Best Practice Tips for Lowering Your Commercial Auto Rates

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

For the last several years, the insurance industry has seen a significant increase in auto rates. In 2023, the top ten auto carriers in the US all saw double digit rate increases. This, in addition to the rate increases we’ve seen since 2018, equates to rates anywhere from 20-50% higher than we had just a few years ago. According to US auto insurers, these rate increases are still not keeping up with the skyrocketing claim frequency and severity. Therefore, we are likely to continue to see auto rates increase before things level off. 

With that being said, positioning your company now with a best practice fleet safety program is more important than ever. It is also critical that business owners work closely with their insurance brokers to develop a program that will not only improve safety on the roads, but will also highlight the efforts a company is focusing on from an underwriting perspective. Minimizing rate increases only comes with the collective efforts of the business owner and their insurance broker. In order to even consider receiving any credits on auto rates, a business needs to stand out from other submissions an underwriter is reviewing. Rancho Mesa understands how important this is which is why we have developed our detailed Fleet Supplemental Application and SafetyOne™ Driver’s Training Program.

As an insurance broker, a vital role we play is representing a business to the insurance marketplace. Providing underwriting details of the business to insurance carriers in an effort to make them interested in quoting the insurance is only the first step. Providing in depth details relating to fleet safety and efforts that go beyond what an underwriter is used to seeing is what Rancho Mesa strives to submit. The more details an underwriter has regarding an auto submission, the more comfortable they will be with the company’s program, which generally leads to more subjective credits. Rancho Mesa developed a Fleet Safety supplemental that dives deep into a business’s fleet program. It collects general information such as fleet size, driving radius, and description of vehicle usage. It also explores details surrounding safety management. Examples of the information collected include:

• Safety controls

• GPS or telematics details relating to maintenance, speed, location, routing, etc.

• Accident reporting

• Fleet safety courses provided

The Fleet Supplemental also provides vehicle and driver information such as:

• Information relating to any permanently attached equipment

• Vehicle inspection and maintenance program

• Where vehicles are parked overnight

• Personal usage policy with employees

• Safeguards in place relating to storing of vehicles

• Process for reviewing and selecting drivers

• Review of Motor Vehicle Reports

• Pre-employment physicals, drug testing, and alcohol testing

Another useful tool relating to fleet safety is Rancho Mesa’s proprietary application called SafetyOne. Rancho Mesa has developed a driver training program that is accessed through the SafetyOne website. The administrator can assign the online driver training courses to the appropriate employees where they can easily be completed from a computer or mobile device.

Since each employee has their own login and password to access their trainings, the records are always easy to locate in the platform.

Driver training courses include both a video and quiz. And, they are offered in both English and Spanish. Employee watch the video and then take the quiz. This can be done as many times as needed in order to pass the course. We want people to really understand the content, not just get a minimum passing score. 

Courses include:

• Distracted Driving – The course covers the cost of distracted driving, “multi-tasking”, technology and distraction, eliminating distractions before you drive, cell phones, and fighting distraction on the road.

• Driver Safety – The course covers preparing to drive safely, driving fundamentals, driving with other vehicles, driving a night and bad weather, distracted driving and road rage, and handling an emergency.

• Driving Defensively – This course covers the fundamentals of driving defensively, dealing with distracted drivers, coping with aggressive drivers, using your headlights, driving safely in bad weather, handling a blowout, and sharing the road with trucks and buses.

• Driving Safety – This course is a refresher course that covers preparing to drive safely, the fundamentals of safe driving, driving safely when sharing the road with different types of vehicles, staying safe when driving at night and in inclement weather, road rage and distracted driving, and what to do if there’s an emergency.

While the auto marketplace continues to see rates increase, now is not the time for businesses to sit back idly and be complacent with their fleet safety program. Working with your insurance broker to improve your fleet safety program and sharing this information with insurance companies can have a significant effect on your auto premiums. 

If you would like to discuss how Rancho Mesa can assist in improving your auto risk profile, please feel free to reach out to me at (619) 937-0174 or jhoolihan@ranchomesa.com.

Unlocking Working Capital in Construction: Options for Reducing or Releasing Retention

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

Retention is a very common practice within the construction industry that typically involves 5-10% of each payment to the subcontractor being withheld until the project has been completed. The purpose behind this is simple, it is designed to make sure that subcontractors satisfy their contractual agreements before they receive their last payment for the work they have done.  While this practice serves a real purpose, it can cause significant issues for subcontractors if the payments are delayed.

Regardless of the reasons why a retention payment could be delayed, whether it be overall project completion delays or if there are issues with the work performed, the delay in payment can cause significant cash flow issues.  For subcontractors that do a lot of bonded work, cash flow issues will have a direct impact on their working capital which can have a negative impact on their bonding program.  However, there are some strategies that subcontractors can employ to get their payments released sooner, like negotiating the terms of the retention release in the contract. 

Prior to signing the contract, it is important that a subcontractor review and attempt to negotiate any unfavorable retention release terms. One option is negotiating a 10% retention down to 5% in the contract.  Should that not be achievable, subcontractors can provide performance and payment bonds which might convince the project owner and/or general contractor to lower the retention amount or release the retention sooner.

Performance and payment bonds protect the project owner and the general contractor in case the subcontractor fails to fulfill their contractual obligations, which is the main reason that retention is being withheld.  Therefore, the presence of bonds on the project may allow a subcontractor to negotiate terms that are more favorable to them, potentially lowering the percentage withheld from each payment, or even getting it released at earlier points within the project.   

While retention remains a standard practice within the construction industry, it can cause significant issues for a subcontractor should those payments be delayed.  So, negotiating these terms in all contracts is vital while also using the ability to provide bonds on the project as a solution to getting more favorable terms. 

Should you have any questions about this or you are having issues with retention being withheld, reach out to me at aroberts@ranchomesa.com or 619-937-0166.

