Reducing Risk Near Traffic for Landscaping and Tree Care Crews

Author, Jessee Keirstead, Risk Control Consultant, Rancho Mesa Insurance Services, Inc.

Landscaping and tree care companies are already high-risk operations, but few job sites present more risk than roadsides, medians, and highway corridors. When employees work is near moving traffic, the potential for severe injury increases significantly, making effective traffic management a priority.

Temporary traffic management is a frequent and critical part of the job. And, when crews are exposed to moving traffic, the primary controls are designed to create enough time, space, and visibility for drivers to recognize the work zone and react safely. Even when lane closure is not required, proper planning, vehicle positioning, signs, cones, and escape routes are necessary controls that can prevent serious incidents.

Pre-Planning

Every roadside job should begin with a hazard assessment. Factors such as road speed, traffic volume, sight distance (including curves and hills), proximity of workers to traffic, and available escape routes help determine the level of protection that is needed.

Preparation also includes ensuring the work zone has with all required equipment on-site including signs, cones, communication devices, and high visibility personal protective equipment (PPE). Workers exposed to traffic should wear ANSI Class 2 or Class 3 high visibility reflective vests.

Core Elements of a Safe Roadside Work Zone

Effective temporary traffic control should include five core elements:

1. Signs provide early warnings to approaching drivers.

2. Cones create visual separation between traffic and workers.

3. Buffer zones provide a clear recovery area.

4. Company vehicles act as a physical protective barrier when positioned between traffic and the work zone.

5. Escape routes provide a predetermined path to safety and serve as the crew's last line of defense.

Adjust for Roadway Conditions

Traffic control requirements vary depending on roadway type. Urban streets may present challenges like pedestrians, driveways, and intersections, while rural roads often have limited visibility due to hills and curves. Highways present the greatest level of exposure because of higher vehicle speeds and reduced reaction times.

As roadway speeds increase, work zones generally require larger buffer areas and more advanced warning for passing drivers.

Specific Challenges of Median Work

Median operations require special consideration because traffic approaches from both directions.

Effective traffic control typically includes signs in both directions of traffic, cones protecting both sides of the work area, clearly marked access points, and protection that moves with the crew as work progresses.

Workers should never enter the road to conduct work nor should they focus solely on one direction of traffic. They must continuously maintain awareness of vehicles approaching from both sides.

A Proactive Approach to Safety

Although roadside and median work will always involve some exposure to traffic, you can reduce risk through planning and proper work zone setup. The most effective roadside operations provide drivers with early warning signs, create separation between traffic and workers, maintain clear escape routes, and continually adapt to changing conditions. Implementing these best practices can help landscaping and treecare companies conduct roadside work safely while protecting employees.

Rancho Mesa’s proprietary SafetyOne™ mobile app offers both landscape and tree care-specific traffic control toolbox talks designed to streamline training of workers on the hazards of roadside and median work.

Companies that prioritize visibility, communication, traffic control, and worker awareness are better positioned to protect employees while performing essential landscaping and tree care services in high-traffic environments.

Accident Investigation: Turning Incidents into Opportunities for Improvement

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

During my recent podcast episode, I discussed how near misses can represent missed opportunities for general engineering contractors to prevent future workplace injuries.

Continuing that theme, I would like to expand on the importance of having a formal accident investigation program in place and how it can help contractors and employees identify and implement corrective actions that reduce the likelihood of similar incidents occurring in the future.

An accident investigation is a systematic process used to examine a workplace injury or incident to determine how and why it occurred. These investigations are often conducted by foremen or supervisors and should focus on identifying and correcting root causes rather than assigning fault or placing blame.

The goal is simple: learn from the incident and prevent it from happening again.

Key Steps in the Investigation Process

A successful accident investigation typically includes four key steps:

1. Secure the scene to ensure the area is safe and preserve any evidence.

2. Gather information by interviewing witnesses, reviewing documentation, and collecting facts.

3. Analyze the root causes to determine the underlying factors that contributed to the incident.

4. Implement corrective actions to address deficiencies and reduce future risk.

Benefits of an Accident Investigation

A formal accident investigation program provides several important benefits:

1. Improves Employee Morale. When employees see that management is committed to understanding incidents and improving workplace safety, it helps build trust and demonstrates that employee well-being is a priority.

2. Identifies Training Opportunities. Investigations often reveal gaps in knowledge, procedures, or communication. These findings can help organizations deliver targeted training where it's needed most.

3. Prevents Recurrence. By identifying and addressing root causes, contractors can implement meaningful corrective actions that help prevent similar incidents from occurring in the future.

Training Matters

Because workplace accidents and injuries are relatively infrequent, it is important to ensure your foremen and supervisors receive proper accident investigation training before an incident occurs.

Rancho Mesa has developed the RM365 Advantage Safety Star™ Program, which includes dedicated instruction on accident investigation techniques and best practices. I highly recommend enrolling your foremen and supervisors so they understand both the importance of a formal investigation program and how to effectively conduct investigations when incidents occur.

Leveraging Technology

Through Rancho Mesa's SafetyOne™ Platform, clients can create corrective action plans, assign responsibilities, track completion, and deliver the appropriate training to affected employees. This helps ensure that corrective actions are documented, completed, and continuously monitored.

While every contractor's goal is to achieve zero incidents, accidents can still happen. Organizations that have a formal accident investigation program in place and can demonstrate that they have identified root causes and implemented effective corrective actions are in a much stronger position to prevent future losses and minimize potential workers' compensation cost increases.

To learn more about the RM365 Advantage Safety Star Program or how the SafetyOne Platform can support your company's accident investigation efforts, contact me at sclayton@ranchomesa.com.

Creating a Safer Workplace Through Effective Violence Prevention Planning

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Workplace violence is a serious safety threat affecting employees across all industries. In 2023, the U.S. Bureau of Labor Statistics (BLS) recorded 740 fatalities due to violent acts in the workplace. Preventing fatalities and injuries is a top concern when addressing workplace violence; however organizational, financial, and emotional consequences can also arise from violent incidents in the workplace. Employers should implement a clear Workplace Violence Prevention Plan to keep employees and their organization safe.

What is Workplace Violence?

The Occupational Safety and Health Administration (OSHA) defines workplace violence as, “any act or threat of physical violence, harassment, intimidation, or other threatening behavior that occurs at the work site.” Employees, clients, customers, and visitors can all be affected by and involved in incidents of workplace violence.

Employees in healthcare, retail or transportation are especially at risk because of the public nature of their work. BLS data shows healthcare and social assistance workers “accounted for 73% of all nonfatal injuries and illnesses due to violence in 2018.”

How Can Employers Protect Their Employees?

The best way to protect employees is through the implementation of clear and well-enforced violence prevention guidelines, often in the form of a Workplace Violence Prevention Plan. These plans set a zero-tolerance precedent toward workplace violence for all workers, contractors, clients, patients, and visitors. Cal/OSHA mandates employers “establish, implement, and maintain a Workplace Violence Prevention Plan;” however, regulations may vary by state so be sure to check with your specific state guidelines.

When building a Workplace Violence Prevention Plan, Cal/OSHA requires the plan include:

• Prohibiting employee retaliation

• Accepting and responding to reports of workplace violence

• Employee workplace violence training and communication.

• Emergency response

• Workplace violence hazard assessments

• Other requirements, such as maintaining a Violent Incident Log.

Although there are no current specific OSHA standards for workplace violence at the federal level, OSHA recommends a Workplace Violence Prevention Program “ensure that all workers know the policy; are trained on prevention methods, signs for potential violent behavior, and how to effectively react when an incident occurs; and understand that all claims of workplace violence will be investigated and remedied promptly.”

What Steps Should Employers Take Following a Workplace Violence Incident?

A Workplace Violence Prevention Program is an excellent proactive step in keeping your employees and organization safe. However, there may be times when employers will need to be reactive following a violent incident.

Employers should provide prompt medical evaluation and treatment for all injured and affected persons. Violent incidents should be reported to local law enforcement. Victims should be informed of their legal avenues for prosecution and violent incidents should be investigated by the organization. Employers should also communicate with staff honestly about the incident and discuss ways to avoid similar situations, including reviewing and updated workplace policy.

Violent incidents should be recorded in an employer’s OSHA 300 logs.

Resources

While every Workplace Violence Prevention Plan is unique to its organization, Rancho Mesa offers a variety of sample policies, and online trainings through the RM365 HRAdvantage™ Portal and SafetyOne™ platform.

