Rancho Mesa's Lauren Stumpf and Account Executive of the Landscape Group Greg Garcia discuss the recently approved increase in pure premium rate for landscape class code 0042.
Show Notes: Subscribe to Rancho Mesa's Newsletter
Director/Producer/Host: Lauren Stumpf
Guest: Greg Garcia
Producer/Editor:Megan Lockhart
Music: "Home" by JHS Pedals, “News Room News” by Spence
© Copyright 2023. Rancho Mesa Insurance Services, Inc. All rights reserved.
Transcript
[Introduction Music]
Alyssa Burley: Hi! This is Alyssa Burley with Rancho Mesa’s 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™.
Lauren Stumpf: Welcome back, everyone. This is Lauren Stumpf, Media Communications and Client Services Specialist with Rancho Mesa Insurance. My guest today is Greg Garcia, Account Executive in the landscape group with Rancho Mesa. Greg specializes in providing commercial insurance and risk management to the lawn and landscape industry. Today, we're going to discuss the recently approved increase and pure premium rate for landscape class Code 0042. Greg, thank you for joining us.
Greg Garcia: Hey, Lauren. Yeah, thanks for having me. Excited to talk about this pure premium increase and ready to get going.
LS: Awesome. Very excited to jump into it. So, as business owners may be aware of, in September 2022, the Workers Compensation Insurance Rating Bureau (WCIRB) recommended a 9% increase in the pure premium rate for landscape class code 0042. Effective September of this year, 2023, a 4% increase was recently approved, totaling 13% over the two year span. Greg, can you start by explaining to our listeners what causes pure premium rates to increase?
GG: Yeah, absolutely. Yeah, the back to back increases for me really kind of rang a bell and kind of wanted to dive into this a little bit more. So yeah, let's break it down from the beginning and kind of how it's kind of made up. Pure premium rates arise from losses sustained in payroll submitted to the WCIRB from all worker's compensation insurance companies. Per the California Department of Insurance, or CDI, pure premium rates are defined as the cost of worker's compensation benefits and expense to provide those benefits. Then the WCIRB evaluates each class code in our case 0042 and determines what recommended rates will be for the upcoming year. This recommendation is made to the CDI, who ultimately needs to reject or approve the recommendations. Once the peer premium rates are approved, each worker's compensation insurance carrier will apply their own loss cost multiplier, which is an adjustment to the pure premium rates that takes into consideration business expense and profit from the carrier, thus creating an individual base rates for each class code. If I lost you there, don't worry about it. It can kind of be confusing, but that's the basic formula there to kind of create those pure premium rates.
LS: Awesome. Thank you for breaking that down for us. So, what does this all mean for the landscape industry?
GG: Yeah, so back to back increases for me, that's telling me that claim activity for landscapers as a whole has been increasing over the last two years in California. With this being said, this may signal the beginning of a hardening worker's compensation market, which is, of course will result in higher rates and thus creating higher premium cost.
LS: So, what can be done to help combat these potential increases in premium?
GG: Yeah, I would say an increased attention to safety practices to reduce claims, a robust return to work program to mitigate costs of existing claims, proactive claim management and consistent document safety training are a few of the ways that will help landscape businesses remain best in class.
LS: And at Rancho Mesa, clients can utilize our programs and tools to help them accomplish these goals. We will include a link to our resources and episode notes. Greg, can you remind our listeners again when these increases will take effect?
GG: Yeah, absolutely. These pure premium changes will take place on worker's compensation insurance renewals after September of this year. Don't be caught off guard. Don't be surprised by this. We talked about it today. I know it's a little bit confusing. So, if you have any other questions about the pure premium rates and how it may impact your renewal, you can email me at ggarcia@ranchomesa.com or by telephone at 619-438-6905.
[Outro Music]
LS: Greg, thanks so much for joining me in StudioOne™.
GG: Awesome. Thanks for having me, Lauren.
AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning in to our latest episode produced by StudioOne™. For more information, visit us at ranchomesa.com and subscribe to our weekly newsletter.
