Signs of a Continued Hard Property Market in 2023

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

The property insurance marketplace continues to be a challenging segment in 2023. With catastrophic events that have occurred over the last several years such as hurricanes, floods, wild fires, and major storms, the property marketplace has taken a huge hit that will take many years to recover. As a result, we expect property pricing to continue increasing for the foreseeable future. There are several real-world examples of the property market hardening.

Insurance carriers are paying much more attention to the geographic diversity in their portfolios. In many cases, insurance companies are pulling out of areas of concern, such as wild fire or flood prone areas. More and more policyholders are receiving non-renewal notices as insurance carriers expand their hazard zones. This also has an adverse effect on those seeking property coverage because it limits the number of insurance carrier options.

Underwriters are also beginning to pay closer attention to the condition of the properties they currently insure or plan to insure. In the commercial property segment, loss control visits are becoming more frequent for buildings of all sizes. Loss control specialists will focus their attention on the state of the buildings, and the status of building updates such as electrical, plumbing, roofing, etc. More specifically, loss control specialists are even analyzing the age and brand of electrical panels. There is one brand of electrical panels called Zinsco that experts recommend replacing immediately due to fire hazard. Therefore, if a building is still equipped with a Zinsco panel, it is likely that these panels will need to be replaced before an insurance company will be comfortable providing terms and pricing.

Another sign of the deteriorating property market includes the recent announcement that California Insurance Commissioner Lara will increase the FAIR Plan coverage limit for commercial buildings from $8.4 million to $20 million. This is a direct result of insurance companies pulling out of areas that are deemed high hazard. This limits the number of insurance companies available to write property policies in these areas and in some cases there are no options at all. Therefore, in the case of a commercial building owner who has exhausted all options, they could fall back on the FAIR plan to secure coverage.

To combat these rapid changes within the property market, it is critical to meet with your broker and review each policy in detail. Discuss those areas that could be impacted, look at increasing values, additional safety measures and controls, make sure your coinsurance percentage is still in line with rising costs. Being proactive and looking closely at how you can perhaps upgrade your building with cost effective loss control measures could be the difference in securing a competitive quote.

To discuss your property coverage, contact me at (619) 937-0174 or via email jhoolihan@ranchomesa.com.

The Importance of a Job Hazard Analysis in the Janitorial Industry

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

The janitorial industry faces job hazards on a daily basis. The key to running a successful and safe business is identifying hazards within the workplace well before injuries or liabilities can occur. One way to keep track and address hazards in the workplace is by creating a Job Hazard Analysis (JHA). A JHA can be used to identify individual exposures to each specific jobsite and create a plan or solution to minimize these risks.

For the janitorial industry, there are several common exposures and solutions JHAs should be used to address.

Bloodborne Pathogens

While this exposure is more prevalent in a medical or healthcare setting, it is important to train employees on OSHA’s bloodborne pathogen standards.  Whether an employee works within a healthcare setting or not, there is always the possibility that they will have to face a situation where blood is present.  Proper education on how to address this exposure can help minimize and prevent the transmission of any infectious disease.

Chemical Hazards

Examples of chemical hazards janitors could face in the workplace include carbon monoxide poisoning, lead poisoning, asbestos, and mold to name a few.  Identifying these hazards in advance and putting a plan in place to avoid these exposures will lead to fewer injuries.

Cleaning Chemicals

Within the JHA, identifying which chemicals are going to be used is critical to job safety. Training employees on the proper use of these chemicals can avoid mistakes made such as improper dilution, improper mixing of products causing a chemical reaction, and improper ventilation.

Slip & Falls

Slip and fall injuries are very common in the janitorial industry for both employees and the general public. A properly used JHA can help identify high hazard areas within the jobsite and put together a plan to help minimize and avoid future injuries. Examples of areas of concern include high traffic areas, areas with slippery surfaces, areas where water tends to settle (i.e., bathroom floors, kitchens, etc.), and entrances to buildings. Once these areas are identified, it’s critical to address the issue by using caution cones, cleaning during off hours when possible, using floor mats whenever possible, and regularly monitoring these areas if a clean-up is necessary.