Navigating the Construction Labor Shortage: Factors and Strategies for Success

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

Construction companies nationwide are grappling with a shared challenge: a labor shortage propelled by various factors. In this article, we will explore these factors and highlight key areas that can contribute to managing bottom lines effectively.

Factors Contributing to the Labor Shortage

Focus on College over Skills Training. Younger people have been opting for academic paths rather than entering the trades. For years, students have been encouraged to attend college in order to have a successful career. Therefore, fewer recent high school graduates have opted to enter trade apprenticeship programs which has significantly reduced the number of people being trained to enter these vital fields.

Retiring Workforce. The imminent retirement of the baby boomer generation (born from 1946-1964) poses a significant challenge. Skilled workers, including superintendents, project managers, and jobsite managers, form a substantial portion of those exiting the workforce. This creates a demand for skilled workers and necessitates a heightened focus on training apprentices.

Inflationary Costs and Higher Wages. Attracting and retaining skilled workers has become a budgetary challenge. Pandemic-induced wage inflation has led to an increase in payroll, resulting in both higher training costs and salaries. Additionally, prevailing wage rates have reached historic highs, contributing to a slower pace in hiring entry-level trade positions for budgetary reasons.

Strategies for Success

As the construction industry struggles with the ongoing labor shortage, business owners must strategize to protect their bottom lines. While challenges persist, focusing on key areas can help mitigate the impact on productivity and costs. Some central aspects that merit attention and investment include:

Safety Training. With an influx of new, unskilled workers, prioritizing comprehensive safety training becomes paramount. This not only helps prevent injuries but also contributes to a safer and more efficient work environment.

Rancho Mesa’s SafetyOne™ mobile app and website provides proactive safety orientation training for new hires plus ongoing safety training for all employees.

Insurance Cost Management. Implementing robust safety measures can positively influence insurance costs. By minimizing workplace accidents and demonstrating a commitment to safety, construction companies can negotiate more favorable insurance premiums.

Using Rancho Mesa’s SafetyOne™ mobile app to monitor safety on the jobsite through risk observations provides the data to show they are committed to safety.

Claim Reviews and XMOD Management. Engaging in claim reviews in regular intervals with your broker to address lingering workers' compensation claims can serve as an effective strategy for minimizing insurance costs, particularly in terms of mitigating XMOD increases and improving overall loss ratios.

Rancho Mesa’s claim advocacy approach remains a critical tool for Rancho Mesa clients.  Jim Malone, the company’s claim advocate, communicates regularly with adjustors and helps advance claims to closure, thus helping insulate XMODS.

Strategic Workforce Planning. Develop long-term workforce plans that account for the aging workforce and the need for skilled labor. This may involve targeted recruitment efforts, partnerships with vocational schools, and apprenticeship programs.

While the construction industry faces substantial challenges due to the labor shortage, proactive measures in safety, insurance management, and strategic workforce planning can help businesses weather the storm and maintain a healthy bottom line.

For more information on these proactive strategies, reach out to me at (619) 438-6874 or  khoward@ranchomesa.com.

2024 Sees COVID-19 Claims Reporting Changes in California

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

As of January 1, 2024, several COVID-19 claims reporting requirements are changing for employers in the State of California.

Beginning this year, employers are no longer required to report COVID-19 cases to their carrier in order to determine workplace outbreaks.

Additionally, COVID-19 is no longer automatically assumed to be a work-related illness. Previously, if a certain number of employees tested positive for COVID-19 within a specific amount of time, those employees’ workers’ compensation claims were presumed work-related, making them eligible for benefits. Now, if an employee claims a COVID-19 injury, it will be treated as a regular claim instead of a presumed work-related illness.

Also, the time frame for deciding liability in COVID-19 injury claims, previously 30 to 45 days, has now returned to the original 90-day timeframe.

Employers are still required to follow Cal/OSHA’s reporting requirements regarding a COVID-19 case, and clients should be aware of their location’s county health department reporting standards. Although most no longer require reporting, health departments such as Los Angeles County still demand companies report employee COVID-19 cases over a certain number.

For questions regarding these changes, visit  www.dir.ca.gov/dosh/coronavirus.

Cracking the Code: Deciphering the Primary Threshold’s Impact

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

Every business owner understands the correlation between their Experience MOD (XMOD) and what they will pay in workers’ compensation premiums.  When the XMOD increases, there is a good chance that the workers’ compensation rates or premiums will rise as well.  This is why it is so crucial to really hone in on company safety procedures to limit work-related injuries as much as possible.  The reality is that even the safest company that does everything the right way is going to run into a workers’ compensation claim from time to time.

So, when the inevitable workers’ compensation claim happens, what are you supposed to do?  What impact will this have on the XMOD?  The first component that business owners need to understand is that there is a cap to how much any single workers’ compensation claim can impact the XMOD.  That cap is called the primary threshold.  The primary threshold varies from company to company and is based off of the company’s payroll.  The more payroll a company has the higher the primary threshold.

For this example, a company has a primary threshold of $15,000 where the maximum number of points that any one claim can impact the XMOD once reaching the threshold is 10 points.  This means that a claim that costs $15,000 and a claim that cost $150,000 will have the same impact (10 points against the XMOD).  However, this does not mean that claims that exceed the primary threshold can be disregarded, because the higher claim cost you have will impact your current and 5-year loss ratio (incurred claim cost/premium paid).  Additionally, if a claim that was reserved higher than the primary threshold and can be closed or decreased lower than the primary threshold, XMOD points can be shaved off of that claim.

Knowing the importance of the primary threshold, we designed our proprietary the KPI dashboard that allows our clients to see their primary threshold number and corresponding maximum impact to the XMOD any one primary threshold claim would have. 

If you have any questions about your XMOD or would like us to create a KPI for your company, please feel free to reach out to me at (619) 438-6905 or ggarcia@ranchomesa.com.

