Rancho Mesa's Alyssa Burley sits down with President Dave Garcia to analyze the state of the commercial insurance marketplace, reflect on Rancho Mesa’s accomplishments, and discuss what’s to come in 2025.

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Host: Alyssa Burley

Guest: Dave Garcia

Editor: Jadyn Brandt

Music: "Home" by JHS Pedals, “News Room News” by Spence

transcript

Alyssa Burley: You’re listening to Rancho Mesa’s StudioOne™ podcast, where each week we break down complex insurance and safety topics to help your business thrive.

I’m your host, Alyssa Burley, and today I’m joined by Dave Garcia, President of Rancho Mesa, and we’re going to discuss the state of the insurance marketplace and a little bit about what’s new at Rancho Mesa.

Dave, welcome to the show.

Dave Garcia: Good morning, Alyssa. I'm excited to be back in StudioOne™.

AB: Well we're happy that you're here.

Now, in a few days, Greg Garcia and I are doing an episode where we’ll discuss the auto and workers’ compensation marketplace specifically for the landscape and tree care industries. But, I want to get your take on the state of the commercial insurance marketplace as a whole.

So with regards to the typical commercial lines like property, auto, general liability and excess, are you forecasting the hardening marketing to continue and if so, what can business owners do to mitigate the market trends?

DG: Yeah, you know, Alyssa, one of the principles that we operate on here is that we're just going to tell the truth and not just tell the audience or people what they want to hear. So the truth really is that the insurance marketplace is continuing to remain hard, and it doesn't seem like any time in the foreseeable future we're going to see any real decline in that. So I think it's important that we get together and really strategize on what are some of the things businesses can do to try to mitigate this, because I would say across the lines, property auto, general liability, and then excess coverage, the arrows are all still indicating upward movement.

AB: All right. So what do you think the workers' compensation market will do in 2025?

DG: So we track the WCIRB, the Workers' Compensation Insurance Rating Bureau. They publish some information quarterly that gives some really good insightful market trends. And this last quarter, we noticed for the first time in 15 years that the average cost of workers' compensation in California has risen. And it's a composite rate, so it's taken all the premium and it's taken all the all the rates and blending them as if they're one. And for the first time it showed an increase. And this is something that I think I've been anticipating.

I'm fortunate to sit on a couple of National Workers' Compensation Carrier Councils and kind of being behind the curtain with them, seeing some of the trends coming, it's coming to fruition now. So I do feel like the Workers' Compensation Market is going to show signs of hardening, but not dramatically like the other lines have done. So it looks like the average increases in the two to three percent range, which most businesses could absorb.

And what that means is that there's still going to be some rate decreases for certain businesses, but those that are not really managing their safety program well, their experience modifications are trending upward, they could see significant rate increases. So it's time to really start to address those issues.

AB: So what are some of the things that people can do to help mitigate this?

DG: Yeah, so I think it's a time, and we would always encourage this ongoing, is really to take a look at your safety programs and try to tighten them up in any areas where maybe there's some insufficiencies. And you may be listening and saying, “Well, I'm not really sure. I think mine's pretty strong. Where do I begin?”

And I would start with working with your insurance consultant, your broker, and the carriers that you're with and asking them what are the areas that they feel like you could use some help. We do a number of things here that we would encourage different people to take a look at and have access to. So for us, we do 60 or so different workshops throughout the year, directed specifically to areas in all lines of insurance that are causing problems relative to workers' compensation.

I think it's time to really evaluate both the services that you receive from your broker as well as the services that you can be receiving from the insurance carrier. It's very varied. The common denominator that many people choose to make decisions on is a simply price and not value. And I think in most people's personal lives, they value value over price sometimes. And that's not to say that the more expensive it is, the better it is. That's not always the case, but to true value to your dollar. So it could be the same price, but the value is just much greater.

So I would look at looking at evaluating, having your broker ask the questions about services the carrier can provide in workers' compensation, like do they offer nurse triage? Do they have any re-employability programs? Do they actually produce a medical cost containment report? What are loss control services like? Are there any loss sensitive options? Things like that, where if you're not aware of those things, you're probably not accessing those things, and that's going to drive up claim costs. And the whole goal is to lower claim costs, because that's what will protect you as the market starts to rise. So ask your broker about accident year loss ratios of carriers. If they're unfamiliar with that term, call us and we'll explain the differences.

But that's a trend that we're seeing that's rising. That is more of an actual number. And for the last four years, the carrier's accident year combined ratios are above 100%. And what that means is currently they're at 107. So that means for every dollar in premium they're collecting, they're paying out $1.07 in costs, and any business understands that's not going to be sustainable. And the only way to correct that is to lower costs or increase revenue, which in the carrier's case is premium. So I think it's time to really roll up your sleeves, get your broker to roll up their sleeves, and get to work and see if you can't help mitigate some of these exposures.

AB: Yeah, absolutely. And I appreciate you explaining all of that and where you see the market changing in 2025. So let's talk about Rancho Mesa and what everyone can expect in 2025.

DG: Wow, my favorite subject other than my family.

AB: You get to talk about us.

