Six Ways Contractors Can Prepare for Higher Workers’ Compensation Rates

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

Over the last couple of months, we have published multiple articles and podcasts on the Workers’ Compensation Insurance Rating Bureau’s proposed rate increase and now the approved 8.7% increase to the pure premium rates effective 9/1/25. But, what we have not touched on are the specific steps our best-in-class contractors are doing to position their companies to offset these increases. They are:

1. Engaging with their advisor early in the renewal process. Contractors need to know exactly how this rate change will impact their specific class code. For 5506 Street/Road Contractors, the pure premium increase is 5%, but contractors performing dry utility work in class code 6325 Conduit Construction, it is increasing 26%.

2. Continuing to evaluate and update their companies’ risk control program.

3. Understand and managing their historical and future experience modification rate (EMR) . If their EMR is a debit mod (i.e., over 100), determine what is driving it upward?

4. Using KPIs to benchmark their frequency and severity against their peers’.

5. Analyzing both open and closed claims. They are looking for any lag times in claim reporting, and reviewing open claims on a consistent basis to manage open reserves. They identify the root causes of the incident and what they can do to prevent these types of claims from reoccurring in the future.

6. Evaluating alternative risk financing strategies like captives, retros or deductible workers’ compensation plans. 

So the question becomes, why do these best-in-class contractors take these proactive steps? One, they understand that losses unfortunately are inevitable but if there are processes and procedures that they can put in place to minimize the impact, they are willing to do it. The second reason is that they are bidding projects that potentially do not start for another 8-12 months and they want to factor in any increase in operating costs and protect their profitability.

To get started on these six steps to prepare for higher workers’ compensation rates, contact me at sclayton@ranchomesa.com or (619) 937-0167.   

How Changes to the Expected Loss Rates Will Impact Concrete Companies

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

In addition to the Workers’ Compensation Insurance Rating Bureau’s (WCIRB) proposed 11.2% workers’ compensation pure premium rate increase, the WCIRB will also be updating the 2025 Expected Loss Rate (ELR) effective 9/1/25.

Each workers’ compensation class code has its own ELR and it is used in the Experience Modification Rate (EMR) calculation. ELRs are the average rate at which losses for a classification are estimated to occur during an experience rating period. They are expressed as a ratio per $100 of payroll and can have a significant impact on the EMR.

For example, the ELRs for 5201/5205 concrete class code will be dropping 19% and 10%, which we believe is not getting the attention it deserves. These decreases will have an adverse effect on concrete contractors’ EMRs effective 9/1/25 and beyond. 

In addition to your EMR, the lowered expected rates also impact your primary threshold. Your primary threshold is the maximum primary loss value for each individuals’ workers’ compensation claim. If the primary threshold goes down, a small lost-time claim will have a bigger impact on your EMR. As all contractors know, any increase to your EMR can not only increase your overall workers’ compensation premium but also impact opportunities to bid certain projects in the municipal/commercial market.

So, how can concrete contractors get out in front of this? 

1. Conduct open claim review meetings on a quarterly or semi-annual basis.

2. Audit any open reserves on claims that are impacting your current and future EMR.

3. Determine the timing of your next unit stat filing date.

4. Ensure that your accident investigations program addresses the root cause of claim frequency and severity.

5. Use trade-specific Key Performance Indicators (KPI) that benchmark you to other concrete contractors.

6. Work with your broker to project your EMR up to 7 months prior to your renewal date.

7. Conduct industry- specific trainings that are OSHA compliant.

We recommend taking a proactive approach. Here at Rancho Mesa, we can provide you with your industry specific KPI’s, a dedicated workers compensation claim advocate, a proprietary safety app, monthly safety workshops and more.  Start now to insure you understand the financial impact to your company and the steps necessary to minimize the disruption.

If you would like to learn more or have us assist you   I can be reached at sclayton@ranchomesa.com or (619) 937-0167.

Workers’ Comp Rate Increases are Here — Are You Prepared?

Authors, Sam Clayton, Vice President, Construction Group, Rancho Mesa Insurance Services, Inc.; Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

The workers’ compensation market in California is hardening. After many years of rate decreases, it appears that the market has started to bottom out.

The Governing Committee of the Workers’ Compensation Insurance Rating Bureau (WCIRB) voted in favor of pursuing an 11.2% rate increase. If the California Department of Insurance approves the WCIRB’s request, it would make the first rate increase in more than a decade.

In recent years, wage inflation has helped to offset rising medical care and claims handling costs within the workers’ compensation system, while carriers’ reserve redundancy releases have also contributed to the soft market.