Anne Wright Explores Philadelphia Surety with Mike Hall

Rancho Mesa’s Surety Relationship Executive Anne Wright sat down with Mike Hall, Vice President of Surety for Philadelphia Insurance Company to explore what makes Philadelphia Surety unique and the programs they offer businesses placed with them.

Transcript

Anne Wright: Welcome. This is Anna Wright, Surety Account Executive here with Rancho Mesa Insurance and we’re going to talk a little bit about how we place business with our surety companies. We have a lot of options. Our clients rely on us to obviously be the professionals they expect handling their business, but also making sure we get the right surety relationship that's going to serve them best with all the terms, conditions and long term relationship.

So I have Mike Hall here with me today. Mike, you want to do a quick introduction?

Mike Hall: Sure. Hi, my name is Mike Hall with Philadelphia Insurance, Vice president and I run the Western region, which includes the northwest, Northern California, Southern California and Hawaii. I’ve been doing surety for 29 years, and Anne and I have known each other for, I would say, probably 27 years of that. So we've been doing business a long time and I'm happy to be here.

AW: Well, thank you for being here. We appreciate it. So when we are looking at placing a piece of business with a surety, you know, we're looking at the type of contractor developer, the type of work they do, the job sizes they need, who they do work for, and then the various underwriting information that they have that's available. So again, we have lots of choices in lots of markets, but we found Philadelphia to be a very strong market for some of our best clients, for many years. I think Philly's been around for 11 years.

MH: Philly Surety has been around for just over 12 and a half years. And then Philadelphia Insurance itself has been around for 60 plus years.

AW: Okay. So they brought in some great talent with Mike and some of his peers to run the surety division. It's been very successful. So we found it a very good market for a lot of our accounts. With regard to Philly, what we find sets you apart from some other sureties, again, the relationships. It's very important that we have the personal relationships with the underwriter. So when you say we've been working together and known each other for 27 years, that matters, obviously. What do you think sets Philly apart from some of your competitors?

MH: I would say one thing that sets us apart is we're A++ 15 ranked by AM Best. That's the highest ranking you can get. There are other sureties, but there's only a handful of them that get that ranking. I think we provide good service and a consistent underwriting approach. So the broker in the account knows exactly what to expect as we're going through the underwriting process.

AW: Yeah, it's an excellent point. Something we have to take into consideration with a lot of public agencies and general contractors, the AM Best rating is an important tool that they use to determine what's acceptable as a surety company. So there's a lot of A- surety companies out there right now, which is still an A, and it's still you know, it's not a big negative. But to be able to say you've got that A++ 15 rating is definitely huge for you all.

MH: It definitely comes into play on the commercial side of the house when they're looking at large appeal bonds or bonds of that nature.

AW: Gotcha. Okay. Yeah, well, you know, some of the smaller to midsize accounts, though, you know you write those, too. So I would typically think that the very large general contractors or developers are going to need that A++ 15 rating. But it's nice to know that Philly is available for some of other accounts that we've been able to place with you along the way. So it's not just meant for mega companies.

MH: Exactly.

AW: And you also have a small contract program. You are one of the early entrants, I think, into the, what we call, the Express program.

MH: Yes, we have on the contract side, we have it's called just Contract Express, and it's for programs of job sizes, $500,000 single up to $1,000,000 aggregate programs. We can go a little bit larger in that area, but that's just kind of typically where they, where they operate. And then on the commercial side, we have Commercial Express, which handles those small statutory bonds.

The agent or even the account itself can go online and purchase a bond there, prints it out, prints out the bond form for you and you ready to go.

AW: Very efficient.

MH: Yeah, it's very efficient. And then standard contract, we go up to programs of $300 million. There's other competitors of ours out there that do substantially more than that but-

AW: It fits your needs.

MH: Yep.

AW: So, very good. We look at claims handling as being an important part of the surety relationship as well. We, obviously we all underwrite to avoid claims. We underwrite to a zero loss ratio, but claims happen. So do you have anything you can share about your claims people and how well they work to resolve issues?

MH: Yeah, our claims department is great and in addition to just the normal claims handler, we have one local here in Southern California, but we also have an engineer on staff. So if you had a situation where there's maybe a big bid spread and our account was confident in their number, we could have the engineer talk with the account, go through the project, walk through it, get a better understanding, and then they'll just provide that additional feedback to the underwriting team.

And then we make the final decision on whether we write the final bond or not. We also have accountants on staff, so if the account is in difficult situation, we can send the accountant in and go through the books and records, get a better assessment of kind of what's going on. You know, that makes sense to finance the account through the project, or is it better to take, you know, some other approach to resolving the claims situation.

AW: Sure. So value added services that exactly through the project.

MH: Exactly, and we also offer up early on in the underwriting process, we have the ability to take collateral. We can also use funds control to maybe get over some hurdles in the underwriting process.

AW: All right. So again, all the tools, that's wonderful. Well, I know there was a recent newsletter that came out from Philly and they talked about selecting the right relationship and they mentioned reputation, size and service. And again, that's what our clients look for in us, and that's what we look for in our sureties, and Philly certainly fits the bill when it comes to reputation and size of the company and service to us as the agents and then our clients to get them on their way and grow the relationship and grow their business. And again, the value that you bring has been a great experience in my career with you. So, thank you for that.

MH: Likewise.

AW: So as a broker, we're going to find any way, any reasonable way, to get the bond done. If we can do it with Philly, we're going to do it with Philly. Mike is one of our go-to’s and we appreciate you being here today in StudioOne™.

MH: Thank you for having me.

AW: You're welcome. If anyone has any questions, you can contact me awright@ranchomesa.com.

Thank you.

MH: Thank you.

Protecting Non-Profit Operations with Business Interruption Insurance

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

A non-profit organization’s culture and positive impact often flows through its strategically placed locations in the communities it serves. These locations, whether they be offices, group homes, childcare centers, or shelters all further the mission and may drive revenue. The cost to the organization if one of these locations becomes inoperable due to a property damage claim can often add undue stress to the finances and leadership. This article will address how business interruption insurance (BII) can address these costs.