Personal Protective Equipment

While surveying a jobsite to determine which cleaning products and equipment will be used, it’s also important to identify what type of personal protective equipment (PPE) will be needed. Examples include proper eye, face, and hand protection while using certain chemicals and equipment. A well-executed JHA can identify which PPE is appropriate for the jobsite. However, the key is making sure that the employees are all properly trained in the use of the PPE and that implementation is mandatory.

Equipment

A JHA can assist with identifying equipment appropriate for a jobsite. Once the equipment has been chosen, proper training is vital to ensure proper use and maintenance.

Janitor’s face a number of jobsite hazards throughout their work day which is cause for concern. By developing a job hazard analysis, employers can develop techniques and procedures for avoiding hazards and injuries. 

If you would like to discuss the resources Rancho Mesa Insurance has in assisting with developing a JHA, please reach out to me at (619) 937-0174 or jhoolhan@ranchomesa.com. 

Auto Insurance Carriers Struggle With Effects of Inflation

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

Inflation continues to plague our nation with no end in sight. With a consumer price index (CPI) reaching as high as 9.1% in July of 2022, the trickledown effect is far reaching. In the second quarter of 2022, the auto insurance marketplace saw a loss ratio of 78.4%. This is quite a spike compared to the average loss ratio of 65% between the years of 2016-2020. Inflation is not the only contributing factor to the challenges within the auto insurance marketplace; we’ll discuss medical inflation, supply chain shortages, and labor shortages.

A continual rise in medical inflation has resulted in the increased cost of treating injured drivers and passengers. Since 2020, healthcare spending has increased by 9.7%. In the first quarter of 2022, the average bodily injury claim was up 24.2% with medical inflation being a significant factor. Because insurance companies are having to pay more due to medical inflation, consumers are seeing increased premiums.    

Also, in the first quarter of 2022, the average collision claim cost reached a record of $5,743. This is a 36.5% increase since the first quarter of 2020. Much of this increase can be attributed to supply chain shortages and disruptions.

COVID-19 shutdowns caused decreasing demand for good and products. There was also an ice storm in February of 2021 that knocked out factories across the South. The Suez Canal was blocked for six days, and there was a semiconductor shortage due to the United States’ reliance on companies overseas.

Now that things have opened up post-pandemic, there are still shortages of available parts and supplies which continues to affect our economy. These supply chain factors have contributed to the average cost of a new car increasing 11.4% and the average used car jumping 7.1%. With the costs of cars increasing and the shortage of available parts, the result is a huge uptick in the cost of repairs and/or replacement of damaged vehicles, as well as the insurance costs.

Labor shortages are another important factor impacting the auto insurance marketplace. Simply put, the shortage has made it difficult to find skilled workers to make vehicle repairs. While the unemployment rate is back to pre-pandemic rates, many people are still testing the waters as they return to their jobs and, in some cases, taking completely different career paths. With the increased demand for workers, employers are offering and paying higher wages, which also leads to higher costs for goods and services, which further increases overall insurance costs.

As auto insurance premiums continue skyrocketing as a result of these inflationary factors, now is the time to focus on improving your business’ auto program. 

For help in developing a Fleet Safety Program that will improve your company’s risk profile and policies and procedures, please feel free to reach out to me at (619) 937-0174 or jhoolihan@ranchomesa.com.

Actual Impact of Auto Claims to Your Bottom Line?

Author, Dave Garcia, President, Rancho Mesa Insurance Services, Inc.

In two previous articles/podcasts, we explored “below the surface” impacts from payroll inflation and lost time workers’ compensation claims. We provided detail on how these can negatively impact a business’s productivity and profitability and what companies can do to mitigate those impacts. Today, let’s look at another area where you need a keen awareness to really understand all the impacts.

What is the true impact an auto accident can have on areas of your business? For discussion, let’s consider an accident where your driver is at fault and also injured. This type of accident is much like an octopus in that it is going to touch many areas of your insurance program. 

