Market Update: Sexual Misconduct Liability in Healthcare Organizations

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

Rancho Mesa’s insurance brokers specializing in healthcare, education and non-profit organizations continue to navigate the hardening insurance marketplace, characterized by tighter underwriting guidelines, reduced limits of liability, increased deductibles, and higher policy premiums.

One of the sectors most impacted by the hardening market is healthcare and its ability to attain adequate insurance protection, specifically sexual misconduct liability insurance. Continued claim activity, social inflation, third-party litigation financing, and the increased cost of litigation all contribute to the hardening market conditions.

Consider the following data points in order to understand why the market is hardening. Several states have recently removed barriers to reporting abuse. Only five states maintain a criminal statute of limitations on claims of abuse. Nineteen states have eliminated statutes of limitations on civil claims. And, 30 states have enacted laws allowing victims more flexibility to revive claims of sexual abuse.

Additionally, according to the Institute for Legal Reform, from 2016 to 2020 the tort system’s direct economic costs grew 6% every year, exceeding both the inflation rate and GDP. That means more and more cases are litigated each year.

Not only are the number of cases increasing, but a 2023 report titled “Medical Malpractice Claims-Made Social Inflation and Loss Development Report” indicates that claims exceeding $1,000,000 continue to grow in frequency. So, the number of claims are increasing as the cost of claims are increasing.

An increase in third-party litigation financing, the practice of investors funding lawsuits in exchange for a portion of the settlement and return on the investment, can discourage prompt and reasonable settlements. This practice also reduces an attorney’s accountability to good faith standards and produces more lawsuits.

Impact to Sexual Misconduct Coverage and Healthcare Providers

Insurance companies are now reducing their financial risk for abuse exposures. This means medical professional liability underwriters may need additional underwriting information to quote limits in excess of $100,000. Additional underwriting measures may include issuing non-renewals, considering jurisdictional challenges, careful consideration of policies covering young patients, excluding all trafficking allegations, and adding a per victim or perpetrator deductible.

Risk Management Strategies for Healthcare Providers

Healthcare organizations can help mitigate some of the risk by:

• Using chaperones to reassure patients of a procedure’s professional nature. The chaperone provides a witness to support the practitioner’s actions.

• Performing examinations for a minor in the presence of a parent, guardian, or chaperone.

• Educating the patient about the exam and its necessity prior to the patient’s appointment.

• Documenting the exam’s medical necessity, the education provided to the patient, and the chaperone’s identity.

• Maintaining boundaries by establishing proper practitioner-patient relationships.

• Educating staff on proper patient interactions, professional boundaries and reporting of misconduct.

• Ensuring familiarity with your state’s reporting obligations related to sexual misconduct and include the requirements in your policies and procedures.

The legal environment and claim trends add financial exposure for both healthcare providers and insurance companies. Rancho Mesa will continue to monitor these trends to better educate and advocate for clients. Please contact me at (619) 937-0175 or sbrown@ranchomesa.com to discuss possible insurance solutions.

Umbrella vs. Excess Liability: The Key Differences Contractors Need to Know

Author, Sam Clayton, Vice President, Construction Group, Rancho Mesa Insurance Services, Inc.

When reviewing insurance requirements that contractors receive from municipalities and/or general contractors, two lines of coverage that are often misunderstood are umbrella and excess liability. These terms are commonly interchangeable in the contract, but have subtle differences. In addition, the limits required by contracts are increasing significantly.

Excess vs. Umbrella

An excess liability policy has two primary functions: it provides excess limits above the underlying liability insurance limits and replaces underlying insurance limits as aggregate limits are exhausted; the excess policy will be subject to the same coverage terms, conditions and exclusions as the underlying policies. This is what is called follow-form.

A commercial umbrella liability policy has three primary functions: it provides excess limits above the underlying liability insurance limits; replaces underlying insurance limits as aggregate limits are exhausted; and offers broader coverage than primary policies for certain losses which would be subject to an SIR or self-insured retention.

Why are they important?

A commercial umbrella or a properly structured excess policy will sit above a contractor’s existing policy’s general liability, auto liability and employers’ liability limit. This protects contractors from large unexpected losses that can have devastating financial impact on the company.

With the dramatic rise in costs of insurance claims the last few years, either from social inflation or third-party litigation funding, multi-million dollar settlements are becoming more frequent. For example, if one of your employees is in an auto accident that causes severe bodily injury to multiple people, the legal and medical costs incurred could very easily exhaust your primary auto liability limit very quickly. Umbrella or excess policy limits would be available cover those losses.

So, when reviewing a contract, pay close attention to the umbrella or excess insurance requirements, and ensure that you understand the subtle differences of how they can impact your bottom line if there is a claim.    

To learn more about these specific coverages and how they can be incorporated into your current insurance program, reach out via email to sclayton@ranchomesa.com or (619) 937-0167.

How Healthcare Staffing Agencies Can Prevent Claims

Author, Jack Marrs, Associate Account Executive, Rancho Mesa Insurance Services, Inc.

Healthcare staffing agencies play a vital role in maintaining patient care standards. That is why it is critical for staffing agencies’ employees to be properly vetted, kept informed, and trained prior to being placed to reduce the likelihood of claims. Preventing such claims requires a collaboration between the healthcare staffing agency and the facility where employees are being placed. Healthcare staffing agencies can take steps to prevent claims and protect their operations.

Employee Screening

A best practice for preventing claims is to ensure that the healthcare professionals being placed are highly qualified and have the required credentials. Proper vetting includes verifying licenses, certifications, and prior work experience. If the potential employee is not properly screened and is hired, it not only is putting the patients in danger but it can result in malpractice claims.

Collective Intelligence, a professional screening service, states that “up to 30% of job applications contain false statements.” The company notes that “by using a healthcare professional screening service, you can rest assured that you are mitigating the risks associated with theft, negligent hiring lawsuits, poor employee retention and fees associated with non-compliance.”

Properly screening potential employees can reduce the risk of unintentionally bringing on unqualified people who could put the organization at risk.

