Ep. 467 Reviewing 2024 Insurance Landscape and Forecasting into 2025

Rancho Mesa's Alyssa Burley and Greg Garcia, Account Executive with the Landscape and Tree Care Group, review the 2024 landscape insurance market and discuss what 2025 has in store.

Show Notes: ⁠ ⁠⁠⁠⁠⁠⁠Subscribe to Rancho Mesa's Newsletter⁠⁠⁠⁠⁠⁠

Host: ⁠⁠⁠⁠⁠⁠Alyssa Burley⁠⁠⁠⁠⁠⁠

Guest: ⁠⁠⁠⁠⁠⁠Greg Garcia

Editor: ⁠⁠⁠⁠⁠⁠Jadyn Brandt

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

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

Transcript

Alyssa Burley: You’re listening to Rancho Mesa’s StudioOne™ podcast, where each week we break down complex insurance and safety topics to help your business thrive.

I’m your host, Alyssa Burley, and today I’m joined by Greg Garcia, Account Executive with Rancho Mesa, and we’re going to review the 2024 insurance market and get an idea of what 2025 has in store.

Greg, welcome to the show.

Greg Garcia: Hey Alyssa, thanks for having me and Happy New Year.

AB: Thanks, we’re glad you’re here. Now that 2024 is over, we can take a look at where the auto and workers’ compensation insurance marketplace was last year to get an idea of where we’re headed.

So Greg, what was the auto insurance marketplace like in 2024 and how do you project it to be in 2025?

GG: Yeah, Alyssa, as we close the door here on 2024, the auto market continues to be a challenge. I think that looking into 2025 and beyond, I don't see that market softening anytime soon. A couple of reasons for this market to continue to harden is just increase in auto claim costs, medical cost inflation, and then the increase in auto-nuclear verdicts, which is any claim amounting to more than $10 million in claim costs.

We're also seeing a slight uptick in frequency as an industry as a whole, and for our landscape companies, this is one of their biggest exposures. You know, we work with a lot of landscape companies that have heavy fleets, they're making multiple stops each day. And they're not only guarding against their drivers being safe, but everybody else on the road. And I don't know about you, but when I'm driving even to work, the amount of people I see just checking their phone and not really paying attention, it's kind of scary. And I think that's what the carriers are seeing in real time in terms of the claim costs and the frequency uptakes So, it's definitely going to continue to harden up now is the time for our landscape clients to really hone in on fleet safety.

AB: Yeah, so why should our clients in the landscape industry be concerned about the hardening auto market?

GG: Yeah, I think it's like I said, I think it's one of our clients’ biggest exposures. You know, we talked about most of our clients have heavier have heavier fleets—you know, fleets of 20 vehicles or more—they're going to multiple job sites a day and that is an exposure they take on every single day. If you're a tree trimmer, you might not be doing that every day. You might be doing it three or four times a week but for our landscape clients, they will be driving trucks every single day on the road and we just kind of talked about how it's not only them that we're concerned about, it's everybody else on the road.

So, some of the things that our landscape clients are doing and if you're not doing this could be a good time to do it is really just hone in on fleet safety. And I feel like we've done three or four podcasts on this topic because I don't think we could do enough on this, this is just the biggest exposure that our landscape clients are having. So honing in on fleet safety and what I mean by that is it starts with your driver training.

And I think sometimes that's the key piece that might be missing in a landscape organization is they kind of overlook that step because that driving position is so coveted and I think it's challenging to get good people in to be those drivers, but you also don't want to just have anybody get behind the wheel of your vehicle. So having strong criteria for these drivers, not only just sending the MVR to the insurance agent and having them run the MVR, the motor vehicle report, but also maybe doing some road tests before, asking about prior experience, things like that would be some of the things that our landscape clients are doing. And then also, just did a topic on this, is staying up to date with technology. There's multiple carriers out there now that are providing dash cams, dual-facing dash cams, and GPS systems. A lot of this is really good data to use and can help in your insurance renewals.

The biggest question we always get from the technology standpoint is, “Okay, if I buy a GPS or use dual -facing dash cams, what's the savings I'm going to see on my insurance premium?” Which is a great question to ask, but there is no set amount. It's not like you get 10% discount if you have, if you use Samsara or Azuga or one of these other products. But what I can say from talking to underwriters and carrier partners is that if you are using these products and you're actually analyzing the data and trying to be proactive about it and frequency starts to go down or claim activity starts to go down on the auto, that that underwriter will look at your account more favorably than maybe the next landscape client.