• First, there is the damage to your auto, obviously this will be covered under the physical damage portion of your policy.

• Second, you will have the physical damage and potential bodily injury to the third party whom your driver hit. This would fall under the auto liability portion of your policy. Additionally, if the other party or parties are severely injured it could penetrate your initial layer of liability insurance requiring your umbrella/excess policy to respond. As a side note, in my 35 years in the insurance industry, the largest claims that we see are predominately in auto due to the potential of severe bodily injury.

• Third, given that your driver was injured, this claim will trigger your workers compensation policy to provide coverage for both the indemnity and medical costs of their injuries.

• Fourth, the claims will impact your loss ratios in both your automobile insurance and workers compensation, causing the potential for future premium increases.

• Fifth, this claim will also cause your Experience Modification to rise, which again will cause the potential for future premium increases as well as potentially, if you’re a contractor, eliminate you from bidding on certain work.

• Sixth, replacing the injured driver may mean having to hire someone new which will increase payroll and lead to additional training time and a loss of productivity.

I’m sure your head is spinning and you’re probably wondering “all this, from one accident?” What should I do? Thankfully there are several things you can do to mitigate this before the accident occurs. Consider the following:

• Do you have a formal fleet safety program in place? If not, work with your trusted advisor to get one in place. If you would like us to help you with that contact our client services team to set up a time to review our trainings and fleet safety resources with you.

• Do you have a distracted driving policy in place for your drivers? This is by far the leading cause of auto accidents and while many are at low speeds, they can still be very costly. High speed distracted driving accidents can be catastrophic.

• Are you participating in the DMV Pull Program? If not, this is a valuable tool that will provide you with information on your drivers’ experience regardless if the infraction or incident occurred as a part of work or outside of work. Most auto insurance carriers will view this as a subjective credit on your premium rating. You can do this very inexpensively and direct via the DMV website.

• Are you using any telematics tools, like GPS, speed and breaking tracking, cameras (both forward facing and rear facing)? These devices are again viewed as a subjective credit by insurance carriers.

• Once an accident occurs, are you completing a thorough accident investigation report with a description of the accident, witness statements, pictures, police report (if available) and then reviewing the data to determine root cause and possible changes to your fleet safety program?

As you’ve seen, the key to mitigating this type of claim is to keep it from occurring, which is easier said than done.  Accidents will still happen. While you may not be the “at fault’ party in many of the accidents, reducing the likelihood of your driver being at fault starts with your commitment to a strong fleet safety program. If you need help in creating this fleet safety program, please contact our client services team to get started. 

Once you have a strong program in place and you feel more in control of your vehicle safety performance there are other cost saving programs that you would be eligible to consider.  We discussed those in other articles where we explore Performance Based Insurance Programs.

I hope you find this information useful and that you are able to take away an idea or two that might improve your operations. To learn more best practice techniques, contact us or reach out to me directly at dgarcia@ranchomesa.com.

Premium Cost Per Vehicle Continues to Increase for Landscape Professionals

Author, Drew Garcia, Vice President, Landscape Group, Rancho Mesa Insurance Services, Inc.

Commercial auto premiums for landscape companies continue seeing heavy increases, and there is no end in sight. 

Knowing your cost per unit (CPU) is a critical component landscape owners and CFO’s must follow to properly monitor, budget, and forecast fleet related premium. Landscape companies with the lowest CPU’s minimize accident frequency and severity by practicing proactive and reactive risk management techniques.

Proactive management can include routine MVR checks, continuous driver monitoring, and ongoing driver training. 

Reactive management can consist of reporting, analyzing, and correcting both near miss and post-accident incidents. 

Fortunately for companies working with Rancho Mesa, we offer a number of video training series in English and Spanish including accident prevention, defensive driving, distracted driving, and more.

When an auto accident occurs, Rancho Mesa’s client services department will analyze the incident and recommend specific training back to our landscape customers, encouraging proactive safety and helping to mitigate future accidents.