Following a covered property loss, a business or non-profit organization may suspend a location’s operations while repairs are made. This is known as the period of restoration. If such a suspension occurs, operations may be impacted in several ways.

 First, revenues may decline. Examples include a health clinic treating a reduced number of patients, a Boys & Girls Club losing members and monthly dues, or donations decrease.

Second, at the risk of losing staff, the organization may need to keep key employees on the payroll who cannot work their shifts during the repairs.

Third, the organization may continue to incur fixed costs at the location such as mortgage, rent, insurance, taxes, professional services and utilities.

Lastly, the non-profit may incur extra expenses to maintain operations or services at an alternative location. These extra expenses may include the cost of an extended stay hotel for clients or increased rent for an alternative worksite, and the cost of moving expenses.

The Challenge

How does a non-profit leader arrive at the most appropriate limit of insurance to indemnify the organization during a loss?

A Best Practice approach would involve the, use of a business interruption worksheet. This document will guide a policyholder and its insurance broker by asking for different line items to be insured.

These items will include:

• Annual net income

• Annual compensation for key people to be retained during the suspension of operations

• Annual employee benefits, pension costs and payroll taxes for key people

• Continuing fixed expenses

• Extra expense

The sum of these figures will provide the limit needed for a 12-month period of restoration. If 12 months does not seem long enough, then the policyholder and broker should discuss a realistic length of time operations would be suspended following severe property damage.

If operations may not resume in full capacity following completion of the repairs, then the policyholder and insurance broker should consider an extended period of restoration.  This may allow a business 180 to 365 days of extended coverage once the period of restoration ends.

Business interruption insurance coverage continues to confuse employers and many insurance brokers who do not have experience working with non-profit organizations. Rancho Mesa encourages decision makers to discuss this coverage and possible disaster plans at length with their insurance broker. It may help avoid a costly financial loss following property damage.

For more information or to ask questions about business interruption coverage, please contact me at sbrown@ranchomesa.com or (619) 937-0175.

Don’t Get Skunked: Properly Insuring Large Tree Care Equipment

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

These days, everything is more expensive. Between inflation and supply chain issues, the cost of equipment is steadily increasing. As the tree care industry becomes more mechanized, we see new technological advancements in machinery and equipment that are greatly improving the productivity, profitability, and safety of the industry. These big ticket equipment purchases are a major investment for a tree care business. It is important to make sure that your assets are insured correctly so you can rest easy knowing that if something were to happen to them, you are properly covered. This can provide financial protection and affirm business continuity. There are two important factors to remember when scheduling equipment with your insurance broker:

1.       Insurance Valuation: Replacement Cost or Actual Cash Value

In insurance, there are a few ways to value equipment, most commonly replacement cost (RC) and actual cash value (ACV). RC is the cost new today, without factoring in depreciation. ACV is the depreciated value (ACV = RC – depreciation). If you have a total loss on a piece of equipment that was rated on ACV, the insurance company will factor in depreciation when determining the payout amount, so you may not receive enough money to replace your equipment with a new item. With inflation and recurring supply chain issues over the past few years, tree care equipment is hard to get and more expensive.

For example, a 2020 chipper costs more new today than it did in 2020. Replacement cost coverage takes this into account by providing coverage for the current cost of replacing your equipment with a new item at current market rates. We recommend that you have the carrier provide replacement cost coverage on all items, so look for that definition when reviewing with your broker.

2.       Equipment Valuation

Secondly, it is critical that you execute a pre-renewal meeting with your insurance broker. In that meeting, your broker should be asking you to review the equipment values and make adjustments where necessary, appropriate to the true valuation. As discussed, equipment values are steadily increasing. Therefore, it is imperative that you are increasing those values on the upcoming policy term to be certain you will get the most money back in the event of a claim.

Properly insuring your assets is a fundamental aspect of your risk management program. It is crucial for protecting your company’s financial stability, business continuity, and safeguards your reputation and operational stability. If you have questions about properly insuring your equipment, please reach out to me at (310) 753-6804 or randerson@ranchomesa.com.

The Billion-Dollar Cost of Working at Height: The Critical Questions to Ask Before Climbing a Ladder

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

Every year, OSHA publishes a “top 10 most frequently cited standards” list. Without question, ladders and fall protection consistently make the list. A Liberty Mutual 2023 workplace survey found that $6.26 billion was spent on falls as a result of working at height. Working at height is inherently dangerous but becomes more so when the incorrect ladders are used or improper setup for a job. Sending your employees to a jobsite without conducting a proper analysis to guarantee you have the proper equipment is setting yourself up to have preventable claims.

Before choosing a ladder at for a job, ask yourself:

• Will the ladders on site reach your desired height safely?

• Do the pads need to be replaced on the feet of the ladder?

• Do I have a faulty ladder?

• Should I be using fiberglass or metal?

• Is the ground level or should I have a ladder with adjustable outriggers?

• Do I need a guardrail system on my ladder?

• Am I able to get the proper angel needed for an extension ladder?

• Do my employees have the proper footwear?

All potential claims from ladders are theoretically preventable if we take the time to prepare properly. Your employees can be working at height for long periods of time, sometimes on very hot or cold days and need to be alert both while at height and especially when getting down. A vast majority of claims we see from ladder falls come from slipping or missing the last rung on a ladder. Looking further into these accident investigations, we see that many employees are not getting enough breaks so they can stay mentally and physically alert.

Most contractors are equipped with step stools, step ladders and extension ladders but these might not be all that is needed to get the job done properly. Each of these serve a purpose and are the most common on job sites for a reason which is why most work can be completed using just these three types of ladders. However, just because we are able to reach our desired height does not mean that it is the most efficient way to get there. Having more intricate ladders available for certain projects has become increasingly more valuable.

