET SAFTEY CONTROLS

When budgeting for an overall safety program, business owners should factor in the multitude of impacts that an auto claim can have on a business. Controls like GPS/telematics, drug testing kits, MVR pull programs, and vehicle maintenance programs are examples of investing in fleet safety.

Fleet safety programs can save lives, save money and can create a stronger culture of safety throughout a business.

Rancho Mesa’s Risk Management Center has a searchable safety library with fleet safety materials that can be used to train employees. Register online for Rancho Mesa’s Fleet Safety webinar on May 26, 2022 from 9:00 am PDT – 10:00 am PDT. Or, contact me at khoward@ranchomesa.com or (619) 438-6874 if you have questions about your auto policy.

OSHA Proposes to Expand Electronic Form Submission Requirements

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

The Occupational Safety and Health Administration (OSHA) recently released a proposed rule that would increase electronic reporting requirements for businesses summiting OSHA logs.

Currently, establishments with 250 or more employees, regardless of classification, and establishments with 20-249 employees, classified in certain high hazard industries, must electronically submit their Form 300A Summary to OSHA, annually.

The proposed rule changes would declare that only those in the classified high-hazard industries with 100 or more employees will be required to submit their Form 300A Summary electronically to OSHA. It would also require that Forms 300 and 301 be submitted electronically by these companies, when previously these two forms were to be kept confidential and only available to OSHA upon request.

Classified high hazard establishments with 20-99 employees would still only be required to submit the 300A Summary electronically to OSHA and would not need to electronically submit the 300 and 301 forms.

Under the proposed rule, OSHA would update the industries that are classified as high hazard and need to submit the data electronically.

OSHA has also proposed that company names be included on the electronic submissions. This, along with the injury and employee information that is included on the 300 and 301 forms, raises privacy concerns because this information would be available for public view via the Freedom of Information Act (FOIA).

The comment period for the public to voice their concerns ends on May 31, 2022. Information on how to submit comments on the proposed rule can be on the Federal Register.

Cal/OSHA Releases Final COVID-19 ETS

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

On Wednesday, April 6, 2022, Cal/OSHA released its third and final version of its COVID-19 Emergency Temporary Standard (ETS) that was approved by the Standards Board at its April 21, 2022 meeting. The revised standard is expected to remain in effect from May 6, 2022 through December 31, 2022.

The third revision removes some language and requirements. Most notably:

• Requirements of the ETS are the same for vaccinated and unvaccinated employees, and the definition for “fully vaccinated” has been removed.

• California Department of Public Health's (CDPH) guidance governs exclusion and return-to-work criteria for those with a close contact, and when face coverings are required.

• The “light test” for face coverings has been removed.

• Self-administered and self-read testing is now acceptable to return to work when it includes independent verification like time-stamped photography.

• A new definition for “returned case” has been added to identify those who have returned to work per the requirements in the ETS and did not develop COVID-19 symptoms.

• Cleaning and disinfection procedures have been removed.

• Requirements for physical distancing (except when there is a major outbreak) and barriers have been removed.

Cal/OSHA has revised several documents that may be helpful for employers:

• FAQ on COVID-19 Prevention Emergency Temporary Standards

• What Employers and Workers Need to Know About COVID-19 Isolation and Quarantine

• Revisions to the COVID-19 Prevention Emergency Temporary Standards

Rancho Mesa has revised its COVID-19 Prevention Program template based on the April 6, 2022 proposed revised ETS language. Download a copy of the template from within the Risk Management Center, or from the link below.

Is Your Business Safe From a Business Email Compromise Claim?

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

Cybercrimes are at an all-time high. News sources report cybercrimes almost on a daily basis with most of the press relating to company breaches and cyber extortion. However, one of the biggest cyber threats that is often overlooked is Business Email Compromise (BEC).

BEC is a type of email cybercrime scam in which an attacker targets a business to defraud the company. BEC attacks use real or impersonated business email accounts to defraud employees. In 2020, BEC scammers made over $1.8 billion – far more than any other type of cybercrime.