Developing a Strategic Business Development Process

Author, Anne Wright, Surety Relationship Executive, Rancho Mesa Insurance Services, Inc.

When your business development strategy aligns with your unique strengths and you are no longer competing solely on price, you have become your clients’ preferred partner because of the value you bring.

A successful business development process requires a long-term strategy. Positioning your company for successful new and repeat relationships is one of the many challenges of any business owner. It takes time to develop these relationships that will provide the best revenues for your company. Oftentimes, it is a key person or persons within your company that manages these important relationships. A firm that is most successful will empower everyone to be a part of the business development process.

If you are fortunate enough to have the relationships you need to grow and further your success, great. However, oftentimes a company will get complacent with their relationships, assuming they will be there forever. They think if it is not broke, don’t fix it. But, we all have to consider how many eggs we need to have in that proverbial client basket in case something unexpected happens.

In a recent podcast episode, my collaborator Katie Yee, owner of Connect Strategic Consulting and I spoke about strategic business development processes. Katie has worked with a few of Rancho Mesa’s clients, which is how we were introduced. And, she is well known and respected for the tools she uses to support those businesses.

In our conversation, we discussed the tools that you might use to set your company apart from the competition:

• Tailored vs. Generic Value Statement

• Unique Expertise to Address Challenges

• Surety Relationship

• Repeat Clients

• Establishing Trust

• Transitions of Key Management, or Ownership Relationships

The most successful firms focus on opportunities where they can clearly demonstrate value based on their relevant project experience, technical expertise, specialized services, and proven ability to solve client challenges. Do not be left behind because you have not put the right focus on this.

Business development is more than just getting new businesses. It is earning the reputation that keeps you relevant in an industry that is too often focused just on price. 

If you would like to reach out to Katie about developing a strategic development process, she can be reached at katie@connectstrategicconsulting.com or (760) 650-6462.

If you are looking for a strategic surety partner, I can be reached at awright@ranchomesa.com or (619) 218-4249.

Introducing SafetyOne™ AI: Smarter Safety Insights for Better Decision-Making

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

SafetyOne™ Administrators now have access to SafetyOne AI Data Analytics.

AI analysis capabilities are now available on the Observations and Mobile Forms screens. By analyzing your organization’s operational data stored in the platform, SafetyOne AI can produce relevant insights to streamline safety practices. Summarize inspections and observations, identify trends and recurring risks, compare projects, and draft toolbox talks in minutes to save time and resources while making faster and more informed safety decisions.

How to Use SafetyOne AI

‍SafetyOne Administrators can access AI functions on the SafetyOne website.

To access AI functions within Mobile Forms or Observations, navigate to the Mobile Form Reports page or the Observation Reports page and click the View tab at the top of the page. Then, select the data sets (i.e., reports) from the list that you want to analyze.

A chat will open where questions (or requests) can be submitted about the selected data set

Using AI Tokens

AI analytics uses tokens to process each request. The number of tokens deducted from your SafetyOne account will depend on the complexity of the request and the size and amount of data is being analyzed. Token count can be viewed by Administrators on the menu panel on the SafetyOne web browser. To purchase more tokens, contact your Client Technology Team.

Ways to Use and Implement SafetyOne AI

SafetyOne AI is easy to use and can be prompted using plain English. Ask SafetyOne AI questions such as:

• “What hazards are increasing this month?”

• “Summarize this inspection.”

• “Show me recurring forklift problems.”

• “Generate a Toolbox Talk from today's observations.”

It can generate toolbox talks from incidents and observations focused on actual conditions affecting your workforce.

Safety and Accuracy

SafetyOne AI analyzes the information available within your organization's SafetyOne dashboard. It does not permanently "learn" from individual conversations in a way that changes future behavior. Your AI interactions are not shared with other organizations using SafetyOne.

SafetyOne AI is designed to assist safety professionals, not replace them. Training recommendations should always be checked to ensure they are following local, state, and federal guidelines.

Additional Resources

• SafetyOne AI Frequently Asked Questions

• The SafetyOne™ Advantage: Maximizing Performance Through AI Analytics Webinar

SafetyOne AI provides organizations with the tools needed to transform their existing safety data into actionable insights to identify risks, improve decision-making, and enhance workforce safety. Thorough analysis, customized toolbox talk generation, and strong data security supports safety professionals in creating safer, more proactive workplaces.

Critical Steps That Protect Employees and Your Business Following a Work-Related Injury

Author, Greg Garcia, Account Executive, Rancho Mesa Insurance Services, Inc.

In the landscaping industry, workplace injuries can occur despite the best safety efforts. When an injury does happen, the employer’s next steps can significantly impact the outcome for the injured employee, the employer, and the insurance carrier.

The first step is to report the injury as soon as possible, even if it initially appears to be a minor injury. Prompt reporting allows the insurance carrier to begin managing the claim immediately, which often leads to better outcomes for all parties involved.  Early reporting helps ensure the injured employee receives appropriate medical care, logs important details about the incident, and can help prevent a minor injury from developing into a more costly claim.

After the claim has been reported, it is important to let the treating clinic know that modified duty is available. This allows the medical provider to evaluate the employee's ability to return to work and identify any temporary work restrictions.  

If the work restrictions can be accommodated, modified duty can be offered to the injured employee. By doing this, it allows for several important benefits:

• It allows the injured employee to continue to receive their normal wages. If the injured employee was not offered modified duty, then they would be eligible for temporary disability benefit which is generally less than their normal wages.

• By keeping the claim from any temporary disability being paid, the impact to the experience modification rate (XMOD) is minimal. Because normal wages continue to be paid by the employer and not the insurance carrier, the temporary disability portion of the claim is controlled and the actual overall claim costs are reduced, thus having a positive impact on your XMOD. By controlling your XMOD, you are helping your company maintain stable rates for your workers’ compensation insurance premiums.

• Offering modified duty also improves employee morale while strengthening company culture. It demonstrates that the company values its employees and is committed to supporting them throughout the recovery process.

• Finally, offering modified duty can significantly reduce the likelihood of litigation. When injured employees remain connected to the company, continue earning their regular wages, and feel supported throughout the recovery process, communication tends to remain strong. This often leads to a more positive claim experience while reducing the potential for litigation.

Prompt claim reporting and a strong return to work program are great ways for landscape companies to control workers' compensation costs, reduce likelihood of litigation, and demonstrate their commitment to employee wellness.

Reach out to me at ggarcia@ranchomesa.com if you have any questions or additional interest in this topic.

What to Do After A Vehicle, Equipment or Fuel Theft

Author, Jessee Keirstead, Risk Control Consultant, Rancho Mesa Insurance Services, Inc.

When a company vehicle, piece of equipment, or fuel supply is stolen, taking immediate and organized action is critical. A prompt response can increase the chances of recovery, support insurance claims, and help minimize business disruptions.

By following a clear reporting process and preserving important documentation, companies can assist law enforcement, strengthen claim investigations, and alert others who may help identify or recover stolen assets. The following steps outline the key actions to take as soon as a theft is discovered.

1. Call Local Police

As soon as a theft has been identified, call the police and file a report. Provide the PIN/serial number, photos, GPS pings, geofence event, etc.

2. Report Theft to National Equipment Registry (NER)

After contacting the police, submit a free theft report to the NER which requires a police report. The NER will then alert the National Insurance Crime Bureau (NICB).

3. Notify Your Broker and Insurance Carrier

Reach out to your insurance broker/carrier to report the loss. Record keeping is important and can help subrogation efforts and shorten claim investigation time. Collect purchase records, PIN plate, concealed markings, maintenance logs, tracker IDs, geofence history, and other information that can be useful.

4. Contact Contractors

Share photos and serial numbers with state and local contractors who thieves may target to sell your used vehicles and equipment.

Using Rancho Mesa’s proprietary SafetyOne™ mobile app to document vehicles and equipment left on jobsites, along with fuel deliveries and fueling schedules, can help companies quickly identify when an asset or fuel supply is missing. Maintaining accurate, real-time records of equipment locations, usage, and fueling activity provides valuable information that can support theft investigations, improve recovery efforts, and reduce the time spent determining when and where a theft occurred.

The best protection against theft is a combination of preparation and prompt action. By maintaining detailed records, leveraging technology to track assets, and following the reporting steps outlined above, companies can improve their chances of recovering stolen property and minimizing business disruption. A proactive approach not only strengthens security but also helps protect your employees, customers, and bottom line.