Clear Communication of Job Roles and Responsibilities

Miscommunication or misunderstanding of job roles can lead to situations where healthcare professionals make decisions outside of their job roles. This not only puts the patient at risk but can also expose the agency to liability claims. To prevent this, the agency must clearly outline the roles, responsibilities, and limitations of the healthcare professionals that are being placed in the facility. Healthcare staffing agencies and the healthcare provider that hires them need to make sure that everyone involved knows exactly what the healthcare professional is responsible for at the facility. 

Effective Safety Training

The healthcare industry is physically demanding, and healthcare professionals are prone to injuries, whether from lifting patients, long shifts, or a slip and fall. Healthcare staffing agencies are also prone to high turnover which can lead to workers being less familiar with their workplace and safety protocols, thus increasing the risk of accidents.

Healthcare staffing agencies must protect themselves from workers’ compensation, general liability, and medical malpractice claims. One way to do this is by partnering with the facilities where the employees are placed and formally agree to share responsibility for training and safety.

While staffing agencies should provide proper training, client facilities should also offer site-specific training related to their own operations and protocols. Clear agreements between the agency and the client facility regarding training responsibilities will help minimize the risk of claims.

Preventing claims in the healthcare staffing industry is an ongoing process that requires attention to detail, ongoing training, and partnerships with healthcare facilities. By taking these steps, agencies can protect themselves from the financial damage associated with claims and the general safety of their employees.

To learn more about how your healthcare staffing agency can reduce risk, contact me at jmarrs@ranchomesa.com or (619) 486-6569.

Three Industry Benchmarks all Landscape Companies Should Track

Author, Greg Garcia, Account Executive, Rancho Mesa Insurance Services, Inc.

There are three major benchmarks that all landscape companies should consider when looking at how well they manage risk.  The three benchmarks are your:

• Average Claim Cost

• Claim Indemnity Rate

• Claim Frequency Rate

Knowing the importance of this, we designed a key performance indicator (KPI) dashboard that highlights these industry benchmarks, as well as compares them against other landscape companies in their geographic area.

We have pulled data from all landscape companies using the 0042 class code and have come up with some industry averages.  For the sake of this example, we will use California landscape contractors only. 

In California, the average claim cost for landscape contractors is $50,300 per 1 million dollars of landscape payroll.  In other words, on average for every 1 million dollars a landscape company has in the 0042 class code they should incur about $50,300 in claim cost. That number would rise to $100,600 in claim cost if a landscape company had 2 million dollars in 0042 class code. 

The next major category to consider would be indemnity rate.  Indemnity rate, or claims that result in lost time and temporary disability, the industry average is 0.7 claims per 1 million dollars of 0042 payrolls. 

Finally, the last category we consider is frequency rate.  In California for every 1 million dollars allocated to the 0042 class code on average that company will have 1.5 claims.

Knowing the data will not only give your team a good indication of how safe your company is, but these categories also play a significant role in determining work comp premiums.  There are several underwriting metrics a worker compensation underwriter takes into consideration when looking at a prospective business.  The Experience MOD, loss history, and of course safety protocols and procedures to name a few. 

The other major metric that underwriters are looking at are these three benchmarks: , average claim cost, indemnity rate, and frequency rate.  Simply put, the better a landscape company scores in these critical metrics, the better chance that an underwriter will add schedule credits to lower the worker’s compensation premium.

Now is a great time to see how well your landscape company stacks up against your peers, and consider any internal options to improve your metrics in any of these three major categories.

Digitalizing Risk Management: A Step-by-Step Guide for Getting Started

Author, Alyssa Burley, Partner, Media Communications & Client Services Group, Rancho Mesa Insurance Services, Inc.

Imagine you are working in a highly productive organization. Over many years of trial and error, the team has streamlined their operations to the point of a well-oiled machine using good ol’ paper and spreadsheets. Then, your insurance broker offers a digital risk management solution and you are faced with the prospect of transitioning your manual processes to a digital platform. This is the scenario that many Rancho Mesa clients have faced and successfully overcome.

Mobile applications have become an integral part of daily life by streamlining everything from banking to finding a ride in the city. Manual tasks can now be completed easily from a mobile device. So, why haven’t most businesses implemented this mobile technology into their daily operations?

Planning & Support

Transitioning a manual process, like the administration and documentation of toolbox talks, safety trainings, jobsite inspections, and other risk management activities, to a digital platform does not have to be a daunting task, though it may seem that way at first. With proper planning and support from those who have helped others digitalize their manual processes, you can significantly increase the chances for success. Utilize resources like Rancho Mesa’s client services team to provide best practices for each manual process that will be replaced by a digital platform.

Where to Start

Once an organization has decided they are ready to make the move to a digital platform, they often ask how they should begin. It is a best practice to start digitalizing a process that has few barriers to implementation, yet will still have a significant impact on operations. Therefore, utilizing digital toolbox talks (e.g., tailgate talks, safety meetings, and the like) is typically the best process to tackle first.

Next, review your existing toolbox talk process and document the steps. It may be helpful to ask the following questions:

• Who decides which topics will be used each week?

• Where is the content sourced?

• How is the topic content distributed?

• Who administers the toolbox talk (e.g., tailgate talk, safety meeting, etc.)?

• Where are the toolbox talks performed?

• How are employees tracked who participated in the toolbox talk?

• Where is the documentation stored?

The answers to these questions will help you identify who will need access to the toolbox talks in the digital platform, whether through an administrator website or a mobile application.

Then, identify one to three people in the organization who are excited about being an early adopter of the new technology. They should be excited at the prospect of streamlining the manual process of getting the toolbox talk content each week, performing the safety meeting, passing around the sign-in sheet, and making sure the signed paper makes it back to the office and in the correct file cabinet. These early adopters could be an administrator, foreman, supervisor, or safety manger, depending on who is responsible for performing portions of this task.