DG: Yeah, exactly. So don't ask me about my family because we'd be talking for like two days. But Rancho Mesa is my second family and I'm super excited really to just be a part of us. We just had a fantastic year. It was just unbelievable. Really strong results, tremendous growth. We're looking to add the right people, more people, but the right people. I'm just super excited about some of the other services that we're being able to bring to our clients. Our Safety One platform, so that's our online safety platform, as well as our safety app that we use for our clients in their fields. Both of those have been added tremendous more capabilities this year. We're really excited about that and we're looking forward to seeing, you know, where it goes from here. So those are the kinds of things that just, I'm excited to see what 2025 holds for us.

AB: Yeah, and I'm glad you brought up Safety One. We've added functionality and streamlined processes over the last 12 months, and I know that we'll continue to onboard more and more clients, and it's only going to get better and better.

DG: Yeah, and I think that's just a great tool. You know, we use that tool in several different ways. One way it's certainly going to improve the safety programs of the clients that use it, there's no question about that. But what it also does when we go to negotiate their terms in the marketplace, we point to the tools that they're using, the trainings that they've completed, we have all that at our fingertips now. And it's our job really to negotiate in our client's behalf, but we need substance. We don't need cotton candy. We need substance that we can take to the carrier and fight for those scheduled credits to keep these costs down. So SafetyOne™ and the SafetyOne™ app are just huge components of us being able to do that.

AB: Yeah, absolutely. So what else do you want to share with our listeners?

DG: Well, let me tell you, we had to delay this podcast a little bit today because exciting news, we're growing, as I mentioned earlier, and we're taking on more space here in the building. So we're now going to take over the remainder of the floor and that contract was just signed a week or so ago and the construction, the demolition of that space has started. And as I said, we had to stop the podcast for a minute while they were hammering away in there. So we're going to add about an additional 5,500 square feet or put us real close to 20,000. So I'm super excited about that, not because of the numbers, but because what it means and the capabilities that that extra space and more people are going to be able to allow us to offer to our clients moving forward. So just keep looking for updates, we're going to be posting pictures as the progress of the new space develops. And then we'll probably have a second open house when we can show it off a little bit. So that's really exciting.

The other thing that I'm looking forward to doing is kind of a kooky idea, of course, it came from me, so it's a really kooky idea. But I'd like to introduce a new podcast series next year called Dave's Dugout. And so, you listen to different radio shows or you watch a sports show on TV and right before the commercial they give you that little teaser like, "So you got to stick around so you can hear what this is all about." So I'm not going to really tell you much about Dave's Dugout today. Just understand that it's going to be something I'm really excited about and we will be producing a short Dave's Dugout podcast introduction shortly that you'll be able to tune into and get an idea of what I'm talking about there. But trust me, it's going to be a lot of fun. And I think it'll be an area where I'll certainly learn and grow from, and maybe some of the audience will do the same. So super pumped about that.

AB: Yeah, I can't wait to hear that.

DG: Yeah, I know. It's like the present under the tree that hasn't been unwrapped yet. And hopefully it's the one that everybody's excited about, not the one that goes out to the curb the day after Christmas, because it's not a present anybody wants.

AB: Well, something that I do want to mention that I'm kind of proud of this last year is about six months ago, we introduced our OneofOne™ recognition program within Rancho Mesa. And essentially what that does is it allows coworkers to acknowledge the work that their teammates are doing in the office when they go above and beyond. We have QR codes scattered throughout the office where people can scan that code. They can, you and acknowledge different people, write up a little scenario, what the situation was. And then we get to post it. We get to shoot it out on teams to everybody in the company so that they can know what their coworkers are doing and how they're supporting each other. And I think we're at like 70% in the last six months of our employees have been recognized. And those are just the people that we've documented, you know that there's a lot more people behind the scenes that are, you know, going above and beyond just helping out their co-workers. So I think that that's something that's pretty cool and not everybody does that.

DG: No, I'm really with you and behind you 100% on that. I thought it was a great idea. And the great thing about it is we're not good here at participation trophies or employee of the month where you just kind of rotate it around because, you know, who hasn't wanted this month. This is really coming from the people. And it could be the same person, it doesn't, you can be repetitive. And what it's really begun to highlight is, I'm finding out things that people are doing at different areas of the company that, unless they just happen to be walking by and talking to them that moment, I wouldn't know. And now it gets pushed out. And what I really see it doing is it's encouraging other people to try to create those OneofOne™ moments. And as the audience probably knows, we actually trademarked that word. We made OneofOne™ all one word because that's really what we're culturally trying to accomplish; provide OneofOne™ interactions between co-workers and clients and friends and vendors and different people. So to see it come to life like that has been super exciting. So I'm looking forward to seeing how many more we get in 2025 for sure.

AB: Yeah, I'm looking forward to it as well and all the exciting things that we'll be doing. Dave, thank you for joining me in StudioOne™.

DG: Yeah, me too. So Alyssa, thank you for having me today here in StudioOne™ I'm super excited about 2024 but I'm really optimistic and excited to see what 2025 has to offer. So thank you for having me in StudioOne™ today.