Your Plumbing or HVAC Website May Be Sending the Wrong Message to Your Insurance Carrier

Author, Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

Most plumbing and HVAC contractors view their website as a sales tool. However, insurance carriers increasingly view it as an underwriting tool. The same website designed to attract customers is at the same time influencing how an underwriter evaluates your business, impacting carrier appetite, available coverage, and, ultimately, the cost of your insurance program.

Insurance carriers typically receive very little information about a contractor from their renewal application. The information submitted can include recent loss history, some details about the contractor’s industry experience, and a generic supplemental application that provides a basic explanation of their operations. While those are central to the underwriting process, with so much information now available online, underwriters commonly rely on a contractor’s website and online presence to gain additional details about their operations, practices, history, and culture. Furthermore, a contractor’s website often serves as an underwriter’s first impression of the business, which will influence the questions that are asked throughout the renewal process.

As rising claim severity continues to drive a hardening market, carriers are closely evaluating which industries and classes of business they want to support. According to market research from Swiss Re and Marathon Strategies, there were 27 verdicts that each exceeded $100 million in 2023, while there were 49 verdicts over $100 million in 2024. With these verdicts significantly impacting carrier profitability, underwriters that remain committed to construction are becoming increasingly selective about the contractors they choose to partner with.

When underwriters see a contractor advertising operations or services that are known as severity loss drivers, they may apply exclusions, increase pricing, or decline the renewal application altogether. This can limit market interest and, weaken a contractor’s position when their broker negotiates their renewal terms.

With carriers applying a higher level of scrutiny on the risk profile of contractors in the current market, here are three things to consider when building or updating your website:

1. Audience

A residential service and repair plumber may have more of a need to advertise a broader range of services than a new construction commercial plumber. Similarly, an HVAC contractor that relies on SEO marketing to drive appointments from residential customers will want to include key search terms, while a mechanical contractor focused on tenant improvement jobs with a limited number of trade partners will not. Think about who will be visiting your website and what they are looking for.

2. Services

It is common to see exhaustive dropdown lists on plumbers’ or HVAC contractors’ websites, advertising things like gas line installation, boilers, medical gases, clean rooms, duct cleaning, excavation, or sewer and water main work. Even with a clear understanding of these operations, many carriers will shy away from these risks due to their potential for severe claims. Review the services advertised on your website, as well as the industries served, to ensure you are only advertising services that are being performed and represent a meaningful part of your operations.

3. Visuals

Pictures can be very effective in conveying information. They can also be effective in misrepresenting your company and operations. HVAC contractors often use pictures of helicopter lifts even when they have never self-performed the placing or removing of larger HVAC units. Have a person knowledgeable about safety review all pictures before they are published on the website or social media to ensure no OSHA violations are shown. Pictures from crane picks or rooftop work can also raise questions about safety controls, like the use of personal protective equipment, fall protection, or hazard analyses. Plumbing contractors frequently use pictures on their websites that show plumbers in trenches, crawl spaces, operating heavy machinery, or near septic tanks. While these types of operations can be eye-catching, if they are an inaccurate reflection of the work you perform, they can create a costly misperception. Consider what pictures, videos, or media are used on your website so that it supports an accurate, constructive representation of your company.

As insurance carriers become increasingly selective about the contractors they want to partner with, every piece of information used during the underwriting process matters. Your website should accurately reflect your operations and showcase your expertise. It should also be a key element that supports the narrative that your company is a disciplined, well-managed risk and a smart long-term investment for the insurance company.

If you would like to review your website for potential concerns or learn how a broker that specializes in plumbing and HVAC contractors can help you develop the right narrative to negotiate your insurance renewal, I can be reached at (619) 486-6554 or mgorham@ranchomesa.com.

Navigating the Future of Workers’ Compensation with Todd Lewis: Litigation Trends, AI, and Claims Management

Rancho Mesa President and CEO Dave Garcia sits down with Todd Lewis, Vice President of Claims at Republic Indemnity, to discuss the growing challenges facing California’s workers’ compensation system, including rising litigation and cumulative trauma (CT) claims. They explore how AI is helping claims organizations investigate and manage claims more effectively, along with practical strategies employers can use to reduce claim disputes, support employees, and foster a stronger workplace culture.

Dave Garcia: Hi, everyone. This is Dave Garcia, and you're listening to Rancho Mesa's StudioOne™ podcast, where each week we break down complex insurance and safety topics to help your businesses thrive. I'm your host, Dave Garcia, president of Rancho Mesa, and I'm joined today by Todd Lewis, Vice President of Claims with Republic Indemnity, one of the leading workers' compensation carriers here in California.

Todd, welcome to the show.

Todd Lewis: Hey, thank you for having me, Dave.

DG: Great. So Todd let’s jump in to some of the general industry,  state of the union types of things. So, what do you see—from your position, what do you see as the biggest challenges facing workers' compensation claims organizations today?

TL: Well, I think it's, you know, I think the obvious answer to that and what we're all seeing is the increase in litigation, you know, primarily CT. I mean, that's the buzz phrase these days in workers' compensation. But, you know, when we, and also too, I think we hate to just kind of blame all the changes in the world on COVID. But you can really see a change in workers' compensation that took place. And, you know, a lot of claim professionals such as myself, we tend to scratch our head because there's nothing that really changed primarily in the law. There's nothing that changed in work comp. But yet we've seen dramatic differences. You know, some of the primary differences that we see now is that the amount of new claims that come into our shops that are litigated from day one.

DG: Really?

TL: That's increased dramatically.

DG: What do you attribute that to?

TL: You know, I think when we look back at how the world changed when COVID hit is that you had a lot of non-essential workers go home. We all thought it would be days or weeks. It turned into months. And I think even applicant attorneys sat back and all of a sudden they looked at their clients dry up and they had to look for ways to keep their businesses going. So I think that they started to lean into an area that was always there and the opportunity was there. But I think that they had to figure out a way to do what they needed to do to keep their business going and then also to be able to do so in a world where we weren't going to be in person. And so, CT really lent itself to that.

And we started to see a lot of these workers that were at home and they started to file CT claims. And we started to see a very, very large spike in that. It's odd because a lot of folks think that litigation rose at the same rate that CT did, but it really didn't. I mean, if you look at most claim operations, you'll see that litigation over the last six years rose primarily about 10%, yet CT has gone up 20%, 25%. You know, as an industry, it's up 21% in the last five years. And so, it's just really odd to see things shift in that direction.

DG: Yeah. When you look at some of the fixes that might be out there, and everybody talks about AI. It's on every street corner, every conversation you have. How do you see technologies like AI maybe helping defending against some of the CT claims that you're seeing?

TL: One of the primary ways that we try to use AI is how we dive into medical records. And I don't want to get too far in the weeds, but from a technical aspect. But CTs, they come in the door with no medical. The employer likely, if they're still employed, many employers don't even know that the CT claim has been filed. Some of these people are even still at work, which is very strange. But most of it's post-term, post-layoff. Obviously, we saw a spike in layoffs after COVID. Many businesses struggled.

And so, there's nothing to support the claim at all. So, one of the things that we have to do as a carrier is to be able to differentiate between the CTs that come in your door. Some of them, even if they're post-term, these are 10, 15-year laborers that quite frankly, could have an injury. And maybe they didn't report something for one reason or another, whatever the case is. You have to handle those a little bit differently. But the way we use AI for these other set of claims that come in the door with no support at all, there really is nothing in there to validate the claim that's being alleged. And there's a laundry list of allegations being made.

We dive into the medical records, the personal medical records, where someone treats for and has been treating. Maybe it's Blue Shield or UnitedHealth. And we get those records and we use AI to dive in and identify prior diagnosis and injuries that have occurred over their lifetime that focus on those body parts. And it's enabled us to shine a light on that and say, hey, this is something that's been with you for quite some time. And we identify fraud that way. We identify other body parts where maybe we're going to get apportionment at the end.

There's many ways to use AI to be able to help you do that because the human being can't go through thousands of pages of records. AI can very quickly, and it can basically outline those facts for you.

DG: So, do you think that's one of the variables that separates a high-performing claims operation from just the average claims operation, amongst carriers?

TL: It does. It really does. I think that you have to be creative. You can't do things by route. And I think many of the, I don't want to say poor claim operations but claim operations that really haven't changed with the times, they're handling things very in a standard way that we've done so for years. The claim comes in, they delay it, they send them their MPN link. They allow the claimant and the attorney to create the claim from scratch on their dime. In California, we pay the first $10,000 if the claim is delayed. So they allow and they basically, they initiate the claim for them, and they allow themselves to be put in a lesser spot from a defense perspective.