In this type of cybercrime, the scammer sends an email that looks like it came from someone the recipient knows, like a superior or co-worker, and asks them to do perform a task. For example, the email may request:

• A change to a vendor’s mailing address so future payments are sent to the scammer and not to the actual vendor.

• An employee to purchase gift cards for a charity auction or employee rewards and then asks for the serial numbers on the cards so the scammers can use them without ever having the physical card.

• A client is sent an email with wire instructions for payment of an invoice that appears to come from your company, but instead it is for the scammer’s bank account.

BEC scams use a variety of impersonation techniques. The following 3 techniques tend to be the most common:

• A spoofed email address or website often has a slight variation from the legitimate address or URL. At a quick glance, the spoofed email address may fool victims into thinking it’s authentic. However, upon a closer look, an “L” might be switched out for a “I” or an “0” for an “o.”

• Phishing emails appear to come from a trusted sender in order to trick the victim into providing personal or confidential information like account numbers, usernames, personal identification numbers, passwords or answers to security questions. Then, the information is used to gain access to networks, accounts, and other data.

• Cyber criminals can infiltrate a company’s network using malicious software and gain access to networks and legitimate emails, often getting information about billing and invoices. This type of cybercrime is often unnoticed until it is too late.

For ways on how to protect your business from BEC claims, Rancho Mesa recommends first starting with a Cyber Liability policy. A comprehensive Cyber Liability policy will not only respond to BEC claims, but it can also provide coverage for other cybercrimes such as cyber extortion, cyber breach, and network security. If you have an interest in obtaining a Cyber Liability policy please feel free to reach out to me at 619-937-0174 or jhoolihan@ranchomesa.com.

Surety Industry Forced to Innovate

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

Rarely are the words surety and technology advancement synonymous, and that’s because it’s hard to introduce advancements to an industry where so many obligees still require raised seals and wet signatures on the bonds they are receiving. However, due to some challenges that bond companies, insurance agencies and obligees have faced during the pandemic, the industry is being forced to innovate. E-signatures on bond documents are becoming more commonplace, and electronic powers of attorney and digital seals are being adopted with the eventual goal of creating a surety bond creation process that is wholly digital.  

General Indemnity Agreements executed by a contractor/principal when they are establishing a surety program with a bond company, have traditionally needed to be executed in front of a notary and the original document, with the wet signatures, provided back to the bond company. Now, more and more bond companies are moving away from this archaic practice and allowing these documents to be signed digitally. This is an important change as it shows the industry’s willingness to implement changes that are in the best interest of the principal. Another change that is being brought about is the use of electronic powers of attorney (POAs), and digital seals.

A couple of years ago, very few bond companies utilized electronic POAs, opting instead to mail agents hard copies that needed to be dated using a typewriter. While this method is still being used, more and more sureties are opting to provide their agents with e-POAs that they can print as needed. In addition to this change, digital seals are also starting to be more commonplace. These can be affixed to the POAs and the bonds themselves when they are transmitted digitally. The importance of these two changes is worth noting as they are steps towards creating a process which allows for the creation of a surety bond by solely electronic means. 

Getting to a point where contract bonds are done only electronically is still a way off, but the technologies that are needed are available, making it necessary that the surety industry continues to embrace technology to improve our processes, and to ensure we are providing bonds in the form, whether electronic or paper, that clients and obligees want. 

For questions about technology in surety or your surety needs, contact me at aroberts@ranchomesa.com or call my direct line at (619) 937-0166.

WCIRB Proposes Expected Loss Rate Decrease for Landscape Industry

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

The Workers’ Compensation Insurance Rating Bureau (WCIRB) has proposed a 2% decrease (from $2.42 to $2.37) in the expected loss rate for the landscape class code 0042. 

The proposed $2.37 would impact Experience Modifications (ExMod) for all workers’ compensation policies that take effect on or after September 1, 2022.