The early adopters will function as the organization’s initial testers, cheerleaders, and then coaches for the rest of the team. They will test the digital process by accessing toolbox talk content and documenting the meeting attendance with both pictures and signatures from their mobile devices. They will report back to their organization’s leadership on how the new process is working. This gives the organization a chance to work with their insurance broker’s client services team to offer suggestions for minor adjustments to the new digital process. Meanwhile, the early adopters will naturally promote the new technology to their co-workers and get others excited for the launch of the new process.  

Once the new digital toolbox talk process is tested and adjusted as needed, it is ready to be released to the rest of the organization. There will be a learning curve, but the early adopters will be familiar with how the streamlined digital process works and will act as informal coaches for new users of the platform. 

Benefits

Changing a well-established process can cause some people within the organization to question why the change is needed in the first place. So, be prepared to explain the reasoning behind the transition. Explain the benefits that will be felt by both the employee and the organization.

Employees will spend less time on paperwork, so they can get back to their other job responsibilities. No longer will a supervisor have to worry about where the sign-in sheet went from yesterday’s safety meeting. All the documentation is digitally uploaded to the cloud and instantly accessible to those who need it.

The organization can ensure compliance with the Occupational Safety and Health Administration’s (OSHA) safety meeting requirements and eliminate lost paperwork. No longer do organizations need file folders full of sign-in sheets with, unfortunately, illegible signatures. Digital records are easily accessible and filtered by date, project, topic, etc. in order to streamline the process of retrieving data.

All of these things save time, effort, and increases compliance, which ultimately translates to reduced costs.

If your organization is ready to make the transition from paper to digital, contact your Client Technology Coordinator for more information about Rancho Mesa’s proprietary SafetyOne™ mobile app and website.

Don’t Wait Until It’s Too Late: Notify Your Insurer of a Claim Right Away

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

Rancho Mesa’s commercial clients purchase insurance to transfer financial risk to a third party and protect their business against claims of liability. These clients rightfully expect their respective insurers to fulfill the obligation found in black and white on the Insurance Service Office (ISO) general liability form that reads “We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies.” So, what must a policyholder do to ensure this obligation is fulfilled?

Most importantly, following a known event, policyholders should not wait until served a lawsuit. Per the policy conditions, the policyholder must notify the insurer “as soon as practicable” of an “occurrence or an offense” which may result in a claim. Failure to do so can result in a breach of duty and forfeiture of coverage for that claim.

When reviewing policy coverage and terms in proposal meetings with their broker, clients often voice concerns about what types of occurrence require notice, how a notice to an insurer will impact future coverage and premiums, and how quickly is “as soon as practicable.”

Per the ISO general liability form, “occurrence” means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.

Various court cases and legal precedent do not provide a clear reporting timeline. It is safe to say policyholders do not want to find out how late is too late to report a claim. Report the incident without delay.

Having some apprehension in reporting the incident due to potential rate increases is common and understandable, but should not come into play at the expense of triggering coverage. It is also true that most insurers do not weigh reported incidents or notice only items when underwriting the risk. In contrast, claims, or matters where a third party actually alleges the policyholder is responsible for damages, will have significance to the underwriter. When determining how or when to properly provide notice to the insurer, your Rancho Mesa service team can educate and advise on how best to proceed.

For more information on a policyholder’s obligation to report an incident or to ask questions about your current policy, please contact me at (619) 937-0175 or sbrown@ranchomesa.com.

Understanding Why Your Building’s Leaky Roof Claim Might Be Denied

Author, Jack Marrs, Associate Account Executive, Rancho Mesa Insurance Services, Inc.

Leaky roofs can be a major headache for commercial property owners, often leading to significant damage and costly repairs. Understanding how insurance policies respond to these situations is crucial in navigating the claims process.

When is a Leaky Roof Covered?

Insurance policies typically cover leaky roofs under certain conditions. The key factor is whether the leak resulted from an unexpected and accidental event, such as a storm causing direct damage to the roof. For instance, if a storm creates a hole or crack in your roof, allowing water to penetrate and cause damage, your insurance policy will likely cover the repairs.

When is a Leaky Roof Not Covered?

On the other hand, if the leak is due to a lack of maintenance or general wear and tear over time, the insurance carrier will typically deny the claim. Routine maintenance and upkeep are the property owner's responsibility, and insurance policies are not designed to cover damages resulting from negligence or normal wear and tear. Also, the age of the roof can determine if the claim will not be covered.

According to the Raizner Slania lawfirm, “In most cases, roof damage on a roof that is 20 years old or older, which accounts for the lifespan of most shingle roofs, will not be covered. A roof on a commercial property can also be deemed too old if one of the lower layers is 20 years old and a new layer was simply added to it rather than the whole roof being replaced.”

Ensuring That Your Claim is Covered

To ensure that your insurance claim for a leaky roof is covered, it is important to document the cause of the damage. If a storm has caused the damage, take photos of the roof and any other affected areas. These photos can serve as evidence when you file your claim. Additionally, maintaining your roof regularly and addressing minor issues before they worsen can help you avoid the claim being denied. Keep records of any maintenance work and inspections conducted on your roof as these documents will be helpful if you need to prove that the damage was not due to lack of upkeep/maintenance.

Remember, if a storm directly causes the damage that leads to a leak, your insurance policy will likely cover the repairs. However, if the leak is due to poor maintenance or normal wear and tear, your insurance policy will most likely deny the claim. By staying up to date with roof maintenance and documenting any storm related damage, you can feel confident your claim will be covered.

To discuss your organization’s potential exposure to property claims, contact me at (619) 486-6569 or jmarrs@ranchomesa.com.

Updates to California Healthcare Minimum Wage Policies for 2024

Author, Megan Lockhart, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

This year has seen several changes to minimum wage in the State of California. On January 1, 2024, the California general minimum wage increased to $16 per hour, regardless of tips. However, as of July, several individual industries across the State, including healthcare, saw minimum wage increases. 

While the federal minimum wage rate still stands at $7.25 as per the Fair Labor Standards Act (FLSA), individual states and certain cities may have their own minimums like California. So, be sure to check the updates in the RM365 HRAdvantage™ portal for your specific industry and jurisdiction to ensure your company’s payroll is compliant.