DG: Oh, I see.

TL: Yeah, but it's also too, it's as a claim leader, I have to be very careful too, because my message is not, let's deny them all and let's be, that's not what I'm saying. You have to be able to differentiate at the desk level when claims come in. And you have to be able to make first contact, initiate a good investigation, have discussions, and to be able to identify and separate the CT claims that lack merit from those that actually have some substance. And these are good people. We need to take care of them.

DG: Yeah, it's interesting. As you're talking, I'm thinking, you know, AI is such a great tool for lots of different businesses. But there's still a human element to it. And so in your view, you know, what kinds of claims decisions, you maybe have alluded to it a little bit, should remain human decisions?

TL: You know, there's a lot. I mean, there's a few different things that go on in California workers' compensation, such as the way we do utilization review, which is like a doctor makes a request for a specific treatment. It goes through utilization review. We don't want adjusters making medical decisions. Sometimes there's things, though, that may not be approved by utilization review. You have to look at the bigger picture. You have some people that have very complex injuries, very significant injuries. You have to take a look at it and ask yourself what this person needs to get to MMI, which is basically where we're all trying to get. It's financially to our benefit to get this person to the end of treatment. You have to look at it realistically and what's going to benefit this person.

Sometimes there's things that you need to approve at the desk level that before you go to UR and not go to UR and be able to take care of that because it's the right thing to do. It's, it's, it makes sense. And we can't think. We can't be so boxed in in the way our adjuster's mentality works that they're just thinking black and white. They're just thinking process, which is very easy to do when you're at a desk. But you have to be human about it. It doesn't mean that you're giving benefits and things that aren't due, but you're trying to understand where you're trying to go, that you're trying to get this person to be permanent and stationary. How am I going to get there? Because it's going to financially benefit the company, it's going to benefit this person greatly, and it's going to be a win-win.

DG: That's outstanding. So let's shift it to, we get this question asked a lot. from our clients, you know, with CT or just frivolous, fraudulent types of claims, you know, as an employer, what can I do to help me defend against that kind of an onslaught of claim? Are there things employers can do?

TL: Yeah, I think there's things that employers can do overall. to help themselves deal with workers' compensation. And I think CT is definitely obviously part of that. There's the obvious things, where you make it known how to report a claim if you have an injury. You make sure you have good people managers that aren't leveraging people to work the number day sign in the warehouse that says, we've been this many days without an injury. We can't lean into that so much that we're pressuring people not to report claims. We have to do all those things, which are very obvious.

But I think there's a bigger component to it. And much like the way I run claims, much like the way you probably run your business here, I know you well enough to know that you're very conscious of this, is that you want to create an environment where you don't lead and manage by the stick, meaning that people don't fear retribution. They don't fear that they're going to be written up. They're not looking at it that way. They look at you as the president of Rancho Mesa, for example, that I don't want to let Dave down. Dave wants the best for me. He wants the best for this business. He wants to obviously make a profit, but he also wants to advance my career and develop me as an individual because he's smart enough to know that that's going to make his business better. It doesn't matter what you're doing. You could be counting widgets in a corner. And if you have that mentality with your staff and you lead that way, people have a tendency to want to take value in their job and their employer. They're not going to be the type they're going to file a frivolous claim. They're not going to be the type that's looking to litigate or is going to get bitter because something didn't go their way. They're going to understand the greater good, if that makes sense.

DG: Yeah, that's a great point. I think sometimes, you know, we've heard where an injured worker then just feels no longer a part of the company. And so whether it's intentional or unintentional or retaliatory, you know, like, well, fine, if you don't care about me. I don't care about you.

TL: Right.

DG: What is there any advice you could give? You know, post-term claims are a huge issue out there. Sometimes layoffs are necessary and it may be just short term. You know, we just the job completed. We don't need the manpower we currently have. When future jobs come, you know, we want you to come back with us. Is there any advice you can give to an employer how to handle that transition from you're employed to I've got to let you go in a manner that it mitigates, doesn't probably completely remove, it mitigates the opportunity for those post-term claims that are not legitimate claims?

TL: At the point of termination or layoff, you need to be apathetic. You need to have some apathy for the employees who are being let go. If you're able financially, I would highly recommend that you give some sort of consideration. You know, we'll talk to employers that have like a factory environment and they'll lay off 20 people and they gave them their last check. They gave them no notice and they did it on a Friday and that's that. And then they're surprised when they get 10 to 15 claims from the EDD or that were made through the lunch truck or whatever, or the bar where all these gentlemen or women drink after work and they all start to talk. And that surprises them. Why are you surprised? These people, you almost kind of left them with no choice.

If you can have consideration, and by that I mean if it's financial, that's great, you should have an exit interview. You should sit down, try to have an exit interview, have some consideration financially for these folks. If you can, have them sign something that whether or not or have them report something if they have an injury, let's hear about it now. If not, if you could sign this document, I'm going to take care of you. I'm not going to give you consideration to sign the document. That's not the message here. But it's a package. And there's some sort of apathy. I'm doing something for you as it takes place. I think those that go the cold route, they're going to see litigation. That's just the way it's going to work.

DG: Kind of like the golden rule, right? Treat others like you want to be treated. So I know businesses get busy and sometimes they don't have in their mind time to sit down and have that formal conversation letting somebody go. But it sounds like you'd advise, find the time. Find the time to do it because it's probably the right thing to do, but it also is likely to reduce the chances to some degree of those post-termination claims.

Todd, you've got a great reputation in the industry as well as Republic Indemnity. Let's shift gears. I know you've been with Republic now about a year and a half or so. Let's talk about, with that strong reputation kind of already in place, what do you believe that you and Republic do differently than many competitors?

TL: I try to practice what I preach. The way that we lead our claim department is very similar to what I talked about, what I would recommend to an employer. You know, adjusting claims is a difficult job. It's a very hard job. It's something that's hard to do in managing a claim department. My team managers, it's rough. It could be a very challenging job. It's one of these types of jobs that's never done. And people have a hard time adjusting to that. It's not for everybody. So what we try to do is develop organizational skills inwardly.

Also, too, one of the things I do when I come into a claim organization, and I haven't been in a lot of shops, but when I came to Republic was first try to identify what's causing them pain. Here's my claim department. We have three locations. What don't you like? What's causing you pain? Do skip-level interviews and touch points with employees and find out what makes them tick. You're going to hear some of the usual things, but you're also going to hear some things. that means something and things that are changes that can simply be made and bring value, real value to them. But you want to start from day one to create the environment within a claim department that people want to work for.

And it's a very competitive environment. Claim handlers get stolen away by recruiters every day. There's a lot of money to be made as well. It's a good career. And good claim handlers are of great value. And so you have to create an environment that they want to be at. And if someone leaves you, there's a reason why they left you. And you need to understand what that is. You can't just be upset and just be hurt by it and just kind of turn your back on it and go, I don't know why Bob left. You have to understand it. And so what I try to do is create an environment where people want to be at. They want to work for it. They believe in where we're trying to go.

And also, too, you make it very clear to them. You communicate. And if anything, probably if I look at myself critically, I probably overly over communicate. And some like it. Some probably like it's a little much. But I'm a fan of it. I want to know where everyone stands. I want the department to know where we stand, what we're doing, why we're doing it, what our numbers are, and what our goals are. And also, too, to clearly explain expectations.

There's many businesses, especially claim organizations. where people really don't understand clearly what's expected of them. That needs to be black and white and it needs to be forefront. You need to understand what is expected of me daily and what I need to achieve, not only to be successful, but also if I want to move upward, you need to develop me as a leader. You need to understand what my wants are and then also too what my needs are.

DG: Is there anything that you're formally doing? You identify somebody that wants to grow. They'd like to take on more responsibility as their career develops. Is there things within Republic that you're doing to consciously develop those people into a leadership position?

TL: Yeah, definitely. I think mentorship is a great way to do that. We're actually doing that consciously right now with a few individuals. I do require all my people leaders to have monthly touch points, one-on-ones with their staff. Also, too, to be able to have some value brought to that. It's not like, well, my door is always open. Dave knows he could come in and talk to me anytime. That doesn't work. You need to have something on the calendar so Dave can plan on what he wants to talk to me about as his manager. And so that's important. And that's hard for a lot of managers to understand, but that's something that I do require within our organization. And I think it brings a lot of value.