According to the Bureau of Labor Statistics, fatal injuries from movable ladders has decreased by nearly 17% from 2019 to 2020 while non-fatal ladder injuries remained consistent (this is the newest data available published in April of 2022).  Things appear to be trending in the right direction with more information and safer ladders available. That said, ladder safety needs to be at the forefront of your safety program as those contractors working at height are always one slip away from a claim that can drastically change the live of an employee along with your insurance program.

If you have any questions on how to improve your ladder safety program or any other insurance questions, do not hesitate to reach out. You can contact me at ccraig@ranchomesa.com or call at (619) 438-6900.

Need a License, Permit, or Court Bond? Rancho Mesa Can Help

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

During our recent budget discussions for the 2024 fiscal year, the Rancho Mesa Surety Department looked at a breakdown of the bonds we wrote in 2023.  As expected, 90% of our bond revenue was represented by the typical performance and payment bonds, subdivision bonds, bid bonds, bond riders, and consents of surety for our construction clients.

One area that surprised us was the volume of bonds classified as “non-contract” that we provide for both our construction and human resource clients.  While these type of bonds are small in size (bond amounts are usually $25,000 or below) they make up a large volume of bonds since many of our accounts require at least one or two of these.  Below I have identified four categories of non-contract bonds and several examples:

1. Court and Fiduciary: Plaintiff bonds include attachment, replevin, mechanic’s lien, and garnishment. While defendant bonds include appeal, supersedes, release of lien, and temporary restraining order bonds. We also placed various probate bonds to cover executors, administrators, guardians, and conservators.

2. License and Permit: Businesses and professionals may need mortgage brokers bonds, CA contractor license bonds, sales and use tax bonds, alcohol bonds, and compliance bonds.

3. Federal Official and U.S. Government: There are several types of bonds including public official bonds, U.S. customs bonds, and notary public bonds for those doing business with or for government entities.

4. Miscellaneous: Additional miscellaneous bonds could include financial guarantee bonds, utility deposit bonds, insurance program bonds, and lost securities bonds.

With over 1,000 types of bonds classified as “non-contract,” it can be overwhelming to determine which category of bond might fit a certain circumstance. That is where a Rancho Mesa bond agent brings value to provide direction and assist in placing the correct form of coverage.   

If you would like more information on various miscellaneous bonds that you might encounter, please contact me at 619-937-0165 or mgaynor@ranchomesa.com.

The Final Chapter: Addressing Training, Access and Recordkeeping in the IIPP

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

In this third installment of exploring an Injury and Illness Prevention Program (IIPP), we will be taking a closer look at: Providing employee training and instruction, procedures to allow employee access to the program, and recordkeeping and documentation.

Providing Employee Training and Instruction

Providing clear and effective training for both employees and supervisors is essential for the success of an IIPP. All employees are required to be fully aware of the workplace hazards they may face. Comprehensive and well-conducted trainings can help reduce the likelihood of work-related injuries and illnesses. An article from The State Fund suggests “If you are unable to conduct your own required trainings, you should reach out to an outside consultant, Cal/OSHA consultation, vendors, your insurance carrier, and/or broker for assistance.” The more knowledgeable and prepared employees are, the safer the work environment becomes.

Take a look at the training resources that are available to your organization. Rancho Mesa clients can access the online safety training courses in the SafetyOne™ platform.

Procedures to Access the IIPP

All employees are required to have access to the written IIPP. This will ensure that all employees are fully aware of the safety protocols and hazard prevention strategies used to minimize workplace accidents and illnesses and thus, maintain a safe workplace.

According to Cal/OSHA, employers can meet this requirement by:

1. Unobstructed access through a company server or website, which allows employees to review, print, or email a copy of the IIPP

2. When requested, provide a printed copy of the IIPP (unless the employee agrees to receive an electronic copy)

The IIPP can be made accessible to users of the SafetyOne mobile app. It allows organizations to upload digital files into a file cabinet that is available only to their users.  For employees who aren’t SafetyOne app users, they could scan a QR code or complete a webform to request the IIPP from their administrator.  However your organization decides to distribute the IIPP, it should be easy for employees to access or request.  

Recordkeeping and Documentation

Recordkeeping and proper documentation are crucial components of the IIPP. By maintaining accurate records, employers can learn from past incidents and identify injury and illness trends. This knowledge allows for necessary corrections and improvements in future operations, which will improve overall workplace safety. There are 5 steps required by the OSHA for a compliant recordkeeping system:

1. Each employer (unless exempt by size or industry) must record each fatality, injury, or illness that is work-related, is a new case, or meets one or more of the general recording criteria specified in Title 8, Section 14300.

2. Record each injury or illness on the Cal/OSHA Log of Occupational Work Related Injuries and Illnesses (Form 300) according to its instructions.

3. Prepare an Injury and Illness Incident Report (Form 301), or equivalent.

4. Annually review and certify the Cal/OSHA Form 300 and post the Summary of Work-Related Injuries and Illnesses (Form 300A) no later than February 1 and keep it posted where employees can see it until April 30.

5. Maintain the last five years of these records in your files.

A simple way to collect the incident information required for the OSHA logs (Form 300, 300A and 301) can be obtained by utilizing SafetyOne’s mobile forms. Either through the mobile app or via a QR Code or web link, employees can complete accident investigation forms and witness statements digitally.  Then, the person responsible for documenting and maintaining the OSHA logs, can review the reports that came in through the mobile app and document the OSHA logs in the RM365 HRAdvantage Portal.

Rancho Mesa will host several webinars in the coming months to assist clients with understanding the best practices for completing their OSHA logs using SafetyOne™ and the RM365 HRAdvantage Portal.

Cal/OSHA has a Guide to Developing Your Workplace Injury and Illness Prevention Program that is helpful for organizations that need some assistance with getting started.

Rancho Mesa also has a 6-page Sample Injury and Illness Prevention Overview for California Employers available through our RM365 HRAdvantage Portal.

Following these steps is a proactive approach to building a safer working environment for all employees. The bottom line, it’s all about mitigating accidents before they happen and building a safe work environment.

