Author, Kevin Howard, CRIS, Account Executive, Rancho Mesa Insurance Services, Inc.
California contractors focused on their experience modification are paying close attention to the soon to be published 2020 Expected Loss Rates (ELRs).
ELRs determine the expected claim cost per $100 in pay roll for each class code during an Experience Modification (Ex-Mod) period. These rates are updated annually. The 2020 rates were recently approved on September 5, 2019. Changes in each specific class code’s ELR can positively or negatively impact a contractor’s Ex-Mod calculation.
In a nutshell, if an expected loss rate drops from one year to another with no material changes to payroll or claims, Ex-Mod’s will increase. Additionally, if an expected loss rate increases, Ex-Mod’s will decrease using the same example.
Below is a breakdown of the 2020 ELRs per class code with notable double digit increases highlighted:
| Class Code | 2020 ELR | Increase/Decrease % |
|---|---|---|
| 3724 Solar/ Millwright | 1.74 | -4% |
| 5187 Plumbing > $28 | 1.18 | -8% |
| 5183 Plumbing < $28 | 2.6 | -5% |
| 5542 Sheet Metal > $27 | 1.40 | -4% |
| 5538 Sheet Metal < $27 | 2.30 | -12% |
| 6258 Foundation Prep | 2.65 | -3% |
| 0042 Landscape Gardening | 2.59 | -15% |
| 0106 Tree Pruning | 3.91 | -21% |
| 5140 Electrical Wiring > $23 | .81 | -6% |
| 5190 Electrical Wiring < $23 | 1.89 | +2% |
| 5470 Glaziers > $33 | 1.63 | +7% |
| 5467 Glaziers < $33 | 4.30 | -2% |
| 5028 Masonry > $28 | 2.17 | -9% |
| 5027 Masonry < $28 | 4.73 | -18% |
| 5482 Painting/ Waterproofing > $28 | 1.42 | -15% |
| 5474 Painting/ Waterproofing < $28 | 3.68 | -7% |
| 5186 Automatic Sprinkler Install > $29 | 1.11 | +5% |
| 5185 Automatic Sprinkler Install < $29 | 2.45 | -18% |
| 5205 Concrete/Cement work > $28 | 1.95 | -5% |
| 5201 Concrete/Cement work < $28 | 3.95 | -4% |
| 5432 Carpentry > $35 | 2.01 | -7% |
| 5403 Carpentry < $35 | 5.27 | -9% |
| 5447 Wallboard Application > $36 | 1.34 | -12% |
| 5446 Wallboard Application < $36 | 2.76 | -21% |
| 5485 Plastering or Stucco >$32 | 2.66 | -6% |
| 5484 Plastering or Stucco < $32 | 4.78 | -27% |
| 5443 Lathing | 2.37 | -18% |
| 5553 Roofing > $27 | 3.90 | -14% |
| 5552 Roofing < $27 | 9.85 | -4% |
| 6220 Excavation/Grading > $34 | 1.24 | -24% |
| 6218 Excavation/Grading < $34 | 2.34 | -5% |
The data above shows that a majority of class codes will be seeing a decrease in ELRs which will cause higher Ex-Mods in many cases. That reality creates a heightened need for loss control, claim management and post claim strategies. If you are seeking a partner with the tools to address these needs, please reach out to Rancho Mesa Insurance and our team of professionals at (619) 438-6874.