So what we've done is we clearly understand where people want to go as much as we can. And then we try to assign mentors to actually help them get to that next level and explain to them the qualities and what they need to take on from a technical perspective. Because this is a very technical job. You must be a technician first in claim. And you must understand the law. You must understand what you're doing. It's not enough just to say, hey, do A, B, and C. I need you to understand what A, B, and C mean and what you're doing. There's a difference.

DG: So it sounds like the characteristics you're looking for is somebody that utilizes critical thinking, problem solving. All of that is something that your mentors try to work with the people that are mentoring to develop those types of skills. Is that kind of the idea?

TL: Definitely, definitely. I think in a career and in a field where, like I said earlier, like you're never finished, right? There's always something to do. You have to be able to be very organized. You have to be able to prioritize very well. You have to think critically as you commented on. These things are very important. And that's what I look in the interview process as well. And if I'm going to bring someone in and, you know, it's always nice and to bring someone in that's like a known quantity, as I call it.

But I was at a prior job where I actually hired a lot of people out of college and whether they be right out of college or a year or two and trying to differentiate between those that are thinking critically, that are organized. It's not always the smartest person, you know, book smart. You have to find someone that's able to think on their feet and the way they react. And I probably have, I've been told probably a more odd style of interview because it's not about me. asking you what you know about claim or these things. It's me trying to figure out how you think.

DG: Oh, interesting. Is there a claim handling practice at Republic that really challenges the conventional industry thinking?

TL: You know, I think what we're doing right now in litigation is challenging that way of thought. And I mentioned it earlier. I think we have a very aggressive CT litigation strategy, but it's all built around differentiating at the desk level.

To give you an idea of basically in most insurance carriers right now,  over half of the claims that they set up daily come in the door, litigated, blind application, no medical, just here's a letter from an attorney and you don't know much else. And that person's never been to a doctor. In some of these cases, unfortunately, within California and primarily LA County, these attorneys in many cases haven't even met these people. And it'll say signature on file. You have to be able to differentiate between these types of claims and the types that are made by individuals that truly you need to handle in a different fashion.

I think what we do is we're very aggressive with those in the first bucket. I'm going to deny your claim. Your claim has no substantial evidence, not only medical evidence, just nothing. There's nothing there at all. You may or may not even still be employed. No one knows that you've had an injury. There's things listed that just don't make sense. There's nothing to validate it at all. So we're very aggressive out of the chute.

And also, too, part of that goes in, and again, not to get too in the weeds, but once we go to medical legals, things of this nature, we're going to provide the doctor with everything. We're going to make sure that we have what we call a perfected medical legal. And that's important. Many carriers today will send out to medical legals QMEs that you hear. And the doctor comes back and they find a compensable injury. It's a trial of fact issue. This is a CT claim. This person hasn't been employed for months. They may have a diagnosis, but how's that link it to work? And this doctor doesn't have that information. Oftentimes, they don't have any medical records. They haven't been given anything. And so you have to object to that medical. You have to hold your ground and get to a perfected medical legal. And you try to settle these claims early. You try to understand what nuisance value really means. And I think that's something that's kind of lost on the industry. But you need to be very aggressive up front. But most importantly, you need to differentiate the claims that you're going to take that strategy on from those that actually have probably some merit. And you need to actually handle them in a different fashion.

DG: So no one size fits all.

TL: No, no. And the thing I fear most in sitting down with you today is walking away and having people listen to this and think, well, it's just another claim guy that's beating everybody up with a stick. That's not the mentality at all. This is a claim administration system. We are a benefit administrative system. Our job is to pay benefits that are due. We will pay every dollar due, but my job, I'm not going to pay one more. I'm going to pay everything you have coming. I'm going to take really good care of you and so is my staff. But we are going to draw the line once we feel that there's abuse.

DG: Well, I can hear the passion in your voice, Todd. That's outstanding. OK, we're getting near the end. So I've got a couple of questions for you. I wanted to let you brag a little bit. So what accomplishment are you most proud of at Republican Indemnity?

TL: You know, I think that I'd say I'm only a year and a half in. And I think what I've done with the staff and to turn many of our metrics around the way that we're audited. Republic Indemnity has been a great claim department and great insurance company for a long time. It didn't take Todd Lewis to come in to do that. They administer benefits and they audit at the very top of the state rankings and have for a lot of years. We do that very well. I think what I like to think about what we do well now in the recent past is that the way that we've embraced AI. the way that we've actually embraced the strategy to handle increased litigation.

Everyone's getting beat up in California Work Comp. You know that. I know that. We've all seen the combined ratio go up. It's how do you get beat up less? How do you manage this system to be able to understand the strategy that's needed. So much of what I just talked about, our ability to develop the staff and train them to understand and differentiate between these claims that come in the door, because truly you have to take care of people at the end of the day. That's the job. But to understand where you draw the line. And I think that's the thing I'm most proud of. And I think I see our staff now, our walkaway rate, which is like the rate of people that file litigation and just walk away from their claim because it's just not—you handle it in such a way out of the gate that's like, okay, well, this isn't what I was told. I was told that I don't really need to do much here and we'll just get a check and we'll go away. That's just not the way we do things at Republic.

DG: Yeah, that's great. Okay, last question. I'm going to give you the magic wand. If you could change any one thing about the workers' compensation system here in California, what would it be?

TL: Well, I think it's obvious we need reform, but I don't want to sound like the basic claim VP and say all these things that we feel it's too liberal because it is a benefit administrative system. That's the way it's built. But in California, I've managed every state and I've also managed Defense Base Act and Longshore and just about every kind of comp there is. California is set up to basically hurt the insured. We need to make it tougher, and not tougher from a standpoint where we make it hard to collect benefits, but the burden to prove a compensable claim is just too low. We can't allow litigation to be filed months after someone's employment ends. Other states don't do that, and they're able to provide benefits in a very fair manner.

Also, too, though, there's some other reform that's going to have to take place as well, like our permanent disability. There's different kinds of legislative change out there. that, you know, labor is going to want something and they should get it. And maybe we should look

at the PD rate. There are some changes that make sense there. It's been a long time since they've increased their weekly rate. Maybe there's some give take that needs to happen, but it can't be all give. And we need to figure out how to basically keep employers in California, make them solvent, make them want to be here and make them successful. Because right now it's not set up that way.

DG: Yeah, it's interesting. You know, we're, so we talked last night at dinner. We're, here at Rancho Mesa, we're involved in three different peer groups nationally. So we get to talk to other agency owners from every state in the union. And CT, frankly, they don't even, what's it stand for?

TL: Right.

DG: They don't see it. So we know it's fixable. You know, we just have to get there. And I do agree with you. It is going to be a give or take. And we're all in agreement that the PD rates should go up. No problem there. We want to compensate those injured workers accordingly, but that are really injured workers. What we want to try to get away from is everybody feeding into the system that are not the injured worker or the employer that are driving these costs up and creating all these log jams of litigation and things like that.

Well, Todd, I don't have the ability to say I grant your wish, but I wish I did. But I think you know, the audience that's listening to this are people that understand we've all

got to take an action in arms here. We've got to all do our part, whether it's reaching out to our council members, to our state senators, chairs, anybody in Sacramento to say, hey, we need to take a look at this and we need to take a look at it sooner than later to correct some things.

So, Todd, is there anything else before I wrap up today that you'd like to share?

TL: No, that's about it, Dave. I appreciate your time.

DG: Yeah, thank you so much for joining me today. Really appreciate it.

And to everyone out there, thanks for tuning in to our latest episode produced by StudioOne. If you enjoyed what you heard, please share this episode and subscribe. For more insights like this, visit us at RanchoMesa.com and subscribe to our weekly newsletter. I'll talk to you again soon. Bye.

Top 5 Risk Exposures for Janitorial Service Providers

Author, Jeremy Hoolihan, Partner, Rancho Mesa Insurance Services, Inc.

Running a successful janitorial company means more than delivering spotless facilities. Every day, your employees work around customers, expensive property, cleaning chemicals, and equipment creating exposures that can lead to costly liability claims.

However, knowing the most common liability risks facing janitorial companies and understanding ways to mitigate your exposure can reduce your overall risk.

Slip and Fall Accidents Remain a Leading Risk

One of the leading causes of liability claims in the cleaning industry is slip and fall injuries.

Whether it is a recently mopped floor, a misplaced caution sign, or excess cleaning solution left behind, a single incident can result in significant medical and legal costs.