What is your CPU, are you addressing accidents with training, and is your program leaking premium dollars? 

For more information on how to help control rising premium costs, contact Drew Garcia at (619) 937-0200 or drewgarcia@ranchomesa.com.

Ensure You’re Not Under Covered and Overpaying for Auto Insurance

Author, Casey Craig, Account Executive, Rancho Mesa Insurance Services, Inc.

Auto insurance prices are continuously rising. What is the reason for this and what can be done to cut back on the cost? There are many factors that lead to the carriers needing to increase their rates. We are going to discuss exactly what some of the reasons for the increases are; and more importantly, what business owners can do to offset price increase as much as possible while receiving adequate coverage.

Distracted drivers are causing more claims every year. Repairing a vehicle has become more costly as newer models have technology features such as sensors and back-up cameras. People using their cell phones while driving can cause them to have a diminished reaction time, which is leading to more severe high impact accidents. This is pushing medical costs up at a rapid rate, leading to an increase of claims dollars. Implementing a “No Phones While in a Vehicle” policy could reduce claims drastically and keep your employees safe.

There are many ways that carriers can get out of covering a loss, and employees driving their vehicles to and from job sites can really come back to haunt you if they do not have adequate coverage limits. Make sure that you have Hired and Non-Owned Coverage! Hired and Non-Owned is the coverage needed for the carrier to cover losses on vehicles that are not on the company’s policy, such as rented or employee owned vehicles. Employers need to make sure that employees have adequate personal auto insurance limits. The California minimum coverage limits of $15,000/$30,000/$5,000 can get exhausted very quickly in a serious accident, and lawyers are getting very good at finding grey areas to drag the employer in. You should consider reimbursing your employees to offset the increase in premium for them. Some carriers will apply subjective credits to your company auto premium if they know your employees need to have higher limits to drive for you.

One of the biggest gaps that brokers see when they audit policies for prospects is they are using the wrong symbols, thinking they are covered for a claim, and end up not having correct coverage. Most reputable carriers will offer Symbol 1 for your liability insurance and it is imperative that you use Symbol 1 vs. Symbol 7. Symbol 7 only covers vehicles described in the declaration and leaves limited coverage for vehicles acquired after your policy begins.

Rancho Mesa Insurance Services is a National Best Practices Agency 13 years in a row. We strive to make sure that our clients are without gaps in their coverage. Call (619) 934-0164 to ask about Rancho Mesa’s proprietary programs that help maintain clients’ safety and get them the lowest premiums possible. Register here for the free Fleet Safety webinar to learn how to increase vehicle safety, control vehicle accidents, safeguard long-term profitability, and ensure that your fleet safety & accident prevention programs are up-to-date.

Distracted Driving, Not Just an Automobile Insurance Issue, Bad News for Workers Compensation Too

Author, David J Garcia, A.A.I, CRIS, President, Rancho Mesa Insurance Services, Inc.

I’ve written at length on the negative effects distracted driving is having on the automobile insurance industry and its impact on the rise in accidents, claim costs, and increases to your automobile premiums. But, have you considered its effects on your Experience Modification Rate (EMR) and ultimately workers’ compensation cost?

When one of your employees is injured in an automobile accident while working on your behalf, Arising out of Employment (AOE) / Course of Employment(COE) their sustained injury will be covered by your workers’ compensation policy, regardless of fault.

“Regardless of fault?!”

When a third party is deemed at fault and the injuries to your employee(s) have been settled, your workers’ compensation insurance carrier may “subrogate” their costs to the carrier representing the at fault driver. Now, here is the realty – studies have shown that 14.7% (4.1 million) of all California drivers are uninsured, while another large percentage of drivers hold the California minimum limits of $15,000/$30,000. What this means is that even if subrogation is a possibility, the likelihood of a “full” recovery is not probable. Thus, all the costs of the injury to your employee(s) will likely be the sole responsibility of your workers’ compensation carrier and this claim cost negatively affects your EMR and loss ratios for years to come.

