Rancho Mesa's Alyssa Burley and Account Executive Greg Garcia, talk about the three benchmarks all landscape companies should track.

Show Notes: KPI Dashboard,⁠ ⁠⁠⁠⁠⁠⁠Subscribe to Rancho Mesa's Newsletter⁠⁠⁠⁠⁠⁠

Host: ⁠⁠⁠⁠⁠⁠Alyssa Burley⁠⁠⁠⁠⁠⁠

Guest: ⁠⁠⁠⁠⁠⁠Greg Garcia

Editor: ⁠⁠⁠⁠⁠⁠⁠⁠Alyssa Burley

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

© Copyright 2024. Rancho Mesa Insurance Services, Inc. All rights reserved.

Transcript:

Alyssa Burley: Welcome back, everyone. My guest is Greg Garcia, Account Executive with Rancho Mesa. Today, we’re going to talk about three benchmarks that all landscape companies should track.

Greg, welcome to the show.

Greg Garcia: Alyssa, thank you for having me. Happy to be here in StudioOne™.

AB: Of course, we’re happy to have you. So, you specialize in the landscape industry and you’re always providing these benchmarks to our clients.

 So, why are these important to know?

 GG: Yeah, we're going to get into three categories that we kind of benchmark all of our landscape clients to their competitors with. Those three categories are going to be: average claim cost, claim indemnity rate, and claim frequency rate. And we'll get into some specifics of why I think this is important for our clients to benchmark against other landscape contractors.

 But ultimately, I think what I found with most of my clients and the landscape industry in general is that these organizations are very competitive, right? They want to know how they're stacking up against their competitors, and for the most part that's what makes a good organization. You want to know, "Hey, where am I doing better than industry average? How can I improve to bring up, maybe, some other metrics that are below industry average?" So, that's what we found bringing this data to them has been a huge advantage for them moving forward.

 AB: Alright, so how do you provide this information to your clients and where is the data pulled from?

 GG: Yeah, we use our Key Performance Indicator Dashboard, KPI Dashboard, all of our clients here at Rancho Mesa are really familiar with that dashboard. It brings a ton of value to them and really outlines these three major categories that we'll talk about. And we pull that data from basically every landscape company that's using the 0042 class code, and we come up with these industry averages for these three major categories. And, you know, for the sake of the time, and we could be here all day, but we'll just use California landscapers only, and then we can kind of get into some examples.

 AB: Okay, so let's talk about the average claim cost. Why is it important for a business owner to know what the average claim cost is for a company in their industry?

 GG: In California, the average claim cost for a landscape contractor is $50,300 per $1 million of landscape payroll. So I know that's a lot of kind of mumbo jumbo there, but in other words, for every $1 million that a landscape company has in their 0042 class code, the industry rate averages for the average claim cost would be about $50,300 in claim cost incurred. Obviously that number could rise to $100,600 if you had $2 million in landscaping payroll, and that number just kind of keeps increasing based on the payroll you have.

 AB: All right, so if a client doesn't know what the average is in their industry, it's really hard for them to know if they're above, below, or if they are average. So, that's really important to understand.

Now, will you explain the claim indemnity rate?

GG: Yeah, absolutely. I'll kind of bundle these next two together; would be the indemnity rate and frequency rate. So, for those that don't know what indemnity rate would be, that would be that would be any claims resulting in lost time for that employee. So, the indemnity rate for the landscape industry is 0.7 claims per $1 million of payroll. So, just under one claim of lost time per $1 million of payroll. And then the one that kind of goes hand-in-hand with that would be frequency. And for frequency for every $1 million allocated to the 0042 class code, that company is expected to incur about one and a half claims.

So, those two I say go hand in hand because a lot of times we'll have clients say, or maybe sometimes our clients will be a little bit higher on their frequency dial and maybe be above industry average. And they're saying “Man, how do I get this lower?” But what I tell them is frequency is not a problem unless severity starts to get involved, and severity is usually when we see our indemnity claims. So if you maybe are above industry average in frequency, it's not as concerning unless you start to get above average in indemnity, which would be caused by severity claims to cause that lost time.

So those two kind of go hand-in-hand and for the clients that maybe are above average in frequency, it actually it plays well because that means they're just reporting all work comp claims and that's what your work comp carrier wants. You know, they don't want you hiding claims or trying to not report every claim. So, sometimes that statistic can be misleading so that's kind of why I wanted to kind of bundle them together.

AB: Alright, now how can this information impact a landscape company's workers’ compensation premium?

GG: Yeah, so I wanted to bring these up because only are our clients competitive and they want to see how they stack up against other competitors in their area. But you can actually see that work comp. carrier underwriters; among other things such as X -MOD, you know, safety procedures, loss history, will actually take these three categories into consideration when they're underwriting your account. So they're really looking at your frequency rate, indemnity rate, and your average claim cost. And if you can stay below industry average in those, it's been our experience that underwriters are much more obliged to credit your work comp. account. And in today's world, if we can find any credits or lowering any types of premiums, that's going to help.

So, it's important to monitor these metrics, see how we can get better. An example of this for indemnity rate, if you're struggling maybe with a high indemnity rate, maybe looking internally and seeing if you have a good return to work program. If you don't know what that is, you know, we can have discussions about that, but a return to work program basically keeps temporary disability off of your claims, which in result will lower your indemnity rate. So, yeah, very important to know these metrics, knowing how you stack up. Not only because you want to be the best landscape company that you can be, but also at the end of the day, it can help save some dollars on your work comp. premium.

AB: Yeah, absolutely. And we do have a KPI Dashboard page on our website and there's a video that kind of explains what this document does and how it works. So, we'll put a link in the episode notes to that page.

 Now, Greg, if listeners have questions about benchmarking their landscape business, what's the best way to get in touch with you?

 GG: Yeah, I can be reached at (619) 438-6905 or you can email me at ggarica@ranchomesa.com.

 And what I've done in the past too, obviously our clients know what these KPI dashboards are, but if there's any non-Rancho Mesa clients that maybe would like to see what this KPI Dashboard is and actually see their numbers, I can put some things together. It doesn't take all that long, just need loss history for the last five years and five years of historical payroll, and I can put that together pretty easily and then we can kind of go through it. So, just wanted to throw it out there for the listeners, if anybody is interested.

 AB: Alright, well Greg, thank you for joining me in StudioOne™.

 GG: Thanks Alyssa.