When someone is hurt, the costs can extend far beyond medical expenses. Legal fees, settlements, and damage to client relationships can make even a single incident extremely costly. That’s why consistent safety practices are so important. Ensuring wet floor signs are always visible, following documented cleaning procedures, and providing regular employee safety training can significantly reduce the likelihood of an accident.

Rancho Mesa’s SafetyOne™ platform offers multiple slip, trip and fall online training courses and toolbox talks to ensure employees are properly trained for a variety of workplace settings.

Property Damage Can Happen in Seconds

Janitorial companies often work around valuable assets, from office furniture and flooring to electronics and fixtures. Even when employees exercise care, accidents can happen. A floor cleaning machine may cause water damage, a cleaning solution may discolor a specialty surface, or equipment could accidentally damage furniture or fixtures.

Because these incidents can be costly, proper employee training and equipment maintenance are essential. Making sure staff understand the correct cleaning methods for different surfaces and regularly inspecting equipment can help prevent costly mistakes.

Chemical Handling Requires Ongoing Attention

Cleaning chemicals are a necessary part of the job, but they also pose a significant liability when used improperly. Exposure incidents can lead to respiratory irritation, skin burns, allergic reactions, or other injuries. In some cases, mixing chemicals incorrectly can create serious health hazards.

Reducing this exposure starts with proper education. Ongoing training, clear labeling practices, and easy access to Safety Data Sheets (SDS) help employees understand how to safely handle and use cleaning products. A well-trained team is often the first line of defense against chemical related claims.

Not only does the SafetyOne platform offer online training on both chemical hazards and GHS Safety Data Sheets, but the mobile app also allows employees to access your company’s SDS from their mobile device through the app or via QR code.

Protecting Client Equipment Is Critical

Many businesses today rely heavily on technology and specialized equipment. Computers, security equipment, medical devices, and manufacturing machinery can all be damaged  during routine cleaning operations.

Unfortunately, even a minor accident can have major consequences. A spilled cleaner or an improperly moved piece of equipment may result in expensive repairs, business interruption, and strained client relationships. Establishing clear procedures for working around sensitive equipment and maintaining open communication with clients about restricted or high-risk areas can help minimize these exposures.

Theft Allegations Can Damage Reputations

Not every liability exposure involves physical damage. In the janitorial industry, theft allegations can be just as damaging as the actual loss. If cash, electronics, inventory, or personal belongings go missing, janitors are often the first people questioned.

Even when no wrongdoing has occurred, accusations can harm a company’s reputation and client relationships. Conducting thorough background checks and implementing a crime policy that includes theft of client’s property can help protect both your employees and your business.

Liability claims are an unfortunate reality for many janitorial businesses, but risk management can significantly reduce both the frequency and severity of incidents.  Rancho Mesa Insurance provides its clients with access to its proprietary SafetyOne platform, RM365 HRAdvantage™ portal, monthly workshops and webinars, and RM365 Advantage Safety Star Program™ . These services offer a way for employers to implement employee training, maintain strong operational procedures, and foster a culture of safety and accountability. This allows janitorial companies to better protect their employees, their clients, and their bottom line.

If you would like to discuss how Rancho Mesa can assist your companies risk profile, please reach out to me at (619) 937-0174 or jhoolihan@ranchomesa.com.  

Jobsite Fuel Theft is on the Rise

Author, Jessee Keirstead, Risk Control Consultant, Rancho Mesa Insurance Services, Inc.

Gasoline and diesel theft has emerged as a growing and often underreported risk across Southern California, driven in part by persistently high fuel costs and organized theft activity.

Regardless of where a business is located, construction contractors are particularly vulnerable to fuel theft due to the nature of their operations. Since jobsites are often temporary, unfenced, and located in high traffic or remote areas, they are ideal conditions for fuel theft, particularly where vehicles, generators, and heavy equipment are left unattended overnight. Thieves are targeting bulk fuel storage tanks, fuel contained within equipment and fleet vehicles.

Gas and diesel theft is no longer just a nuisance, and the rising cost of fuel has a direct impact on theft. California’s fuel cost is amongst the highest in the country, creating stronger incentives for theft. Fuel is typically easier to steal than equipment, easier to transport covertly, and stolen fuel has become much easier to re-sell.

Industry data shows construction theft costs between $300 million and $1 billion annually in the U.S., with more than 11,000 incidents reported each year. Fuel is a frequent target because it is easily siphoned, resold, and almost impossible to trace. In many cases, fuel theft may go unnoticed. However, there has been a surge in fuel theft incidents, including events where thousands of gallons have been siphoned from commercial businesses in a single event.

Beyond the direct loss of fuel, contractors face indirect costs including project delays, equipment downtime, and potential environmental liabilities from damaged or drilled fuel tanks.

Solutions

There are two methods contractors can utilize to reduce the risk of fuel theft from their jobsites: physical and procedural.

Video monitoring and mobile towers paired with alarms and analytics can deter thefts and provide evidence for prosecution. Installing good lighting and heavy-duty access controls create minor hurdles that can often deter or frustrate would-be thieves. At a minimum, secure jobsites with fencing, lighting, and surveillance systems, park vehicles in well-lit and controlled areas. If you have equipment or vehicles that will be unmonitored for a significant period of time, you may want to consider securing fuel storage tanks with locking caps and anti-siphon devices.

Modify company procedures to avoid pre-staging vehicles and equipment near public roads overnight.

And, train crews on security measures, spotting suspicious activity, proper locking of gas caps, use of deterrents, and response to theft. If you have noticed suspicious activity, you may want to consider keeping logs and conducting regular checks of fuel levels. Encourage operators to inspect tanks, fuel caps, and equipment to identify any signs of theft as early as possible.

Fuel theft is a costly and growing threat, but it’s one that contractors can manage with a solid layered approach. Combining physical and procedural security measures can reduce the likelihood your fuel will be stolen. Ultimately, prevention is about discipline, consistency, crew training, and rapid reporting protocols. By integrating these strategies, contractors can protect their fuel and keep projects on schedule.

Hierarchy of Controls Applied to Landscape Maintenance Fleet Safety

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

Hierarchy of Controls

The National Safety Council introduced the Hierarchy of Controls in the 1950s as a safety framework. The framework is organized as an inverse pyramid of risk mitigation practices that can help organizations reduce workplace hazards. The graphic places the most effective methods at the top and the least effective at the bottom starting from elimination, substitution, engineering controls, administrative controls, and personal protective equipment.

Applying the Hierarchy of Controls to fleet safety for a commercial landscape maintenance company is critical. Using the five levels of controls in the order of most effective first to the least effective can reduce overall fleet risks.

Elimination

Although eliminating the over-the-road exposure all together is impossible for landscape companies, there are still ways to critically reduce the risk through other means.

• Eliminate unnecessary trips due to route optimization or job consolidation can reduce overall miles driven.

• Eliminate hazardous or unsafe vehicles from the fleet immediately.

• Eliminate driving in severe weather conditions like rain, wind, fog, and snow.

• Eliminate the need for backing up at job sites with pre site planning.

Substitution

If a risk cannot be eliminated, try replacing the hazard with something less risky.

• Replace older vehicles that lack updated safety technology with more modern options.

• Replace open utility trailers with enclosed options.

• Stagger morning rollouts, when appropriate, for a safer start to the day.

Engineering Controls

The third option is deploying engineering controls to isolate people from the hazard.

• Utilize safety controls such as backup cameras, 360-degree cameras, blind spot notice, land departure, forward collision warning and automatic emergency braking technology in vehicles.

• Organized and fitted trailers help hold equipment and material while in transport to prevent shifting.

• Dash cameras and global positioning systems (GPS) are tools help monitor driver behavior and provide more insight if an accident occurs.

• Prepare flow maps for the yard to help crews enter and exist safely.

Administrative Controls

Changing the way people work is an administrative control that can reduce fleet risks.

• The controls can consist of MVR reviews, driver authorization programs, driver evaluations, and driver training.

• Implement cell phone, seatbelt, and drug/alcohol policies.

• Perform daily vehicle inspections and telematics safety habit reviews.

• Implement a preventive maintenance program that helps keep vehicles operating safely.

Personal Protective Equipment

The last control in the hierarchy is personal protective equipment (PPE).

• High visibility safety vest help with existing and entering the vehicles.

• Signage and cones when parked near roadsides alert drivers that people are working near by.

• Safety blocks for parking and effective tools that can help employees in and out of truck beds or trailers to minimize slip and trip hazards.

