Rancho Mesa's Alyssa Burley and Vice President of the Landscape Group Drew Garcia discuss the expected loss rate for the landscape industry and what it means for the experience modification.

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Director/Producer/Host: Alyssa Burley

Guest: Drew Garcia

Editor: Alyssa Burley

Music: "Home" by JHS Pedals, “News Room News” by Spence

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Transcript

Alyssa Burley: Hi, this is Alyssa Burley with Rancho Mesa Media Communications and Client Services Department. Thank you for listening to today's top Rancho Mesa News, brought to you by our safety and risk management network, StudioOne™.

Welcome back, everyone. My guest is Drew Garcia, vice president of the landscape group with Rancho Mesa Today, we're going to talk about the expected loss rate for the landscape industry and what it means for the experience modification. Drew, thank you for joining me.

Drew Garcia: Alyssa thanks for having me.

AB: Now you focus on the landscape industry and we're going to talk specifically about proposed decrease issued or the proposed decrease issued by the Worker's Compensation Insurance Rating Bureau or the WCIRB. But the issues that we'll be discussing today are important for every business owner to understand, regardless of their industry. Is that correct?

DG: That's correct, yes.

AB: So I've mentioned that the WCIRB has proposed a 2% decrease from $2.42 to $2.37 in the expected loss rate for the landscape. Class Code 0042. Drew, what does the decrease mean for landscape companies out there?

DG: So this would be effective September the 1st of 2022. So if your policy incepts after September the 1st of 2022, then this information would be relevant because it would impact your experience mod, and basically a lower expected loss rate would put pressure on the ex mod to increase, whereas a higher expected loss rate or an increase in the expected loss rate would allow a little relief on the experience mod. That's kind of the, the sum of everything there.

AB: Okay. So you explain how that works.

DG: Absolutely. So the, the ex mod is basically a fraction and the expected losses would be the denominator, the bottom number, of the fraction. So as that denominator decreases, it's going to increase the fraction or your experience mod if the denominator were to increase, it's going to cause that fraction to decrease or your ex mod to decrease. So the only way to really combat this is that numerator or your actual losses have to come down if the expected losses comes down just to remain even or try to be the experienced mod that you had previously.

AB:  All right. So landscapers need to implement effective safety programs to ensure losses don't exceed the new lower expected loss rate for their industry. And Drew, we know the decrease in the expected last rate will affect the ex mod calculations, even for those who have had no change in their safety record. How else will this decrease affect those companies?

DG: So I ran a couple of mock experience mods in advance of that September 1 date with some varying sizes. And really the only thing that I use that differs each time I run a different test experience mod is the amount of payroll that I'm putting into that, into the calculation, and I continue to see about a 5% increase in the lowest possible mod.

So that would be, you know, all the all the payroll, no claims. What's my lowest possible experience mod? I continue to see really no matter the size of the business, about a 5% increase in the mod, which is about 2-3 ex mod points and to really hone in and look at it you know, back January 1st of 2021, we launched our KPI Safety Dashboard, which really answers exactly what we're talking about today because it's providing our landscape businesses the insights that they need to be prepared for changes like this.

So if you're not a customer of Rancho Mesa and you're interested in us running our KPI model for you so you can get out ahead of this, this change in this movement, we'd be happy to do it. It would just be a matter of connecting with the right people over here.

AB: All right. And we'll include a link in the episode notes where listeners can request a customized KPI. And Drew if listeners have questions about their ex mod or the proposed expected loss rate, what's the best way to get in touch with you?

DG: My email, and that's drewgarcia@ranchomesa.com. That's the easiest way to get hold of me.

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

DG: Thanks, Alyssa. Appreciate it.

AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning into our latest episode produced by StudioOne™. For more information, visit us at RanchoMesa.com and subscribe to our weekly newsletter.