The expected loss rate is used to calculate each company’s individual ExMod within the industry. A decrease in the rate would generate lower expected losses and lower primary thresholds.  So, the lower number puts pressure on the ExMod to increase. Whereas, an increase in the expected loss rate would help provide some potential ExMod relief.

The proposed decrease would impact the lowest possible ExMod for landscape companies by increasing it about 5% or 2 to 3 ExMod points.

So, landscapers need to implement effective safety programs to ensure losses don’t exceed the new lower expected loss rate for the industry.  

To help landscape businesses manage their individual ExMod, Rancho Mesa introduced the KPI Dashboard in January 2021 to provide insights that help organization leaders stay informed and prepare for future changes like these.

If you’re not a Rancho Mesa client, and are a landscape business in California, we would welcome the opportunity to forecast your ExMod to help you better prepare. Contact me to request your customized KPI Dashboard.

Wearable Technology Is the Future of Jobsite Safety

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

The future is here and construction companies are starting to adopt wearable technology for their workers to reduce and prevent injuries from occurring on their jobsites. Wearable technology can be defined as any device that construction workers wear on his/her body. Since the construction industry accounts for nearly half of all fatal work injuries, this new type of personal protective equipment (PPE) is going to look radically different in the years ahead and should reduce both fatal and non-fatal injuries on jobsites worldwide. Below is an overview of five technologies in use today or soon to be in use in the near future.

Smart Watches
Many people wear smart watches daily, but the powerful sensors in smart watches can provide significant benefit to the construction industry.  These devises can monitor vital signs like heart rate and step counts to prevent overexertion. They can also detect falls, which is a leading cause of serious injury on a jobsite and provide an immediate alert to site and emergency personal.  In addition, smart watches allow employees hands free communication.

Smart Hard Hats
Hard hats are a vital piece of PPE on every jobsite. But, these aren’t your fathers’ hard hat. By adding a sensor band around the inside of a hard hat, employers will be able to detect fatigue, prevent mircosleeps (when sudden moments of sleep occur in a fatigued individual) and proximity sensing. Proximity sensing will alert both workers and equipment operators of a potential collision and prevent serious injuries. In addition, the outside rim of the smart hard hat is equipped with a ring of LED lights that allow for visibility from a quarter mile away. This feature is especially useful for any contractors performing work at night.

Clip-Ons
Clip-ons are not part of the usual construction PPE but are proving to be very helpful. A clip-on can identify zone-based worker locations and detect free falls. With a direct line of communication, workers can immediately report injures by pushing a button. 

Smart Boots
Steel toe boots are already an essential for construction workers, but in the next few years the soles in these boots will be capable of detecting shocks and falls sustained by workers, track the location of the workers more accurately and will recharge themselves by walking in them.

Smart Vests
Highly visible vests are a staple on jobsites. These new vests can track body temperature and will alert workers when a break in the shade or a drink of water is necessary to prevent heat-related illnesses. The built-in sensors can also alert workers when they are nearing or entering a hazardous area. If used in conjunction with GPS equipped equipment, they can detect nearby equipment and slow them down to avoid any safety issues.

The future of construction safety will include some form of smart device that alerts the wearer and/or the safety manager when it detects a hazard. While these wearables are not a replacement for traditional PPE and best practices, they can help prevent hazards created by human error. As they are deployed across jobsites, we’ll be able to prevent workplace injuries before they happen.

For questions about managing your jobsite risk, contact me at sclayton@ranchomesa.com or (619) 937-0167.

Actual Impact of Auto Claims to Your Bottom Line?

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

In two previous articles/podcasts, we explored “below the surface” impacts from payroll inflation and lost time workers’ compensation claims. We provided detail on how these can negatively impact a business’s productivity and profitability and what companies can do to mitigate those impacts. Today, let’s look at another area where you need a keen awareness to really understand all the impacts.

What is the true impact an auto accident can have on areas of your business? For discussion, let’s consider an accident where your driver is at fault and also injured. This type of accident is much like an octopus in that it is going to touch many areas of your insurance program. 