California Healthcare Minimum Wage Rate Changes

Jurisdiction	Industry	Coverage	Minimum Wage as of July 1, 2024
Statewide	General		$16.00
Statewide	Healthcare	Hospitals	$18.00 (delayed, effective date TBD)
Statewide	Healthcare	Clinics and all other healthcare facilities	$21.00 (delayed, effective date TBD)
Statewide	Healthcare	Large employers and integrated healthcare systems	$23.00 (delayed, effective date TBD)

Clients can login to the RM365 HRAdvantage™ portal to review the full minimum and tipped wages for all states under the 2024 State and Local Minimum and Tipped Wage Rates.

Understanding the Importance of Your Workers’ Compensation Unit Stat Filing Date

Author, Greg Garcia, Account Executive, Rancho Mesa Insurance Services, Inc.

Imagine you are a landscaping company owner and your workers’ compensation policy just renewed January 1st. You are probably thinking, now what? Well, the next date that should be on your radar is June 30th, your unit stat date. Each unit stat date varies and with the actual filing taking place approximately 180 days from when the workers’ compensation policy was placed. The unit stat date is when all workers’ compensation claim activity is frozen, along with audited payroll information, and sent to the rating bureau so the experience modification (XMOD) can be calculated.  

As a reminder, your XMOD is determined by comparing your loss experience and historical payroll to others with similar class codes. The XMOD is derived from three years of audited payroll and losses suffered over those years.

If a particular claim is closed after your unit stat date, that claim will impact your next XMOD at the total incurred value before the unit stat date. Therefore, if you have a claim that can either be closed or reserves reduced, it is critical that this is done ahead of the unit stat date. Staying up to date with your claims adjuster and insurance professional ahead of the filing can quite literally save you points on your XMOD, which in turn can help to reduce your worker’s compensation annual premium.

Using one of the metrics on our proprietary KPI Dashboard, our clients are able to track the number of days until their unit stat date. Combining this KPI tool with our dedicated workers’ compensation claim advocate services at prescheduled claims reviews throughout the policy year helps to close the claims or mitigate claim costs in advance of the filing. This strategy can dramatically lower overall insurance costs.

If you have any questions about the unit stat or would like me to put together a custom KPI dashboard for your team, you can contact me at ggarcia@ranchomesa.com.

Beyond Insurance: Employer Strategies to Prevent Wage and Hour Claims

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

It was June, 86 years ago, when Congress and President Franklin D. Roosevelt (FDR) signed into law the Fair Labor Standards Act of 1938 (FLSA). In the words of FDR, the FLSA ensured “a fair day’s pay for a fair day’s work.”

While the FLSA immediately raised wages for hundreds of thousands of workers and improved working conditions, it has also given rise to a specific type of costly allegation, wage and hour claims.

Wage and hour claims arise when non-salaried or non-exempt employees make a formal complaint stating they were unfairly compensated for work performed.

In 2021, about 19,000 California workers filed unpaid wage claims for a total of more than $330 million, according to Cal Matters.

Wage and Hour Liability Allegations include:

• Underpayment of overtime

• Miscalculation of wages

• Refusal to allow employee breaks

• Expecting off-the-clock work

• Not paying employees regularly

• Refusal to pay exempt employees for absences

• Not paying for time required to put on or remove protective gear or clothing

• Adhering to federal minimum pay guidelines when state guidelines warrant higher pay

Prevention is always the best line of defense against wage and hour claims. Beyond purchasing insurance, which will typically provide $100,000 to $200,000 of defense costs, employers can mitigate risk by:

• Assessing the risk within the company, starting with the State and Local Government Self-Assessment Tool available from the U.S. Department of Labor’s Wage and Hour Division.

• Review employee classification as to “exempt” and “non-exempt” status to ensure compliance with guidelines under the FLSA and applicable state laws.

• Consult with an attorney or consultant regarding job descriptions and how overtime is calculated.

• Review and confirm proper classification for independent contractors.

• Keep payroll records for all employees and establish a mechanism for tracking non-exempt employees’ hours.

• Review practices and procedures to ensure compliance with meal and rest periods as applicable to state law.

• Allow an outside HR firm to conduct an external audit of the employer’s wage and hour practices.

• Enacting policies that prohibit off-the-clock work

Navigating employment law and the FLSA will help employers earn good favor among workers and help to avoid costly wage and hour lawsuits. Understanding common wage and hour allegations is a critical step in this process, but may not be enough.

If you have questions about how insurance policies may supplement your existing risk management plan, contact me at sbrown@ranchomesa.com or (619) 937-0175.

Building an Effective Renewal Submission in a Hard Market

Author, Jack Marrs, Associate Account Executive, Rancho Mesa Insurance Services, Inc.

Insurance renewals can be challenging for nonprofits, especially in the hard market of 2024, characterized by higher premiums, stricter underwriting, and reduced coverage from insurance carriers. Leaning on your insurance broker as the quarterback, a well-prepared submission can significantly impact the outcome of your insurance renewal, potentially leading to better terms and lower premiums. Nonprofits can work effectively with their insurance broker to build a comprehensive submission using the following strategies.

Pre-Renewal Meeting

Begin the pre-renewal process well in advance by meeting with your insurance broker at least 90 days before your renewal date to update expiring applications and discuss any changes in operations, such as new programs, major grants, changes in leadership, turnover percentage, and employee count, etc. Rancho Mesa meets with clients 120 days prior to the renewal date. This provides plenty of time to gather the necessary documentation, address potential issues, discuss a renewal strategy, and explore alternative options if needed.

Highlight Risk Management Efforts

Insurance carriers are going to favor organizations that proactively manage risk. Demonstrating your commitment to risk management can position your nonprofit as a lower-risk organization, potentially leading to more favorable insurance terms. Risk Management Strategies:

• Safety Training
  Regularly train staff and volunteers on safety procedures and document these sessions. Rancho Mesa clients have access to our proprietary SafetyOne™ Desktop & Mobile App, which allows you to manage your workplace safety program from anywhere, access important documents, and share job-specific and employee safety data as needed. The SafetyOne platform also includes tailored trainings to ensure proactive risk management.

