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.

Safety Programs Can Reduce Workers’ Compensation Premiums

Author, Daniel Frazee, Executive Vice President, Rancho Mesa Insurance Services, Inc.

As California business owners continue incurring costs as they work their way through the maze of ever-changing COVID-19 regulations and protocols, prioritizing critical elements of your internal safety program can directly lower your insurance costs. Refocusing on key areas below will help present an effective, detailed submission to the marketplace that will lead to talking points with an underwriter for schedule credits and ultimately, lower rates and premiums.

Employee Benefits

Workers’ compensation underwriters pay close attention to employee benefit plans from a submission they are reviewing to quote. A deeper dive will create inquiries on overall employee participation, employer’s contribution to the plan, and whether established “wellness” plans are made available. High participation and contribution can show underwriters that employees value the benefits being offered and that the employer is investing in their most important asset, the employees. Lastly, industry professionals commonly link reduced fraudulent workers’ compensation claims to more robust, supported employee benefit programs.

Formal Safety Program

Developing a formal, documented Injury and Illness Prevention Program (IIPP) is truly just a baseline for managing risk for any business. The IIPP must be a living, changing document that contemplates random/periodic inspections, regular meeting intervals, safety orientation for new employees, and detailed investigative reports performed by field and management. Your program can be compared to a book that sits on the shelf and develops dust. Or, if you are focused on best practice techniques, it can be used as a tool for education, training, and risk mitigation. It should change as your company changes and incorporate the safety priorities instilled from the top down. Additionally, incorporating safety programs like Rancho Mesa’s RM365 Advantage Safety Star™ training program for foreman and supervisors help make your safety program go to the next level and really stand out in the insurance marketplace. Dynamic IIPPs stand out in a workers’ compensation submission process. They provide much needed detail to simple Yes/No questions on a supplemental application and show just how important safety is to the organization that is being underwritten.

Return to Work Program

Companies of all types will share that they support a return to work program when their injured employee is cleared for modified duty. That support needs to be taken a few steps further to improve your program. Create job descriptions for potential modified positions. Identify and engage with specific doctors within your network and ensure that these job descriptions are on file. This process can often help expedite employees back to the field, warehouse, office, etc. and ultimately lower temporary disability payments which can lower claim reserves. Use Rancho Mesa’s RM365 HRAdvantage™ portal to generate job descriptions and manage employee’s modified duty in the Risk Management Center.

Hiring Practices

Developing “gates” in the hiring process are often overlooked as too expensive or time consuming.  But, the costs of bad hiring decisions can linger for years, impacting your bottom line and employee morale. Employers must strongly consider pre-employment physicals and drug testing, typically performed post interview and before an offer is made. As the Compliance Director for Current Consulting Group LLC, Andrew Current said, “The average cost of a pre-employment drug test is $45. The average turnover cost for an entry level employee is $6,600.”  There is added benefit with workers’ compensation underwriters who view pre-employment checks as key controls to minimizing claim frequency and severity. Take advantage of the New Employee Onboarding Checklist and other resources in the RM365 HRAdvantage Portal.

Website Development

Most, if not all, workers’ compensation underwriters begin their review process by accessing the company in question’s website to learn more about their operation, exposures, risks, etc. Therefore, seeing your website through this same filter and utilizing your broker as an additional soundboard of information, consider these possible edits and/or redesign of your website:

• Add a “Safety” link or tab, allowing space for sharing your company’s philosophy on managing risk.

• Include a section on any safety awards or recognition that you may have received.

• Remove any pictures on your website that might create confusion or concern about your operation as it relates to safety and risk.

• Include examples of safety protocol that are unique to your operation (e.g. proper use of machinery, ladder usage, cleanliness of operating areas, etc).

Like any potential internal investment, companies must always balance whether the time and resource commitment will ultimately benefit their company. Many of the above recommendations require minimal resources and can pay huge dividends in consistently securing the most competitive workers’ compensation pricing, often a significant line item on a profit and loss statement. You may find cost savings in areas you did not know were possible that can help your business survive and remain profitable in these difficult times.