• First, there is the damage to your auto, obviously this will be covered under the physical damage portion of your policy.

• Second, you will have the physical damage and potential bodily injury to the third party whom your driver hit. This would fall under the auto liability portion of your policy. Additionally, if the other party or parties are severely injured it could penetrate your initial layer of liability insurance requiring your umbrella/excess policy to respond. As a side note, in my 35 years in the insurance industry, the largest claims that we see are predominately in auto due to the potential of severe bodily injury.

• Third, given that your driver was injured, this claim will trigger your workers compensation policy to provide coverage for both the indemnity and medical costs of their injuries.

• Fourth, the claims will impact your loss ratios in both your automobile insurance and workers compensation, causing the potential for future premium increases.

• Fifth, this claim will also cause your Experience Modification to rise, which again will cause the potential for future premium increases as well as potentially, if you’re a contractor, eliminate you from bidding on certain work.

• Sixth, replacing the injured driver may mean having to hire someone new which will increase payroll and lead to additional training time and a loss of productivity.

I’m sure your head is spinning and you’re probably wondering “all this, from one accident?” What should I do? Thankfully there are several things you can do to mitigate this before the accident occurs. Consider the following:

• Do you have a formal fleet safety program in place? If not, work with your trusted advisor to get one in place. If you would like us to help you with that contact our client services team to set up a time to review our trainings and fleet safety resources with you.

• Do you have a distracted driving policy in place for your drivers? This is by far the leading cause of auto accidents and while many are at low speeds, they can still be very costly. High speed distracted driving accidents can be catastrophic.

• Are you participating in the DMV Pull Program? If not, this is a valuable tool that will provide you with information on your drivers’ experience regardless if the infraction or incident occurred as a part of work or outside of work. Most auto insurance carriers will view this as a subjective credit on your premium rating. You can do this very inexpensively and direct via the DMV website.

• Are you using any telematics tools, like GPS, speed and breaking tracking, cameras (both forward facing and rear facing)? These devices are again viewed as a subjective credit by insurance carriers.

• Once an accident occurs, are you completing a thorough accident investigation report with a description of the accident, witness statements, pictures, police report (if available) and then reviewing the data to determine root cause and possible changes to your fleet safety program?

As you’ve seen, the key to mitigating this type of claim is to keep it from occurring, which is easier said than done.  Accidents will still happen. While you may not be the “at fault’ party in many of the accidents, reducing the likelihood of your driver being at fault starts with your commitment to a strong fleet safety program. If you need help in creating this fleet safety program, please contact our client services team to get started. 

Once you have a strong program in place and you feel more in control of your vehicle safety performance there are other cost saving programs that you would be eligible to consider.  We discussed those in other articles where we explore Performance Based Insurance Programs.

I hope you find this information useful and that you are able to take away an idea or two that might improve your operations. To learn more best practice techniques, contact us or reach out to me directly at dgarcia@ranchomesa.com.

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

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

In the three preceding articles in this series, we took a deep dive into some areas where a business’s productivity and profitability could be impacted by various factors emerging in the insurance marketplace. In the course of those articles, we also examined some tools, strategies and ideas that a company might implement to help manage and mitigate those impacts. Today, we will look at a way to exert the most control over your insurance program and premium outcome through performance-based insurance programs.

I’ve written about these programs before in "Increasing Your Productivity and Profitability Through Your Insurance Program," "What is the True Cost of a Lost Time Workers’ Compensation Claim?" and "How is Payroll Inflation Impacting Your Workers' Compensation Premium." So, in lieu of diving into all of them, let’s review a few of them briefly and then spend a little more time with “are they right for you now?”

