2021 Insurance Game Plan

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

As we come to the end of 2020, the most challenging year most of us have ever experienced, where COVID-19, wild fires and other natural disasters took their toll emotionally, physically, mentally and financially on all of us, we can only hope for a brighter 2021.

The insurance industry did not escape the impact of COVID-19 and the natural disasters, either. Insurance companies, along with their reinsurance companies, suffered catastrophic losses as a result. As with many industries, there will be lagging actions that will take place in 2021 to help these companies in their efforts to recover.

While there really isn’t a line of insurance that wasn’t impacted, the lines of insurance that suffered the greatest losses and impacts include:

• Property

• General Liability

• Excess/Umbrella

• Workers’ Compensation

• EPLI

• Cyber Liability

• Surety

• Employee Benefits

For this article, I will limit my discussion to the property and casualty lines and leave surety and employee benefits to another day.

To offset these losses, I anticipate any number of steps insurance companies will take as we move into 2021. But, let me just touch on those that I think will have the greatest impact and need for attention to business owners in 2021. 

Let’s review these and I will try and give you a small sampling of the implications for each action.

• Non-renewing policies

  • Carriers in many cases will not offer renewal terms.

• Reducing coverage limits and terms

  • Increasing deductibles, lowering aggregate limits particularly in the excess/umbrella marketplace.

• Add new exclusions

  • Businesses will start to see “communicable disease” exclusions added to various lines of insurance.

• Increase underwriting information needed

  • A higher emphasis on information particularly as it relates to a business’s policies and procedures to mitigate COVID-19.

• Raise premiums

  • This is the ultimate consequence and one we are all anticipating to see beginning in early 2021.

To many businesses, this will seem daunting and hopeless - one more hurdle to overcome to keep their businesses going. However, there are proactive steps you can take to mitigate these circumstances and have a strong year despite the adversity.

I’m a firm believer in being pro-active and not re-active. Following are steps you can take to meet this challenge head on:

• Meet with your insurance advisor 90-120 days from your renewal date.

• Understand the specific challenges you will be facing.

• Create a strategy on how to approach the insurance marketplace to ensure the most cost effective and comprehensive risk management program.

• Review and enhance your existing safety program. Rancho Mesa offers our RM365 Advantage Safety Star™ certification program. This is a comprehensive web-enabled training course designed to enable your employees from supervisory to front-line workers to be trained and certified in safety best practices. The insurance marketplace already places a high value on these types of safety trainings and certifications, so this will help your company’s productivity through fewer claims but also position you in a more favorable position in the marketplace.

• Benchmark your company’s safety performance to your industry and see which areas you are outperforming your peers and areas that need your attention. Rancho Mesa offers a benchmarking report we call StatTrac™ to our clients or to other companies who want to see where they stack up.

To close, let me reassure you there is light at the end of the tunnel for 2021. Be proactive; start 90-120 day out from your renewal; don’t let insurance issues sneak up on you; attack them head on and I believe you can make 2021 a great year for you and your company.

If you have any questions or want any help in devising a plan and you are a construction company, please reach out to Sam Clayton, our Construction Group Leader at sclayton@ranchomesa.com. If you are in the human services industry, schools, non-profit, healthcare, assisted living, etc., please reach out to Sam Brown, our Human Services Group Leader. And finally, we can be reached at (619) 937-0164 or at our website, www.ranchomesa.com.

I really believe there is no limit to what you can do – best of luck in 2021.

Youth Protection Policy - Are You Protected?

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

California Governor, Gavin Newsome, signed a new state law on October 13th, 2019 to better protect California’s survivors of child abuse. In response, youth organizations and insurance companies expect a surge in legal activity in 2020.

This new law will give survivors of childhood sexual abuse until age 40 to file a civil suit against their attackers. This is a 14-year increase from the previous age limit of 26. Adult survivors previously had three years from discovering the abuse to sue, but the new law now provides a five year window. The new law also suspends the statute of limitations to three years beginning January 1, 2020. No age limit will be enforced during the three-year span.

The State of New York passed a similar law on January 25, 2019 named the “Child Victims Act.” Among other changes, the new law allows survivors of any age to come forward beginning August 1, 2019. More than 400 lawsuits were filed the first day the act took effect.

Insurance companies offering abuse liability insurance in California are prepared for a surge in legal activity in 2020. New lawsuits may cause an increase to insurance premiums and negatively impact the carriers’ capacity to offer higher limits of liability.

Youth organizations that normally rely on insurance companies to cover the cost of defense and settlement in these cases, may find themselves in financial jeopardy if insurance limits become exhausted.

It is imperative that school districts and other youth organizations take a critical look at youth protection policies and safeguards moving forward. This may include added training, mandatory background checks, and eliminating one-on-one interactions.

Please contact Rancho Mesa to learn about resources for creating a strong youth protection policy.

Information sourced from The Legal Examiner and ABC News.

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.

3 Topics to Discuss with Vendors, Independent Contractors, and Partner Agencies Prior to Working Together

Recently, a non-profit client of mine asked the question: What are the steps I should take with vendors, contracted professionals and partner agencies to make sure my organization is protected should a claim arise as a result of their work?  This is a common exposure to many of our clients, and there are several steps that can be taken to protect your business.

1. Verify the Proper Insurance is in Place
Any person/organization that you consider working with should be fully insured and able to provide you with a Certificate of Insurance, which lists the coverages, carriers and limits of insurance they have in place.  Without their own insurance in place, your company is now assuming full responsibility for anything that may occur as a result of their negligence. Depending on the nature and scope of the work being performed, different types of insurance will be required.  An insurance professional can help you determine the specific coverage needed.

Example: A charter school has hired a local animal shelter to bring animals to their students and teach about conservation.   One of the animals bites a student.  If the animal shelter does not have the proper insurance, the charter school’s insurance will be liable for any action taken against the school.

2. Name Your Business as Additional Insured
In addition to verifying that the correct coverages and limits are in place, you should also require they name your company as an additional insured on their policy.  By doing this, your organization will now be indemnified under their policy for claims arising as a result of their work, in which you are named. 

Example: In the example where a charter school has hired a local animal shelter to bring animals to their students and one of the animals bites a student, by requiring the animal shelter to name the charter school as an additional insured, the school is covered under the animal shelter’s insurance.

3. Provide a Waiver of Subrogation
A waiver of subrogation means an insured (and their insurance company) are waiving their right to subrogate against another party, should their employee suffer an injury on your premises.  Most independent contractors aren’t required to carry insurance, so this wouldn’t apply to them.  However, if employees of another company are performing work on your premises, it is wise to have them waive their right to subrogate against your workers’ compensation carrier. 

Example: A charter school has hired a local animal shelter to bring animals to their students and teach about conservation.   While presenting, an employee of the shelter trips and injures their knee.  A waiver of subrogation would void the animal shelter’s workers’ compensation provider from seeking subrogation against the charter school’s workers’ compensation policy. The employee will still be treated, but you won’t suffer the penalty for it.

I strongly recommend reviewing your processes regarding vendor, independent contractors and partner agencies to see what is currently in place.  Far too often steps are skipped and businesses are unaware of the liability they are assuming.  If you have any question about a specific circumstance, please don’t hesitate to give Rancho Mesa a call at (619) 937-0164, we are happy to assist.