Please contact me with any questions regarding the IIPP at (619)-486-6569 or via email at jmarrs@ranchomesa.com.

Developing A Strong Subcontract Agreement with Tree Care Partners

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

Having strong service partners that support your customers outside of your core operations is an important part of business. Many commercial landscape businesses have regional relationships with professional tree care companies to support the needs of their customers.

Here are some of the key components when setting up your overall subcontract program, specific to the tree care industry.

Written Subcontract Agreement

Work with your attorney to draft a master subcontract agreement or project/job specific subcontract agreement since the type of indemnity agreements can change from state to state.

Among other things this agreement should clearly define indemnity and provide insurance requirements.

Insurance Requirements

Limits
Collaborate with your insurance advisor to specify the types of coverages and policy limits you will require in the subcontract agreement. 

Arborist Errors & Omissions Coverage
The tree care company should carry some type of Arborist E&O endorsement or have a separate policy providing coverage for Arborist E&O.

Depending on the scope of work, if the tree care company is providing written arborist reports or providing professional consulting services, require them to carry professional liability coverage.

Additional Insured
Ask the tree care company to name you as an additional insured for both ongoing and completed operations coverage, including primary/non-contributory and waiver of subrogation on their general liability policy in your favor.

Certificates of Insurance
Collect certificates of insurance and automate the process of requesting an updated certificate as the policy period nears expiration.

Transferring risk where possible is critical for landscape contractors. Using these initial steps as you build out a best practice subcontract agreement can insulate your company from the ever growing exposures that exist as you engage with partner trades.

To discuss your company’s management of risk, contact me, Drew Garcia, at (619) 937-0200 or drewgarcia@ranchomesa.com.

WCIRB Proposes 2024 Construction Dual Wage Threshold Increase

The Workers' Compensation Insurance Rating Bureau (WCIRB) has proposed an increase in hourly wage thresholds for all 16 construction dual-wage classifications.

The increases range from $1 to $4 depending on the classification and if approved will go into effect for policyholders renewing September 1, 2024 and thereafter. The chart below outlines the proposed increases for each classification.

Dual Wage Classifications	Existing Threshold	Proposed Increase	Proposed Threshold
5027/5028 Masonry	$32	$3	$35
5190/5140 Electrical Wiring	$34	$2	$36
5183/5187 Plumbing	$31	$1	$32
5185/5186 Automatic Sprinkler	$32	$1	$33
5201/5205 Concrete Work	$32	$1	$33
5403/5432 Carpentry	$39	$2	$41
5446/5447 Wallboard Installation	$38	$3	$41
5467/5470 Glaziers	$36	$3	$39
5474/5482 Painting Waterproofing	$31	$1	$32
5484/5485 Plastering or Stucco	$36	$2	$38
5538/5542 Sheet Metal Work	$29	$4	$33
5552/5553 Roofing	$29	$2	$31
5632/5633 Steel Framing	$39	$2	$41
6218/6220 Grading/Land Leveling	$38	$2	$40
6307/6308 Sewer Construction	$38	$2	$40
6315/6316 Water/Gas Mains	$38	$2	$40

In light of the ongoing labor shortage within the construction industry, employers have been making a concerted effort to retain their workforce. This includes providing more comprehensive benefits packages, including higher wages, and offering merit-based bonuses when appropriate. As a result, these proposed wage classification increases may prompt employers to consider extending further salary increases to their employees, with the aim of reducing 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.

California Expands Regulations for Employee Criminal History

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Recently, California updated regulations regarding how employers can use criminal history to make employment decisions.

The new standards come as an update to the California Fair Employment and Housing Act (FEHA) and apply to businesses with five or more employees.

The updates have expanded the definition of “applicant” to include any employees who pursue or intend to pursue a new position in the company, as well as those being reviewed due to a change in company management or ownership.

Employers are prohibited from stating in job postings that they will not hire applicants with criminal backgrounds.

“Employers are prohibited from including statements in job advertisements, postings, applications, or other materials that no persons with criminal history will be considered for hire, such as ‘No Felons’ or ‘Must Have Clean Record,’” subsection (a)(2) of the law states.

Furthermore, if an applicant shares their criminal history voluntarily, and is otherwise qualified for the job, the employer cannot take their criminal history into consideration until a conditional job offer has been made to the individual.

The update also adds that if a “a licensing, regulatory, or government agency or board” grants the right to perform the job duty, such as in the form of a certification, the employer should not consider their criminal history a disqualifying factor for the prospective job.

The California Civil Rights Department provides sample notices employers can use to communicate how their criminal history will affect the company’s decision making.

Rancho Mesa aims to provide the resources clients need to make informed employment decisions. For any questions regarding these updates, contact your client technology coordinator.

Mitigating Risks in the Solar Industry with Professional Liability Insurance

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

Since the outset of the 21st century, the solar installation industry has been bustling with the demand to create clean sustainable energy. Based on growing political and ecofriendly needs, the solar industry is ever changing and trying to keep up with constant fluctuations when it comes to energy storage, federal and state regulations, and supply chain demands. Hand in hand with this growth is the risk created for solar installation contractors who are busy creating drawings, proposals and contracts. It is common for a solar contractor to purchase general liability insurance. It is commonly mistaken as the only needed coverage besides workers’ compensation and commercial auto insurance. However, general liability coverage needs to be triggered by either property damage or bodily injury. But, what about all of the potential lawsuits outside of property damage and bodily injury? This is where professional liability becomes an essential element to any solar installation contractor’s insurance program. To dive deeper, I have provided some claim examples that should resonate with any solar contractor performing residential or commercial installation.

Design Errors

Once a rendering is made that calculates the potential savings a solar system can generate, a contract is typically signed with the proposed energy savings. A solar contractor may face a claim if there is a design error. For example, a shaded area may have been missed that does not generate enough energy or the system might have been incorrectly positioned. A professional liability insurance product would be the best risk transfer vehicle for protection against this type of claim.