• Large Claim Summary
  For organizations that have experienced any number of large claims, it is best practice to provide a detailed summary of each claim. This should include exactly what happened and the procedures your organization has put into place to mitigate similar claims from happening in the future. Charity First recommends this approach because it demonstrates to insurance carriers that your organization is proactive about risk management.

Description of Operations

Providing a detailed description of your operations is crucial. This includes explaining how your nonprofit executes its mission, the specific activities and programs you run, and how these activities align with your organizational goals. A comprehensive description helps insurance carriers understand the nature and scope of your work, assess the associated risks accurately, and provide appropriate coverage.

Broker Expertise

Your insurance broker is a valuable resource and should have a deep knowledge of your organization’s insurance market and the specific needs of nonprofits. The broker should be ensuring that the submission is as strong as possible. The broker should be leading you throughout this entire process, informing you exactly what is needed and educating you on what is happening in the marketplace. The broker's role is not only to provide nonprofits with adequate coverage but also to ensure clients feel well-informed about what to expect for their renewal.

Importance for 2024 Renewals in a Hard Market

The insurance market in 2024 is particularly challenging for nonprofits due to an uptick in frequency and severity of claims across all lines of insurance. A hard market typically translates into insurance carriers engaging in more conservative underwriting, more restrictive coverage, elevated retentions/deductibles, and higher premiums. This makes it even more critical for nonprofits to present a strong, well-documented submission.

Building a strong submission for your insurance renewal in 2024 requires a proactive and collaborative approach. By starting early, maintaining open communication with your broker, compiling comprehensive documentation, highlighting risk management efforts, leveraging your broker’s expertise, and exploring alternative options, your nonprofit can secure the best possible terms for its insurance coverage. This strategic approach not only helps in managing costs but also ensures that your organization is properly insured.

To discuss your organization’s insurance renewal, contact me at (619)486-6569 or jmarrs@ranchomesa.com.

Litigation Funding Contributes to Higher Claim Amounts and Premiums

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

The first quarter of 2024 is in full swing and the insurance industry is already feeling the rising cost of insurance claims, often referred to as social inflation. Commonly discussed reasons for social inflation include socioeconomic, legal, and behavioral trends that produce costly lawsuits, according to research conducted by The Institutes. In addition to these familiar observations, a relatively new factor is now playing a role in large lawsuits: third-party litigation financing.

Litigation financing refers to the practice of private equity companies, hedge funds, and other investors taking a calculated risk to invest in lawsuits, according to The State Bar of California Standing Committee on Professional Responsibility and Conduct. The Insurance Information Institute estimates that $30 billion will be invested in litigation financing by 2028.

A simple example that typifies the arrangement is an investor paying for legal expenses in exchange for a portion of the settlement. A plaintiff may agree to this in hopes of increased damage awards.

The downsides to litigation financing include prolonged litigation, litigants receiving only a fraction of the award, litigants demanding higher settlements to cover the cost of the investments, and funding agreements impacting an attorney’s judgement when representing a client. The ultimate downside occurs when underwriters charge higher policy premiums or reduce appetite, making coverage very difficult or impossible to obtain.  

As the practice of third party litigation financing grows more common, legislation and regulation must catch up and may need to implement guidelines to better protect the interests of both policyholders and insurers.

If you have questions regarding social inflation and the impact on your policy premiums, please contact me at 619-937-0175 or sbrown@ranchomesa.com.

The Critical Importance of Nonprofit Executive Transition Planning

Author, Jack Marrs, Associate Account Executive, Rancho Mesa Insurance Services, Inc.

In the world of nonprofit management, the departure of an executive director can cause a time of uncertainty. This kind of challenge is why all nonprofits need a well-crafted executive transition plan. This plan is not just a roadmap for navigating the change in leadership but a tool for sustaining and growing the nonprofit's mission. In this article, we will dive into the importance of having an executive transition plan, the key components that make up an effective plan, and the benefits it brings to the nonprofit sector.

Understanding the Role of the Executive Director

The executive director's role is crucial in shaping the nonprofit's direction, culture, and public image. These leaders have many roles from strategic planning and fundraising to staff morale and community engagement. Therefore, the departure of an executive can leave a void that is difficult to fill without a transition plan in place.

A well thought out executive transition plan begins with a deep understanding of the executive director role within their nonprofit. It involves evaluating the organization's current needs, future plans, and the specific qualities in a new leader that will allow them to successfully fulfil the nonprofit’s mission moving forward.

Alignment and Visioning

The next step is to make sure that the organization’s future plans align with the board’s vision. In order for the organization to continue to be successful, everyone needs to be on the same page and have a deep understanding of the organization’s goals.

Developing a transition plan that is prepared for different types of departures like planned, unplanned, or strategic, shows your level of preparedness. Whether the transition is expected or sudden, having a clear plan in place minimizes disruptions and allows the organization to focus on its mission.

Cultivating Internal Leadership

One of the plan's key components is the focus on internal leadership development. By identifying and training potential future executives within the organization, this will create qualified employees ready to step into a leadership role when needed. Also, internal employees bring a deeper understanding of the nonprofit’s culture and operations, making the transition period much smoother than hiring from outside the organization.

The Search for New Leadership

Finding the right executive to guide the nonprofit through its next phase is the most important part of the transition plan. This process involves setting clear criteria for the ideal candidate, conducting a thorough search, and the selection process itself. The plan should outline the steps for advertising the position, screening candidates, and holding interviews, while keeping the organization’s mission on the forefront.

Also, finalizing the transition does not simply involve the selection of a new executive director but also ensures that they are fully integrated into the organization. This would involve a detailed onboarding process where the new leader is introduced to the team and understands the nonprofit's operations.

The importance of having a comprehensive executive transition plan cannot be overstated for nonprofits. By thoroughly understanding the role of the executive director, aligning the transition with the nonprofit's vision, cultivating internal leaders, selecting and integrating a new leader, nonprofit organizations can successfully navigate the executive transition with confidence and ease. This approach not only protects the organization's mission during times of change but also sets it up for future success.