What can you do?

You can implement a strong fleet safety program that includes a policy pertaining to distracted driving. When your employee is involved in a motor vehicle accident, adherence to your company’s accident investigation protocol is crucial. Documentation will prove pivotal for your carrier if subrogation becomes a possibility.

For our clients, through RM365 Advantage, we have a number of resources: fleet safety programs that can be customized, fleet safety training topics, fillable and printable accident investigation forms, archived fleet safety workshop videos, and more, in both English and Spanish. You can access this through our RM365 Advantage Risk Management Center or contact our Client Services Coordinator Alyssa Burley at aburley@ranchomesa.com.

If you are not a current client of Rancho Mesa, we encourage you to reach out to your broker for assistance or email Alyssa Burley to get additional information or to ask any questions.

Commercial Auto Premiums Are Rising - What’s Driving the Increases?

Author David J. Garcia, C.R.I.S., A.A.I., President Rancho Mesa Insurance Services, Inc.

The insurance industry is experiencing record losses on their commercial auto books of business, which is dramatically driving up insurance premiums for business owners. There are many factors that are contributing to this increase in losses; let’s take a look at six of the most prevalent.

1.    Distracted Drivers.  This one factor is now contributing over 30% of all accidents reported. This is the single most significant issue facing not only the commercial insurance marketplace, but personal auto usage as well.  Whether it’s talking on the phone, viewing and answering emails, or texting, these trends are escalating at alarming rates.
2.    Higher Auto Repair Costs.  This is one of the hidden “new” claim costs that insurance companies are facing.  Record auto sales of newer vehicles that include sensors, cameras and other new electronics are bringing the cost of repairs to higher levels than ever before.  As an example, minor fender repairs might have been a few hundred dollars in the past, but now with sensors and cameras built into most new vehicle bumpers, this cost has risen into the thousands of dollars.
3.    Increase in Miles Driven.  Since recovering from the recession, a healthier economy has lead businesses to expand and hire more employees.  Now, with an increased need for more company-owned vehicles, more miles are driven which leads directly to an increase in accidents.
4.    Rising Medical Costs.  The medical costs associated with treating auto accident victims is rising 1.5 times faster than any other cost associated with auto incidents.  While this probably comes as no surprise given the state of our health care costs, in general, it plays a major role in driving up commercial auto losses, and thus, premiums.
5.    Fatalities and Severe Accidents Increasing.  With an increase in miles being driven and the distracted driving epidemic, the severity of accidents has grown proportionately.  
6.    Less “Skilled Driver” Availability.  The growth in business and the need for more drivers has resulted in a shortage of skilled commercial drivers. The lack of availability has also increased the likelihood for more auto accidents to occur.

As a business owner, what can you do to minimize this exposure and help control your present and future auto premiums?  The process starts with having a formal written “Vehicle Safety Program” in place that is specific to your company’s needs and exposures.  The following will outline major areas that the Vehicle Safety Program should address.

1. Management Commitment – strong management involvement and concern must be evident
2. Vehicle Operator Responsibilities – distracted driving guidelines and consequences, a description on how the vehicle may and may not be used, etc.  
3. Driver Selection - established criteria in order to be eligible to drive, should include age, MVR history, etc.
4. Accident Investigation – formal written process for documenting, reporting and the resulting training to prevent similar accidents
5. Vehicle Maintenance – establish a process for regular and consistent care of the vehicles tires, brakes, oil, etc.

In addition to the above, there are other areas that need to be addressed in more detail in order for you to build your own comprehensive Fleet Safety Program.  In order to get started, you may want to reach out to your existing auto insurance carrier, as many carriers will offer assistance to their policyholders for creating a safety program.

Furthermore, Rancho Mesa has a proprietary template for our clients, as they design new and re-design existing Fleet Safety Programs.  We also offer Fleet Safety Training workshops twice a year to assist in this process.  Our workshops are free of charge and offered to current and prospective clients. 

To learn more, visit our Workshops and Webinars.