When looking for opportunities to improve your fleet safety program, look at your risk through the hierarchy of controls. We tend to see most improvements within engineering space with telematics, GPS and dashcameras alongside strong administrative controls from driver selection to ongoing monitoring and training.

Success with SafetyOne™: A Fundamentals Refresh for Administrators

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Rancho Mesa’s SafetyOne™ platform is built to support and enhance the implementation of an effective safety program. Real-time data insights, industry-specific safety trainings, and intuitive technology empower organizations and administrators to make safety a priority on the job.

Company News

The company news function simplifies communication, making it easy to communicate important information with your entire organization or groups of people working on a specific project, or program. Administrators can utilize this function to share jobsite information, required forms, procedural reminders or toolbox talk topics to SafetyOne app users and send notifications straight to their mobile device.

File Cabinet

The file cabinet in SafetyOne is where administrators can store important documents. Rancho Mesa recommends using this function to store items including, certificates of insurance, employee handbooks, IIPP/HIPP, and safety data sheets so that they are easily accessible to mobile app users.

Mobile Forms

Mobile form templates can be used in a variety of ways to streamline data collection from the jobsite and in the workplace. Templates can be used to document reports like accident investigations, daily inspections, client visits, and visitor logs. The uses are endless.

SafetyOne administrators can then use the Mobile Forms “Reports” function to analyze the data collected from mobile forms. This can enhance the implementation of better safety practices and address recurring issues.

Observations

Observations streamline the assessment and reporting of possible risks and hazards in the workplace. Mobile app users can document issues using written and photographic data. Existing open issues can be assigned to employees and solutions can be tracked and stored within SafetyOne. Report data can be analyzed to improve safety practices.

Policies

SafetyOne ensures your mobile app users have access to your organization’s policies for workplace safety and best practices. From fall protection to drug and alcohol testing, having clear policies easily accessible keeps employees informed and compliant.

Toolbox Talks

Toolbox talks are a great way to ensure your safety program is proactive, rather than reactive. Hundreds of templates are available for use in both English and Spanish, and industry-specific topics are also available for landscape, tree care, and company drivers.

Integrating the SafetyOne platform into your organization’s safety practices is a small step that can make a big difference. Storing and collecting data allows for personalized safety responses, supported by easily accessible training. And, our platform is regularly updated with new content and technology to ensure you have the tools to administrator an effective safety program.

A complete list of SafetyOne app user guides can be found on our website.

If you have a SafetyOne account with Administrator privileges and want so help getting started, register for our upcoming “The SafetyOne™ Advantage: Mastering Rancho Mesa’s Safety Platform” for a hands-on workshop.

Overlooked Coverage that Keeps Projects Moving After an Equipment Loss

Author, Kevin Howard, Partner, Rancho Mesa Insurance Services, Inc.

For trade and general contractors that own heavy and/or valuable specialty equipment, there is an  overlooked coverage that can be critical in certain loss scenarios.

When we think of business income in the classic form, we think of a fire that shuts a business down and a business income policy that responds, supplementing the revenues and/or operating expenses lost over a set time. Separately, there is also a coverage form that is tied directly to an equipment schedule; so, in case of a loss where a revenue-generating piece of equipment is damaged or stolen, there is a business income limit that can offer coverage for potential loss of revenue.

For example, consider a concrete pumping contractor that has roughly $6,000,000 in total scheduled equipment. Three of these items are cranes and/or pumps that are used daily. If the equipment is not running, revenue is lost. If the contractor secures a $150,000 business income policy that aligns with this schedule, there is additional coverage available in case of a loss. The piece of equipment is covered either through actual cash value or replacement cost, and there is now coverage for the loss of income based on historical data vs. the $150,000 limit.

Coverage makes the most sense for contractors who own heavier pieces of equipment like concrete pumpers, excavation contractors, grading and or utility contractors, paving contractors, crane operators and equipment rental companies.

The business income limit can be adjusted by an underwriter who typically will have a max limit around $150,000 to $250,000 depending on external factors.

Over the past couple of years, California has experienced a major uptick in equipment theft including gas theft, vandalism and well thought out plots to steal large pieces of equipment. These thefts are more common now because of higher resale values and an abundance of attractive targets. Understandably, it is these types of equipment which are now prime targets for thieves.  And with that, a business income limit becomes an important risk transfer technique.

Inland marine insurance protects the physical assets that contractors depend upon every day while business income coverage protects the financial engine behind those assets. As equipment values continue to rise and replacement timelines become more uncertain, contractors should consider business income coverage as an important option within the policy offerings.

Should you have questions about this exposure within your own operations, please contact me at khoward@ranchomesa.com or (619) 438-6874.

Strategies to Help Contractors Reduce Insurance Costs

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

Rising insurance costs in California continue to put pressure on contractors. While many companies focus on finding lower premiums, the most effective way to control insurance costs is to reduce risk before claims occur.

Two of the most effective ways to accomplish this are implementing strong hiring practices and maintaining a formal return-to-work program. Together, these strategies help reduce injuries, improve claim outcomes, increase employee retention, and demonstrate to insurance carriers that your company is committed to risk management.

Hire for Safety and Retention

Every employee impacts your company's risk profile. While technical skills are important, hiring individuals who fit your safety culture can help reduce workers' compensation, general liability, and commercial auto claims.

A strong hiring process should include:

• Reviewing employment history

• Confirming licenses and certifications

• Checking references

• Validating specialized training

• Conducting background checks where appropriate

• Reviewing motor vehicle records for employees who will operate company vehicles

Hiring is only part of the equation. Building employee retention through a clear mentoring process is equally important.

Workers who understand company procedures, safety expectations, and jobsite hazards are generally less likely to be involved in accidents than newly-hired inexperienced employees. By creating clear career paths, promoting from within, and investing in employee development, contractors can build a more experienced and stable workforce while reducing turnover-related risk.

New hires should also receive a comprehensive onboarding program that covers:

• Safety orientation

• Injury reporting procedures

• Drug and alcohol policies

• Equipment training

• Return-to-work expectations

Establishing expectations from day one helps create accountability and reinforces a culture of safety.

Establish Return-to-Work Programs

Even the safest companies experience workplace injuries. The difference is how those injuries are managed.

A prolonged workers' compensation claim affects more than just medical costs. Contractors often face lost productivity, overtime expenses, project delays, and administrative burdens while an injured employee remains away from work.

Insurance carriers also pay close attention to claim management practices. While a single claim may have a limited impact on a company's experience modification rate, insurers view return to work programs as an indicator of how actively the management team works to control losses and support injured employees.

A formal return-to-work program provides modified duty assignments that allow employees to remain productive while recovering. Employees who stay connected to the workplace often experience better recovery outcomes, while employers retain valuable workers and reduce lost time claim costs.

Insurance carriers evaluate much more than claims history; they assess how a company manages risk. Contractors that demonstrate strong hiring standards, low turnover, effective onboarding procedures and formal return-to-work programs are consistently viewed as better insurance risks.

Contractors who achieve the best long-term insurance results are typically those that invest in their workforce. Strong hiring practices help prevent claims before they happen, while return-to-work programs help manage injuries effectively when they do occur.

By focusing on employee retention, safety, and injury management, companies can reduce insurance costs, improve workforce stability, and position themselves more favorably with insurance carriers in an increasingly challenging market.

If you have questions about your hiring practices and return-to-work programs, do not hesitate to reach out to me at ccraig@ranchomesa.com or  (619)438-6900.

Construction Equipment Theft on the Rise

Author, Jessee Keirstead, Risk Control Consultant, Rancho Mesa Insurance Services, Inc.

Across the United States, construction equipment theft is on the rise. And, for companies that depend on small and/or heavy equipment to operate, a stolen piece can have devastating consequences that result in project delays and lost revenue.

Each year, construction equipment theft losses are estimated to be between $300 million and $1 billion. And, that doesn’t include the indirect costs like equipment downtime, cost of rentals, and delays in construction, which all raise the true impact far beyond direct costs.

Since construction equipment is mobile, valuable, and often stored on jobsites with predictable on-site schedules, it is a target for organized and opportunistic thieves. Equipment that can be moved and resold quickly, often across state lines, is a likely target while recovery rates lag far behind the frequency of thefts.

On average, an equipment claim and recovery typically costs between $29k - $35k per incident. And, while industry briefings have stated around 1,000 equipment pieces are stolen per month on average, it is expected to rise.