With a strong presence representing the insurance needs of nonprofits throughout California, Rancho Mesa prides itself on understanding both the risk management and operational components within this important space. For questions on this article or to learn more about how Rancho Mesa can help your organization, contact me at jmarrs@ranchomesa.com or (619) 486-6569.

Resources

https://alysterling.com/nonprofit-executive-director-transition/
https://www.philanthropy.com/article/the-great-nonprofit-leadership-turnover
https://boardsource.org/fundamental-topics-of-nonprofit-board-service/executive-transition/
https://buildingmovement.org/reports/the-leadership-in-leaving/

Protecting Non-Profit Operations with Business Interruption Insurance

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

A non-profit organization’s culture and positive impact often flows through its strategically placed locations in the communities it serves. These locations, whether they be offices, group homes, childcare centers, or shelters all further the mission and may drive revenue. The cost to the organization if one of these locations becomes inoperable due to a property damage claim can often add undue stress to the finances and leadership. This article will address how business interruption insurance (BII) can address these costs.

Following a covered property loss, a business or non-profit organization may suspend a location’s operations while repairs are made. This is known as the period of restoration. If such a suspension occurs, operations may be impacted in several ways.

 First, revenues may decline. Examples include a health clinic treating a reduced number of patients, a Boys & Girls Club losing members and monthly dues, or donations decrease.

Second, at the risk of losing staff, the organization may need to keep key employees on the payroll who cannot work their shifts during the repairs.

Third, the organization may continue to incur fixed costs at the location such as mortgage, rent, insurance, taxes, professional services and utilities.

Lastly, the non-profit may incur extra expenses to maintain operations or services at an alternative location. These extra expenses may include the cost of an extended stay hotel for clients or increased rent for an alternative worksite, and the cost of moving expenses.

The Challenge

How does a non-profit leader arrive at the most appropriate limit of insurance to indemnify the organization during a loss?

A Best Practice approach would involve the, use of a business interruption worksheet. This document will guide a policyholder and its insurance broker by asking for different line items to be insured.

These items will include:

• Annual net income

• Annual compensation for key people to be retained during the suspension of operations

• Annual employee benefits, pension costs and payroll taxes for key people

• Continuing fixed expenses

• Extra expense

The sum of these figures will provide the limit needed for a 12-month period of restoration. If 12 months does not seem long enough, then the policyholder and broker should discuss a realistic length of time operations would be suspended following severe property damage.

If operations may not resume in full capacity following completion of the repairs, then the policyholder and insurance broker should consider an extended period of restoration.  This may allow a business 180 to 365 days of extended coverage once the period of restoration ends.

Business interruption insurance coverage continues to confuse employers and many insurance brokers who do not have experience working with non-profit organizations. Rancho Mesa encourages decision makers to discuss this coverage and possible disaster plans at length with their insurance broker. It may help avoid a costly financial loss following property damage.

For more information or to ask questions about business interruption coverage, please contact me at sbrown@ranchomesa.com or (619) 937-0175.

The Final Chapter: Addressing Training, Access and Recordkeeping in the IIPP

Author, Jack Marrs, Associate Account Executive, Rancho Mesa Insurance Services, Inc.

In this third installment of exploring an Injury and Illness Prevention Program (IIPP), we will be taking a closer look at: Providing employee training and instruction, procedures to allow employee access to the program, and recordkeeping and documentation.

Providing Employee Training and Instruction

Providing clear and effective training for both employees and supervisors is essential for the success of an IIPP. All employees are required to be fully aware of the workplace hazards they may face. Comprehensive and well-conducted trainings can help reduce the likelihood of work-related injuries and illnesses. An article from The State Fund suggests “If you are unable to conduct your own required trainings, you should reach out to an outside consultant, Cal/OSHA consultation, vendors, your insurance carrier, and/or broker for assistance.” The more knowledgeable and prepared employees are, the safer the work environment becomes.

Take a look at the training resources that are available to your organization. Rancho Mesa clients can access the online safety training courses in the SafetyOne™ platform.

Procedures to Access the IIPP

All employees are required to have access to the written IIPP. This will ensure that all employees are fully aware of the safety protocols and hazard prevention strategies used to minimize workplace accidents and illnesses and thus, maintain a safe workplace.

According to Cal/OSHA, employers can meet this requirement by:

1. Unobstructed access through a company server or website, which allows employees to review, print, or email a copy of the IIPP

2. When requested, provide a printed copy of the IIPP (unless the employee agrees to receive an electronic copy)

The IIPP can be made accessible to users of the SafetyOne mobile app. It allows organizations to upload digital files into a file cabinet that is available only to their users.  For employees who aren’t SafetyOne app users, they could scan a QR code or complete a webform to request the IIPP from their administrator.  However your organization decides to distribute the IIPP, it should be easy for employees to access or request.  

Recordkeeping and Documentation

Recordkeeping and proper documentation are crucial components of the IIPP. By maintaining accurate records, employers can learn from past incidents and identify injury and illness trends. This knowledge allows for necessary corrections and improvements in future operations, which will improve overall workplace safety. There are 5 steps required by the OSHA for a compliant recordkeeping system:

1. Each employer (unless exempt by size or industry) must record each fatality, injury, or illness that is work-related, is a new case, or meets one or more of the general recording criteria specified in Title 8, Section 14300.

2. Record each injury or illness on the Cal/OSHA Log of Occupational Work Related Injuries and Illnesses (Form 300) according to its instructions.

3. Prepare an Injury and Illness Incident Report (Form 301), or equivalent.

4. Annually review and certify the Cal/OSHA Form 300 and post the Summary of Work-Related Injuries and Illnesses (Form 300A) no later than February 1 and keep it posted where employees can see it until April 30.