With reserve redundancies declining and wage inflation stalling, the effect of rising costs in the workers’ compensation system are becoming more noticeable. Added to that, the diminishing investment returns for carriers and the need for rate increases and stronger underwriting performance becomes even more pronounced.

Below are four ways that your insurance broker should be helping to prepare you for the coming change:

Understanding Your Workers’ Comp Claims

Meeting with your insurance broker throughout the year can help you identify trends and underlying root causes for your claims. This can help you to implement practices and procedures that reduce the likelihood of the same type of claim recurring.

As an example, we identified that lower back strains are among the most common work injuries in one of the industries that Rancho Mesa specializes in, which led our team to develop the Mobility & Stretch Program and A.B.L.E. Lift Protocol.

Providing Effective Safety Resources

A strong safety culture depends on individuals consistently making safe choices and having access to the tools they need. Among other resources, Rancho Mesa provides clients with the SafetyOne™ platform, a website and mobile app that offers a suite of tools to implement safe practices, such as a library of topics for toolbox talks, online safety trainings, and safety observations.

Utilizing Workers’ Comp Claims Advocate

The workers’ compensation process can be complex and costly. Rancho Mesa offers an in-house workers’ compensation claims advocate to help navigate the claims process, manage claims, and provide accountability to adjustors. Leveraging your broker’s claims advocate can help manage the overall impact of claims on your insurance costs.

Exploring Loss Sensitive Plans

Rancho Mesa can help you evaluate a variety of loss sensitive options, such as captives; self-insured groups; large, intermediate and small deductible options; or retro plans to see how they compare against guaranteed cost. Having access to more product options allows for more relevant, effective advice on which program best meets your risk tolerance.

That final decision and recommendation will be done and take effect September 1st 2025.

While these increases will not directly impact you until your next renewal, taking action to prepare for the coming change is critical. Rancho Mesa is informed, has the resources available and most importantly the proactive commitment to help you navigate the approaching storm.

If you would like to learn more about our resources and approach to this process, please reach out to Sam Clayton at sclayton@ranchomesa.com, or Matt Gorham at mgorham@ranchomesa.com.

Changes on Horizon Likely to Affect Workers’ Compensation

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

Businesses in California have become accustomed to many changes in legislation and the filings from the Workers’ Compensation Insurance Rating Bureau (WCIRB). 

Changes by the WICRB typically take place at the first of every year and can impact workers’ compensation Pure Premium Rates, Expected Loss Rates (ELR) and Wage Thresholds. However, the WCIRB has amended its filing schedule in 2021 to take effect September 1st.

Below are key changes that businesses should be aware of that can alter Experience Modification Rates (ExMod) and workers’ compensation renewal pricing.

Assembly Bill 1465

The proposed Assembly Bill 1465 (AB 1465) could have significant impact on workers’ compensation rates in the years to come.  If passed, AB 1465 will establish the California Medical Provider Network (CAMPN), a broad and largely unregulated network run entirely by the state that would apply to the workers’ compensation system.  All licensed physicians in good standing who elect to treat injured workers will be included in the network.  Injured workers can choose any provider within the network and can transfer among providers multiple times without any limitation.

If this bill passes and a CAMPN is created, employers can anticipate:

• Doctor shopping by injured workers and attorneys;

• Increase in temporary disability and time to return to work;

• Increase in permanent disability ratings;

• Overall increase in medical costs per claim;

• Poorer quality medical reports due to fewer controls and less oversight.

Workers’ Compensation Rates

The WCIRB recently proposed a 2.7% workers’ compensation rate increase, effective 9/1/2021. This would be the first rate increase since 2015.  Updated fee schedules for med-legal review reports and physician office visits are what is driving this potential increase.

Expected Loss Rates

A characteristic of a Best Practice business is their focus on managing their ExMod. In simple terms, if a business’s ELR increases, it will have a positive effect on their ExMod. Conversely, if their industry’s ELR decreases, it will have a negative effect. While understanding what an ELR is and how it can specifically impact your ExMod is critical, this should be something your insurance advisor is explaining to you and projecting the impact it will have on your ExMod and ultimately your insurance premium.

To put this information at our clients’ finger tips, we have created a Key Performance Indicator (KPI) dashboard to not only show the impact of any changes in the ELR but also provide other key indicators like industry benchmarking, claim trending, and many other critical factors.  Request your customized KPI dashboard.

To stay up to date with these topics and related insurance news, subscribe to our weekly safety and risk management newsletter and podcast. Or, contact me directly at (619) 937-0167 or sclayton@ranchomesa.com to discuss how your company may be affected.