To discuss how your company’s safety program can affect your workers’ compensation premium, contact me at (619) 937-0172 or dfrazee@ranchomesa.com.

Healthcare Insurance Carriers Respond to COVID-19 Threat

Author, Alyssa Burley, Media Communications and Client Services Manager, Rancho Mesa Insurance Services, Inc.

As Rancho Mesa continues building resources for our clients and their employees across all sectors, we have compiled a list of healthcare insurance providers and their enhanced benefits designed to respond to the COVID-19 virus. Listed below is information related to COVID-19 testing when ordered by a physician.

Health insurers are responding to the Coronavirus threat by offering members no-cost screening and diagnostic testing.

Carrier	Enhanced Benefits1
Aetna	Screening/diagnostic testing provided at no cost. $0 copay telemedicine (for next 90 days2). Members diagnosed with COVID-19 will receive a care package with over-the-counter medications and cleaning supplies. CVS Health will help Aetna members that may be experiencing anxiety related to COVID-19 by: • opening Crisis Response Lines • providing plan sponsors with a Resources for Living toolkit • expanding 24/7 access to the Aetna Nurse Medical Line
Anthem Blue Cross	Screening/diagnostic testing provided at no cost.
Blue Shield of California	Screening/diagnostic testing provided at no cost.
Health Net	Screening/diagnostic testing provided at no cost.
Kaiser Permanente	Screening/diagnostic testing provided at no cost.
MediExcel Health Plan	Screening/diagnostic testing provided at no cost.
Oscar Health	Screening/diagnostic testing provided at no cost. Continuing to offer $0 telemedicine through Doctor on Call for most members.
Sharp Health Plan	Screening/diagnostic testing will be covered under the member's standard plan benefits.
Sutter Health Plan	Screening/diagnostic testing provided at no cost.
United Healthcare	Screening/diagnostic testing provided at no cost. Free Emotional-Support Help Line available for members suffering from fear or stress due to COVID-19, open 24/7.
Western Health Advantage	Screening/diagnostic testing provided at no cost.

¹ Screening/diagnostic testing when ordered by the physician.
² Aetna’s website states a 90-day window as of March 2020, but the page is posted without a start/end date. Check with Aetna before receiving services

View full table here.

For additional resources and telemedicine information for each carrier, download the full PDF document.

What is SB 562 all about?

It may be of interest, if not importance, for all Californians to know about current proposed legislation, sponsored by Senator Ricardo Lara of Bell Gardens and Senator Toni Atkins of San Diego.  The proposed bill would significantly expand the role of the state government within the healthcare system, by essentially establishing a single-payer system.

Under Senate Bill 562 (SB 562), the State would cover all medical services for every resident regardless of income or immigration status, including inpatient, outpatient, emergency, dental, vision, mental health, and nursing home care.  Furthermore, insurers would be prohibited from offering benefits that cover the same services, potentially resulting in their choice to exit the marketplace.  While the proposed bill touts that the program would eliminate co-pays and deductibles, and the need to obtain referrals, there is no mention of how it would be funded, except through “broad-based revenue.”

Obviously, many people ask me about the direction healthcare is headed in California and the Country; to which, I do my best to eliminate my interest in the subject since I make my living guiding companies through the insurance process.  But, I do offer up some food-for- thought in terms of evaluating such a proposal, including citing the increasing shortfall of funding for Medicare, and the VA as examples of government-run healthcare, as it seems to me the former is going to require an eventual increase in payroll taxes, which effects everyone, employers and employees alike, and the latter is a good example of inefficiency and lack of innovation when there is no competition.  

Personally, I believe that healthcare is both a right and a responsibility.  As out-of-whack as the current system seems, or let’s face it, is, I just don’t know how we go about funding such a proposal without breaking the proverbial bank. The financial and economic realities have to be weighed with the politics, which is why it’s a bit of a relief that Governor Jerry Brown has asked the question in return, “Where do you get the extra money?  This is the whole question?”

Whatever my thoughts, it is certainly a complex and vexing economic, social, and political issue for our times, one that will continue to be hotly debated and legislated, so there is much more to come.