5. Maintain the last five years of these records in your files.

A simple way to collect the incident information required for the OSHA logs (Form 300, 300A and 301) can be obtained by utilizing SafetyOne’s mobile forms. Either through the mobile app or via a QR Code or web link, employees can complete accident investigation forms and witness statements digitally.  Then, the person responsible for documenting and maintaining the OSHA logs, can review the reports that came in through the mobile app and document the OSHA logs in the RM365 HRAdvantage Portal.

Rancho Mesa will host several webinars in the coming months to assist clients with understanding the best practices for completing their OSHA logs using SafetyOne™ and the RM365 HRAdvantage Portal.

Cal/OSHA has a Guide to Developing Your Workplace Injury and Illness Prevention Program that is helpful for organizations that need some assistance with getting started.

Rancho Mesa also has a 6-page Sample Injury and Illness Prevention Overview for California Employers available through our RM365 HRAdvantage Portal.

Following these steps is a proactive approach to building a safer working environment for all employees. The bottom line, it’s all about mitigating accidents before they happen and building a safe work environment.

Please contact me with any questions regarding the IIPP at (619)-486-6569 or via email at jmarrs@ranchomesa.com.

Identifying Proper Procedures for the Injury and Illness Prevention Program

Author, Jack Marrs, Associate Account Executive, Rancho Mesa Insurance Services, Inc.

In this second installment of exploring an Injury and Illness Prevention Program (IIPP) we will be taking a closer look at the procedures for identifying and evaluating workplace hazards, investigating occupational injury or illnesses, and correcting unsafe or unhealthy conditions, work practices and procedures.

Identifying and Evaluating Workplace Hazards

Employers need to have proper measures in place to identify potential health and safety risks like unsafe conditions and practices within the workplace. These measures involve conducting regular inspections to identify any areas of the workplace that may be hazardous. Also, conducting interviews with employees is a great way to identify any potential workplace hazards. During this process it is important to document any identified hazards and create a plan of action to fix them.

According to California’s State Fund “Inspections should be conducted by personnel who, through experience or training, are able to identify actual and potential hazards and understand safe work practices. They should be knowledgeable in the Cal/OSHA safety orders that apply to your workplace to better help you identify potential hazards.”

Investigating Occupational Injuries or Illnesses

Referring now to the investigation that should take place after an accident or near miss has occurred. The investigation should be done by a trained employee who is able to identify the cause of the accident and understands what solutions need to be put in place to prevent a similar incident from happening in the future. When doing an investigation, it is crucial to fill out an investigation report containing the details about what happened. This information is used to not only identify root causes but much of the data that is collected will need to be documented on the OSHA logs.  CAL/OSHA lists five important steps for proper recordkeeping:

1. Each employer (unless exempt by size or industry) must record each fatality, injury, or illness that is work-related, is a new case, or meets one or more of the general recording criteria specified by OSHA.

2. Record each injury or illness on the OSHA Form 300, according to its instructions.

3. Prepare an Injury and Illness Incident Report known as Form 301, or its equivalent.

4. Annually review and certify the OSHA Form 300 and post the Summary of Work-Related Injuries and Illnesses known as the Form 300A no later than February 1 and keep it posted where employees can see it until April 30.

5. Maintain the last five years of these records in your files.

Lastly, building an inventory of investigation reports can lead to a stronger ability to identify developing trends and root causes that could lead to additional incidents, if not corrected.

Correcting Unsafe or Unhealthy Conditions, Work Practices and Procedures

Once your safety team becomes aware of a hazard, it is imperative to take immediate action. If the hazard is not easily fixable, employees should vacate the work area until a solution is implemented. Once the solution is in place, only trained staff members should enter the hazardous area to address the issue. This approach ensures effective hazard management while minimizing the risks associated with its correction.

By implementing an effective Injury and Illness Prevention Program, workplaces will begin to fulfill their regulatory obligation of maintaining a safe workplace, but also create a culture of safety and accountability.

Our next installment will cover the last 3 critical components of the IIPP: providing employee training and instruction, procedures to allow employee access to the program, and recordkeeping and documentation.

Please contact me with any questions about managing your risk at (619) 486-6569 or via email at jmarrs@ranchomesa.com.

First Four Steps to Take Immediately After a Data Breach

Author, Sam Brown, Account Executive, Rancho Mesa Insurance Services, Inc.

On Friday, July 14th Rancho Mesa hosted a popular workshop titled “Cyber Liability Explained: Hacking Trends for 2023” with presenter Beau Bechelli of Evolve MGA. His 60-minute presentation educated the audience on the cost of cyber attacks, the most common types of attacks, and practical ways to help reduce the threat of a breach.

This article will cover recommended steps an organization should take immediately following a data breach.

Call Insurance Agent

Immediately call the business’ insurance agent or the cyber insurance policy’s claim reporting line to report details of the incident.  

Secure Operations

According to the FTC.gov’s Data Breach Response Guide, an organization should first take steps to quickly secure its operations. This may require:

• New locks and access codes to physical areas

• Taking all affected equipment offline immediately

• Remove improperly posted information from the organization’s website

• Search for the organization’s exposed information on the web

FTC.gov also recommends interviewing individuals who discovered the breach and advises against destroying evidence.

Address Vulnerabilities

The organization should next address the system’s vulnerabilities compromised in the breach. Contact any service providers involved to assess the personal information to which the provider had access and determine if it’s necessary to change access privileges.

Work with the forensics team to understand if the breach is contained and determine the status of the network’s backup data. This process should also produce the number and types of records compromised. Begin corrective measures as soon as possible.   

Notify Appropriate Parties

The guide instructs businesses to notify law enforcement, other affected businesses, and affected individuals. Work with the insurance company’s assigned legal counsel to ensure compliance with all state and federal notification requirements.

Please refer to the Federal Trade Commission’s Data Breach Response Guide for more detailed steps.

For those who are interested in learning more about how cyber-crimes affect real businesses, watch “Cyber Liability Explained: Hacking Trends for 2023.”

 Contact me to discuss the merits of cyber liability insurance or a possible data breach at (619) 937-0175 or sbrown@ranchomesa.com.