Failure to Comply with Building Codes

If a customer’s home cannot pass inspection because the work does not meet building codes, there could be a lawsuit and a claim which could trigger a professional liability policy.

Failure to Obtain Permits

If there are any nominal losses created from the lack of permits or timing of permits, a customer could file a lawsuit seeking damages. Since there is no bodily or property damage, a general liability policy would deny this type of claim. A professional liability policy would offer advice through third-party council to help mitigate losses fast in a time sensitive claim scenario.

Battery Storage

The State of California has high hopes to be petroleum free by 2050. This would mean that home battery systems would become essential for energy storage. Now imagine a family is counting on this system to make sure their vehicles are charged. This creates a lot of demand and if this battery was installed incorrectly, there could be claims having to do with losses sustained by that family. The scenarios are endless when you really think about it.

Maintenance Contracts

For some large-scaled solar installations, the energy created can be critical to business or for emergency lighting. If these systems fail to produce the proposed energy, in could cause a domino effect of a loss and/or costly lawsuits. Imagine a manufacturing plant relying on solar panels and battery storage that cannot create their product due to a faulty system. A professional liability policy could help mitigate the loss by adding in defense and counsel.

As the solar industry adapts and grows, the need for appropriate risk protection grows with it. Building an effective insurance program that includes professional liability is critical for all solar contractors considering the exposures referenced in this article. With a strong niche in this space, Rancho Mesa brings expertise and market knowledge that can help solar contractors transfer the appropriate risk, where necessary.

To discuss your risk management, please contact me at khoward@ranchomesa.com or (619) 438-6874.

California Increases Paid Sick Leave for 2024

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

The state of California will officially change the paid sick leave (PSL) law for businesses in 2024. Effective January 1, 2024, the amount of PSL employees can take will increase from 24 hours to 40 hours per year.

The decision to make these increases was approved by Governor Newsom this month and includes two methods of allotting paid sick leave to employees, the accrual method of gaining leave hours over a period of time, and the lump sum method which allots a sum of PSL hours to employees each year.

Employers who provide leave via an accrual system must allow employees to accrue at least 24 hours of PSL by their 120th day of employment, and the entire 40 hours by their 200th day of employment. The accrual method normally follows a rate of 1 hour PSL per every 30 hours worked, however, employers can choose how time is earned as long as it meets the new standards.

If companies provide PSL in a lump sum, they must grant the sum of 24 hours of PSL to employees by no later than their 120th day of employment and they must allot them the rest of the leave (and additional 16 hours) by the 200th day of employment.

If a company breaks up the leave allotment into these 120 and 200-day incriminates, they must allow carryover of any unused leave. Employers can also provide the entire 40 hours at the start of employment, or calendar year, by which they do not need to allow for carryover.

The yearly use cap is now 40 hours or five days instead of 24 hours or three days, and the total accrual cap is now 80 hours, instead of 48 hours.

It is important for employers to evaluate their current PSL policies and make necessary changes to ensure they stay in compliance come January 1st.

The new paid sick leave requirement is one of many employment law changes happening in 2024. Rancho Mesa’s upcoming 2024 Employment Law Update webinar on Wednesday, November 8th will cover these topics in further detail.

Strategies for General Contractors to Minimize Liability

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

In Episode 355 of Rancho Mesa’s StudioOne™ podcast, host Andy Roberts, an Account Executive in the Surety Group at Rancho Mesa, is joined by Ted Lee, a Contract Bond Underwriter at Liberty Mutual Surety, to discuss strategies for general contractors to limit their liability when working with subcontractors. Ted shares his background and experience in the surety industry before delving into the main topic.

They explore two key strategies that general contractors can use to mitigate liability:

1. Subcontractor Prequalification: Ted emphasizes the importance of how general contractors select their subcontractors. If they choose based solely on the lowest bid, there may be risks associated with subpar quality. To mitigate this risk, it's suggested that general contractors require a prequalification letter from the subcontractor's surety. This helps ensure that the subcontractor is bondable, providing added assurance to the general contractor.

2. Performance and Payment Bonds: Requiring performance and payment bonds from subcontractors offers immediate protection to general contractors. Performance bonds protect against subcontractor default, while payment bonds guard against potential liens from lower-tier subcontractors and suppliers. These bonds could also enhance a general contractor's bonding program, potentially allowing for higher bonding limits and more favorable terms.

The conversation highlights the role of the general contractor's surety in evaluating the prequalification process and bond requirements. Ted explains that this evaluation helps the surety understand and support the general contractor's risk mitigation efforts.

They also mention that some general contractors may have automatic bond requirements for certain project sizes, but for those who don't, bond companies may step in and require subcontractor bonds when needed.

In conclusion, the podcast episode provides valuable insights for general contractors looking to limit their liability and manage risk by implementing subcontractor prequalification processes and requiring performance and payment bonds. Andy and Lee also recommend seeking assistance from insurance agents with expertise in surety bonding to navigate these processes effectively.

Listen to Episode 355 below, or on your favorite podcast listening app.

Safety Evolution: General Contractors Begin Requiring Safety Helmets Over Hard Hats

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

The hard hat has long been a staple for construction-site safety. However, a new contender has entered the industry in 2023 as more and more general contractors are requiring safety helmets.

The safety helmet, while similar in form to the normal hard hat, includes added protection such as chin strap, face shield, and ear muffs. These new features allow for the helmet to sit more securely on the head while also protecting the ears from dangerously high noise levels and the eyes from possible debris. 

“Since we made the switch to the new style hard hat, our employees don’t want to go back to the old-style hard hat,” Gilbane Building Company said. “This technology successfully removes the hazard of the hard hat falling off during a task, and wearing the face shield eliminates the possibility of forgetting to wear eye protection.”