Beyond guaranteed cost programs, where policyholders pay a set premium and then claims are covered up to the policy limit, there are a wide range of performance-based insurance programs that can apply to a single line of coverage, like workers’ compensation, or multiple lines of coverage that can also include most notably general liability and automobile. Rancho Mesa has created a Workers’ Compensation Continuum document that lists many of these programs. As you move from right to left on the continuum, business owners increase control as well as risk. So, a wise strategy would be to evaluate as many programs as seem to fit your tolerance and readiness for that additional exposure.

Are you confused, yet? You are not alone, which is why it is even more important to start the process with a trusted advisor (your insurance broker) who is both familiar with and skilled in putting these programs in place. A properly skilled and educated advisor will be able to walk you through each option and present it in a way that makes your understanding of it easy to comprehend. If you do not fully understand both the benefits and the risk, we recommend pausing before moving forward, and take ample time for the best decision possible.

As someone who owns and operates a business, I like the idea of the “bet on yourself” model which always makes me feel more in control of the outcome. I cannot emphasize enough how confident you need to be in the ability to control your claims in order for these programs to work for you. That is why in the previous three articles, we talked so much about what you can do to improve your safety programs and more importantly your safety culture. Once you have the right team in place, have reached the point where you have control of your claims, and want more control over your premiums and pricing, then it may to time to move into the performance-based insurance program world.

If my forecast of a hardening workers’ compensation market as early as late 2022 or early 2023 is accurate, then getting started now in putting the right team together should be a priority. Follow these three steps to prepare:

1. Review your existing safety programs.

   a. Look for ways to improve them based on loss trends and industry benchmarks.

2. Evaluate your claims history over the last five years.

   a. Look for the root causes that are driving the losses.

3. Identify someone internally to be your safety director.

   a. Consistently demonstrate upper management’s support of their efforts to the company and make sure you provide them with tools necessary to accomplish their goals.

Finally, in closing, choose a trusted insurance advisor who understands your industry, your operations and is very familiar with performance-based programs. There are good trusted advisors out there, so if you are currently with one, then give them the time they need to help you get better. 

If you want to learn more about performance-based programs and would like to talk with us about the opportunity to be your trusted advisor, contact us and our team that specializes in your industry will reach out to you. If you would like to speak with me directly, email me at dgarcia@ranchomesa.com.

I hope you found this series helpful in making your 2022 the most productive, profitable and safe year ever.

How Higher Average Pay Can Lead to Work Comp Savings

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

Wage thresholds have increased consistently in the past decade. This has pushed owners to give sizable raises every few years to maximize employee compensation, but also reducing insurance cost. The experience modification (XMOD) and payrolls are key factors in developing a company’s net rates for workers’ compensation, but average wage per hour represents a big differentiator for most carriers and can lead to even more savings.

Paying your most competent employees above the wage threshold leads to less fraudulent claims, longer tenured employees, and a happier workplace, not to mention the benefit of a drastic cut in net rates for that class code. The gap that is sometimes felt is when there are employees that have the same job description and are earning 30-40% less. Managing payroll inflation is always critical for businesses but let’s think about what this can do to the employees bringing the average pay down for your company. Consider:

• More fraudulent claims as the employee has less to lose if they are terminated or laid off;

• Resentment toward employees that are doing same job but making more;

• Employees are more likely to move to another company to get raises;

• Likelihood to miss more time when injured, leading toward higher temporary disability pay which typically can lead to a higher XMOD.

Insurance companies and their underwriters look closely at average salary per employee when they receive a submission with the renewal documentation.

The higher the average pay, the more aggressive they can be with potential scheduled credits in most cases. Obviously, the employer must be selective with who receives a raise and how much but also understand what potentially positive impacts there can be when giving raises in order to hit those thresholds.

And, perhaps just as important is partnering with a broker that specializes in your industry and knows how to properly benchmark you with like organizations. This consistently leads to more productive discussions with underwriters that lead to more scheduled credits. The happier your workforce is, the less claims you tend to see and that translates to long-term savings.

If you have any questions about how you compare to your industry or would like to discuss any other insurance related topic, do not hesitate to reach out to 619-937-0164 or email me directly at ccraig@ranchomesa.com.