Breaking Down the First Few Components of the IIPP

Author, Jack Marrs, Associate Account Executive, Rancho Mesa Insurance Services, Inc.

Building upon Sam Brown’s article “Guidance for Developing an Effective Injury and Illness Prevention Program” (IIPP), I would like to delve further into some of the key components of an IIPP. In this first installment, I will explore assigning the right person to create the IIPP, compliance with safety regulations, and effective communication.

Person Responsible for Creating the IIPP

This person must understand the ins and outs of the organization. They must be familiar with the workplace hazards and understand what safety measures need to be put in place. They are also in charge of updating the program and improving it as the organization changes and grows. This individual must also be formally mentioned in the IIPP, clarifying the assigned responsibility for overseeing this aspect of safety by including their name in the document.

Compliance with Safety Regulations

The IIPP outlines the system for ensuring employees comply with safe and healthy work practices.

This entails effectively training and informing employees about their responsibilities and expectations. Employees need to understand the system that is put in place as well as the safety procedures and the requirements of the IIPP. Providing positive recognition and rewarding employees who are following the IIPP guidelines is crucial, while disciplinary measures should be put in place for those who fail to comply. This is how you begin to create a culture of safety and accountability. Also, to ensure your IIPP stays up to date, it is considered best practices to regularly review and update all rules and procedures as needed.

Effective Communication

The IIPP must include a system for communicating with employees in a form readily understandable by all affected.

It remains critical to effectively communicate with your employees on matters that relate to the IIPP. Clear communications can be learned through trainings. And, it is important that employees use language that can be easily interpreted. According to the State Fund, “your communication system should include provisions for encouraging employees to report potential hazards in the work environment without fear of reprisal. One way to do this is to have a notification system where employees report hazards anonymously.” This helps eliminate fear in the employee and allows them to feel comfortable holding their co-workers to the IIPP standard. Effective communication can help prevent injuries from happening in the first place.

By embracing these components, organizations can create a culture of safety and accountability.

The next IIPP article will cover the three critical components of the IIPP: identifying work place hazards, investigating occupational injury or illness, and work practices/procedures.

If you have any inquiries, feel free to reach out to me at (619) 486-6569 or via email at jmarrs@ranchomesa.com.

Guidance for Developing an Effective Injury and Illness Prevention Program

Author, Sam Brown, Account Executive, Rancho Mesa Insurance Services, Inc.

As some company leaders may recall, since 1991, all California employers are required to maintain a written Injury and Illness Prevention Program (IIPP). An IIPP is an understandable and accessible safety program tailored to a business’ operations. An effective IIPP will help an employer establish and maintain a safe workplace while setting expectations and protocols for all employees.

The information below outlines the necessary elements of a written and effective IIPP, while recommending a resource to use when creating or updating the plan.

Cal/OSHA requires all Injury and Illness Prevention Programs to contain nine critical components:

1. A person (or persons) with authority and responsibility for implementing the program is identified.

2. A system for ensuring employees comply with safe and health work practices.

3. A system for communicating with employees in a form readily understandable by all affected.

4. Procedures for identifying and evaluating work place hazards.

5. Procedures to investigate occupational injury or illness.

6. Procedures for correcting unsafe or unhealthy conditions, work practices and procedures.

7. Provide employee training and instruction.

8. Procedures to allow employee access to the Program.

9. Recordkeeping and documentation.

California employers looking for guidance on the Cal/OSHA required Injury & Illness Prevention Program can often feel overwhelmed when addressing all required elements, while also abiding by the best practices of updating the plan, annually. Fortunately, California’s State Compensation Insurance Fund offers a free IIPP builder to all employers.

The State Fund’s IIPP Builder will help an employer create an IIPP from scratch, but can also help improve an existing program to make it more effective and compliant. An employer is first asked to answer a series of questions about safety practices. The answers will help build a safety program and tailor it to the business. The IIPP builder will also guide an employer through the required elements of the written IIPP.

Once finished, an employer can save the IIPP to their computer and upload it into their SafetyOne™ mobile app. They can also print and keep a hard copy at all locations. Lastly, to make it a truly effective program, the employers should share details of the IIPP with their employees.

Rancho Mesa wants clients to feel comfortable and confident when creating, updating, and sharing details of their Injury and Illness Prevention Program. To learn more about an effective IIPP and the State Fund’s IIPP BuilderSM, please contact me at sbrown@ranchomesa.com or (619) 937-0175.

Plan Your SafetyOne™ App to Best Suit Your Organization’s Needs

Author, Megan Lockhart, Media Communications and Client Services Coordinator, Rancho Mesa Insurance Services, Inc.

Rancho Mesa aims to provide clients with tools that are flexible in order to best fit their individual needs, including our proprietary SafetyOne™ application. SafetyOne’s features are systemized based on “Projects.” However, projects are highly adaptable to the way each individual organization works.

Below are best practices for utilizing projects depending on your organization’s industry and structure.

Construction (Project or Job)
As the name suggests, construction companies will most likely assign their policies, mobile forms and users to their individual construction projects or job sites. Project managers and foremen can access job-specific content based on the projects they are assigned.

This system works well for both short-term and long-term projects that need to manage safety within unique worksites.

Landscape, Tree Care and Janitorial (Service Crew)
Many landscape, tree care and janitorial companies organize their employees in the SafetyOne application into crews. These crews are employees who stay grouped together from one worksite to the next. Companies can name their projects based on a crew number, truck, or team name and assign content, such as toolbox talks to individual crews.

This system works well for companies providing on-going services to multiple accounts that aren’t necessarily tied to one worksite. 

Human Services (Client or Program)
Human services organizations like non-profits, home healthcare, and schools can use projects for their different office locations, facilities, programs, or campuses. These organizations may choose to make policies and forms available to employees based on their office, clients, facility, program or campus.

There may be different ways to utilize the projects organization structure in the SafetyOne application. Through the dynamicity of the platform, Rancho Mesa is happy to help clients best meet their organization’s risk management needs.

For more information about how to set up projects in SafetyOne™, please contact your client services coordinator or watch our Administrator Website Overview Training.