And touching a little bit more on that, really important to analyze the data. It's one thing to, “Yeah, we get these driving scores every week and we see who are our biggest drivers that are having the most infractions are in terms of speeding, harsh braking, aggressive turning,” whatever it might be. But now taking the next step in training those drivers, letting them know that they're having these infractions and what they can do to get better is like I said, a proactive approach to your fleet management. And I think it's something that a carrier would really like to see in terms of their submissions. So, those are a few things that I think landscapers can start to do to try to help navigate a very challenging market.

AB: Yeah, I like all those points. And you know, if you have the data, you have to do something with it. You can't just say, "Oh, we have GPS. We have all of these tracking devices." And then do nothing with them because that doesn't, that doesn't help. And I like the fact that you talked about driver training. So Rancho Mesa has a fleet safety workshop, we record it so anyone can watch it. And then we also have specific driver trainings specifically focused on different things. So if you know that the employee may be prone to being distracted or something like that, we can put them through those trainings that should help mitigate some of that risk.

GG: Totally, and I know, just piggybacking off that a little bit further, is our process here for any of our clients when they have an auto accident is it gets sent to your team directly you guys figure out is there any trainings that we have on hand based on the accident information that we gathered and we can send it to our client. So that's a reactive approach, you know, we want to stay proactive, but it's also important to train after an accident does happen and we have that system in place here at Rancho Mesa so, yeah, great points Alyssa.

AB: Yeah. All right so like you mentioned, I'm not surprised that we're seeing an increase in premiums and a hardening market. So, do you expect the workers’ compensation marketplace to see similar increases in 2025 compared to 2024 like we're seeing in the auto market?

GG: Yeah, I would say the work comp market as a whole over the last seven to eight years has been relatively soft. And what I mean by that is there hasn't been much increase in insurance premiums, even with increase in experience mods or anything like that, premiums have stayed relatively flat or seen decreases year after year. Just talking with other carrier partners, we see that number maybe starting to harden up a little bit as well. And that's basically due to the same reasons as we're seeing on the auto, you know, cost of the medical costs, inflation, wage increasing--so people making more money now. And then especially here in California, the litigation rates are just going higher and higher each year. So, those three things are leading indicators that we might be seeing a hardening work comp market.

What's nice about the work comp market is that you have a little bit more control of it as opposed to the auto market, right? You can have no claims year after year on your auto market but you're going to still be seeing increases. As we know and we've discussed in previous podcasts, your work comp insurance premium is primarily based upon your experience mod and how well you handle risk within your industry. So what our clients do well is they control your experience mod, keeping that experience mod as a credit mod, something that's below a 1.00. And there's a couple ways that our clients are doing it and if you're not doing it, now's a good time to hone in on those things. And that's doing weekly safety tailgate topics, that's wearing proper PPE protective equipment and even recording job hazard analysis as well. So taking all those little steps into place helps control your experience mod.

And furthermore, one thing that I think might get overlooked in terms of controlling your experience mod is partnering with the right insurance carrier. There's a lot of work comp carriers out there, but what we do as our green team is we track on a monthly basis how many landscape clients each carrier has. And we want to track that trend because it would only make sense for you to want to partner with a carrier that has an appetite for your industry, because like I said, there's plenty of work comp carriers out there, but if I was a business owner, I'd want to partner with somebody that actually wants to write my industry and write my trade and understand our trends, where we're having our claims. And then partnering with a carrier that maybe handles claims in-house has a lot of those extra services like loss control and things like that. All of those things can really go a long way into controlling your experience mod and ultimately controlling your work comp premiums.

So, auto market really, really hardening and we don't see that going any softer anytime soon. Work comp not as hardening as much but we're seeing some leading indicators that might be hardening in the near future. So, honing in on fleet safety, controlling your experience mod are two key factors into controlling insurance premiums as a whole. And as we look out to 2025 I know it's probably budgeting season or maybe that just happened last month in December, but I know insurance premiums for a lot of our clients is a big overhead. So learning how to control that, partnering with the right carrier and then utilizing the resources that your team has, it's a good deal.

AB: So overall, you're thinking both auto and workers’ compensation markets for the green industry will harden in 2025. And it's best to start preparing now, regardless of when your policy renews because the sooner you start managing these two risks, the better off you're going to be overall.

GG: Nailed it. Yeah, that was perfect. Nailed it.

AB: All right. So, Greg, if listeners have questions about their auto or workers' compensation, what's the best way to get in touch with you?

GG: Yeah, you can email me at ggarcia@ranchomesa.com or you can call me at 619-438-6905.

AB: Greg, thanks for joining me in Studio One.

GG: Thanks Alyssa for having me.