While OSHA does not officially require the switch from hard hats to safety helmets, the topic was brought up at the Nation Association of Home Builders (NAHB) Spring Leadership Meeting in June 2023 in which director of OSHA’s Office of the Directorate of Construction, Scott Ketcham, granted insight on OSHA’s plans to improve jobsite safety with elevated standards for Personal Protective Equipment (PPE) in the near future.

“One initiative shared at the meeting is a pilot program for safety helmets meant to eventually replace hardhats as the preferred head protection in construction,” NAHB’s article about the meeting said. “Ketcham noted that 20% of head injuries in construction are the result of slips, trips, and falls and that hardhats do not protect against such injuries while helmets with chinstraps may stay on the head during a fall and offer protection.”

As PPE continues to evolve in the construction industry, it's important for subcontractors to be aware of what might be required of them on their job sites. Although no current laws require safety helmets over hard hats, Rancho Mesa will continue to offer updates as standards change.

How Important is Your EMR in the Pre-Qualification Process?

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

With 2024 right around the corner, general engineering and trade contractors will be required by government agencies and general contractors to enter the annual pre-qualification process in order to bid work. These entities are looking closely at a company’s project history, including project size, bonding capacity, limits of insurance as well as a companies’ Experience Modification Rate (EMR).

An EMR is a numeric representation of a company’s audited payrolls for the three prior years (not including the current year) and your workers’ compensation claims history, compared to businesses in the same industry or standard classification. EMR’s create a baseline for business while allowing for a surcharge or debit when employers claims are worse than expected and a credit when employer’s claims are better than industry average. Companies with and EMR rate below a 1.00 are considered better than average, while greater than 1.00 are consider below average.

Pre-Qualification Process

In the highly competitive environment of construction bidding, it has become common that government agencies and general contractors will preclude contractors from the pre-qualification process if your EMR exceeds 1.00 or 1.25. In my opinion, this represent an oversight as many companies have strong will developed safety programs, yet their EMR is holding them back. Some examples of this include:

1. The EMR is a lagging factor. Only the last three policy periods, not including the current policy period are taken into consideration for the calculation.

2. EMR’s can include claims that may have been unavoidable and don’t represent a lack of safety (i.e. an employee was involved in an auto accident and was not at fault).

3. Large indemnity claims can have a significantly higher impact for a smaller company vs. a larger company with a similar size claim.

Rather than placing such critical importance on the contractors current EMR, government agencies and general contractors designing the pre-qualification process should include frequency indicators like incident and DART Rate (i.e. days away, restricted or transferred) or put more emphasis on a contractors’ 5 or 10-year average EMR. 

Given the importance of the pre-qualification process an and the potential for contractors to be precluded from new opportunities to bid work, we’ve developed a proprietary Key Performance Indicator “KPI” Dashboard as well as our SafetyOne Desktop & Mobile App to assist companies in managing their EMR. These tools will, among many things, help you:

• Benchmark your experience against your peers.

• Weigh the impact of any claim to your EMR.

• Project your future EMR a year in advance.

If you would like a KPI created for your company, or would like to learn more about our SafetyOne App, please email me at sclayton@ranchomesa.com.

SB 553: Governor Signs New Law for Workplace Violence Prevention Requirements

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

On September 30, 2023 Governor Newsom signed into law new standards for California companies regarding workplace violence. Effective July 1, 2024, Senate Bill 553 (SB 553) will expand requirements for recordkeeping, injury and illness prevention programs, and employee training.

What do these new regulations define as “workplace violence?” Workplace violence is any act or threat of violence that occurs in a place of employment. The law applies to both verbal and written threats of violence and incidents involving use of a dangerous weapon regardless of whether an employee sustains an injury.

“The threat or use of physical force against an employee that results in, or has a high likelihood of resulting in, injury, psychological trauma, or stress, regardless of whether the employee sustains an injury,” Section (4).(a).(6).(B).(i) writes.

Recordkeeping

While companies are already required to report work-related injuries, now employers also must record every workplace violence incident in a violent incident log. The log includes information about each incident such as the date, time, and location, a detailed description, the people involved, the type of violence, and the consequences of the incident. The log must be retained for five years.  

IIPP

Companies must include a written workplace violence prevention plan in addition to their Incident and Injury Prevention Program (IIPP).

The plan must include procedures for the following:

• The employees responsible for creating and implementing the plan

• The procedures the company will follow in the event of a violent incident, depending on its type 

• Enforcing procedure compliance for both employees and supervisors

• Communicating to employees post-incident recordkeeping and investigation results

• Identifying hazards and corrective procedures

• Investigating and responding after the incident occurred

• Annually evaluating the plans effectiveness and make necessary edits

• Methods for implementing the training and procedures outlined in the plan

Training

SB 553 requires employers to provide workplace violence training to their employees. Training should inform employees of their company’s procedure for handling workplace violence and how they can access the written workplace violence prevention plan.

The training topics should also cover how to report workplace violence, how to respond and seek help in the event of an incident, strategies to avoid physical harm, implementing corrective measures, and information about accessing the violent incident log.

Workplace violence training is required for employees annually, and employers but retain training records for at least one year.

“Training records shall be created and maintained for a minimum of one year and include training dates, contents or a summary of the training sessions, names and qualifications of persons conducting the training, and names and job titles of all persons attending the training sessions,” Section 4.(f).(2) states.

Both the SafetyOne™ platform and the HR Portal offers a range of training related to SB 553’s required topics such as preventing workplace violence, security in the workplace, and workplace stress. 

While the Cal/OSHA Standards Board is required to adopt the new standards no later than December 31, 2025, the law becomes enforceable on July 1, 2024. Exemptions to the new requirements are workplaces who are not open to the public and that have less than 10 employees working at one time as well as employees working from a remote location or in healthcare facilities.

SB 553 contains quite a lot of new requirements that might feel overwhelming for employers. Cal/OSHA is expected to release a model program for the standards including a workplace violence prevention plan in addition to the IIPP and training requirements.

Rancho Mesa will continue to keep clients informed as more resources are released. For any questions regarding this topic, contact your client technology coordinator.