Thieves target equipment like skid steer loaders, utility carts, mowers, backhoes, excavators and mini excavators, and bulldozers. They rank among the most stolen machinery types due to mobility and market demand. Compact tracked loaders, towable chippers, generators, and trailers are also consistently targeted because they are easy to move.

Physical Controls

No system is 100% effective, but utilizing physical controls to deter would-be thieves is the first step in protecting equipment at the yard or on the jobsite.

Minor hurdles can often deter or frustrate thieves. So, installing good lighting, utilizing heavy duty access control, wheel locks/boots, chains, cables, and anchors can be enough to slow or stop a thief. Parking smaller equipment boxed in and facing inward so that the hitch on trailers are facing towards larger equipment or a building can also be a deterrent to thieves.

Rekeying equipment eliminates the ability for a thief to use universal keys often installed by equipment manufacturers. This makes it harder for a thief to start the piece of equipment. Once you have rekeyed the equipment, conduct audits on keys, document key storage, control spares, lock keys in a secure location, and require sign out to ensure the keys are not stolen.

Removing batteries and detaching or storing critical attachments separately can immobilize equipment. Making the thief install a battery or other attachments in order to steal the piece of equipment may be enough of a deterrent that they move on.

Modern Solutions

As technology advances, construction companies have increasingly more tools available to help combat equipment theft.

Global Positioning Systems (GPS) and telematics systems can send immediate notifications when equipment moves or leaves a defined zone. Trackers can accelerate law enforcement response and increases recovery rates.

Yard and jobsite security like video monitoring and mobile towers paired with alarms and analytics can deter thefts and provide evidence for prosecution.

The National Equipment Register (NER) HelpTECH (Heavy Equipment Loss Prevention Technology) program, is a centralized, law enforcement-backed equipment ownership database that also boosts recovery and deters theft.

Procedures

Adopting procedures to ensure equipment is inventoried, limit exposure on the jobsite, and employees are properly trained helps limit risk of theft.

Conducting regular inventory of equipment at the yard and daily inventory on the jobsite provides documentation of where equipment is located and where it is supposed to be, plus it can help to confirm when something is missing. Rancho Mesa’s SafetyOne app provides daily jobsite reports that include a section for equipment that is left on the jobsite.

Limit the time the equipment is on a jobsite. Avoid pre-staging trailers or equipment before it is needed near public roads and overnight to reduce the chances the equipment is noticed by thieves.

Train crews on physical and procedural security measures, spotting suspicious activity, proper locking, trailer security, use of deterrents, battery removal, and response to theft.

Using a combination of physical deterrents, modern technology and procedural training can help protect jobsite equipment.

Construction equipment theft is a costly and growing threat, but it is one that contractors can manage with a solid layered approach. Combining physical security measures, such as perimeter controls, key management, and immobilization, with modern technology like GPS tracking, geofencing alerts, and remote monitoring creates a good defense. Programs like NER’s HELPtech add another layer by improving identification and recovery odds.

Ultimately, prevention is about discipline, consistent inventory checks, crew training, and rapid reporting protocols. By integrating these strategies, contractors can significantly reduce theft risk, protect their equipment, and keep projects on schedule.

NALP 10-Hour OSHA Construction Safety Course for the Landscape Industry

Some landscape companies require OSHA 10 training, but not all OSHA 10 courses are created with landscape professionals in mind. The NALP's OSHA 10 was designed specifically for the landscape industry.

Unlike traditional OSHA 10 construction courses, this one focuses on the hazards, equipment, and jobsite conditions landscape crews face every day.

If you're looking to invest in your company’s safety, and strengthen your safety culture, this opportunity is available to both NALP members and non-members.

Back to School Traffic Safety: Protecting Students and Drivers

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

August marks the start of a new school year and an increase of traffic risks for company drivers. The National Safety Council (NSC) reports motor-vehicle fatalities often increase in the month of August. Daily driver routes can be impacted by new drivers, students on e-bikes, and school zones. It is important to prepare and train company drivers for potential hazards they will face on the road.

As children and teens head back to school, campuses and neighborhoods will see an increase in pedestrian traffic. Drivers should be aware of children crossing the road, sometimes unexpectedly, and be prepared to stop quickly if needed. School zones also have slower speed limits than other parts of the neighborhood and drivers should be prepared to follow all additional school-zone laws. Morning drop-off and afternoon pick-up times will be especially busy, and organizations should be reminding their drivers to remain alert at all times.

Company drivers should also be aware that they will be sharing the roads with inexperienced teen drivers and students riding bikes, e-bikes, scooters, and skateboards. Drivers and riders with limited experience can make unpredictable moves on the road. Educating employees on defensive driving tactics can help prepare them to avoid hazards and prevent possible accidents.

The best type of safety training is proactive, not reactive. Preparing company drivers before school resumes is key to enforcing safe habits on the road.  Building and implementing a fleet safety program is a necessity to train new drivers and remind seasoned employees of proper driving habits. A fleet safety program can include trainings on defensive driving, route planning, and avoiding distractions to help reduce the risk of collisions.

Rancho Mesa provides clients with a number of fleet safety resources in the SafetyOne™ website and mobile app.

SafetyOne Resources:

• Comprehensive Online Driver Safety Training

• 52 Driver-Specific Toolbox Talks

• Automobile Accident Report

Register to watch our on-demand webinar “Building a Fleet Safety Program with Rancho Mesa’s Tools and Resources.”

For more information, contact your client technology team.

The Evolution of Credit-Based Bonding Programs

Author, Andy Roberts, Surety Group Leader, Rancho Mesa Insurance Services, Inc.

When I first started in the industry, 8+ years ago, there were a handful of surety companies that offered credit based surety programs. They required a one-page application, would do a soft pull on the owners credit, and so long as it was sufficient, they could qualify for up to $400,000 in single and aggregate bonding limits. Since then, the limits in these programs have continued to grow as the market for the credit-based programs has evolved.     

From that $400,000 limit, we saw these programs jump to $750,000 single and aggregate, then it went to a $1,000,000 single and aggregate. Now we have surety companies that are offering $3,000,000 single and aggregate limits based on the personal creditworthiness of the owners. Just as before, there is no need for the contractor to provide company financials. The contractor would need to fill out an application and depending on the strength of their credit they could qualify for up to $3,000,000 in bonding. However, there is one caveat. The limits in these programs are also based on the contractor’s largest completed project, with surety companies offering a single bond limit at two times their largest project size. This is a significant development in the industry that is being driven by a few different factors.

First, sureties have become increasingly more comfortable with the idea that if owners pay their bills personally they are likely to operate their businesses in the same fashion. The increased comfort level stems from the fact that these programs have performed well from a loss perspective. Second, there is a lot of competition in the surety marketplace, especially in California, and this is driving companies to develop programs that will attract quality contractors earlier than previously. Finally, inflation is a significant factor. A project that was $1,000,000 a few years ago may now very well be close to $2,000,000 now. The scope is the same, but labor and material costs have increased substantially, and sureties need to increase their limits to keep pace. 

We often talk about how very little changes within the surety industry, but that is not the case with credit-based bonding programs. This part of the industry has changed a lot and is continuing to evolve creating more opportunities than ever for contractors to get access to bonding. This makes it important to work with a surety agent that understands all the different markets, and can help identity the program that best fits your company’s goals.

For more information on credit-based bonding programs, contact me at aroberts@ranchomesa.com or (619) 937-0166.   

The Evolving Workers’ Compensation Landscape with State Fund CEO Vern Steiner

Rancho Mesa President and CEO Dave Garcia speaks with California State Fund CEO Vern Steiner about the current state of California’s workers’ compensation market. They discuss key industry trends, cost drivers impacting employers, and offer considerations for the future of the workers’ compensation system in California.

Dave Garcia: Hi everybody, you're listening to Rancho Mesa’s studio and podcast, where each week we break down complex insurance and safety topics to help your businesses thrive. I'm your host, Dave Garcia, and my guest today is Vern Steiner, the CEO of the California State Fund. Vern, welcome to StudioOne™. We're super pleased and excited to have you join us today.

Vern Steiner: Thanks for having me, Dave.

DG: Sure. All right. Let's just jump into it. So, Vern, you've built an impressive career spanning more than 30 years, in workers’ compensation in the insurance industry, starting in claims and now becoming the CEO of the State Fund. Looking back on that journey, what experience has had the biggest impacts on your leadership philosophies and how do you approach the industry today?

VS: Well, Dave, I think it my leadership philosophy probably started being shaped even before I got into insurance. And it's all a set of experiences with people. There's, you put it leadership. Right. And there's leadership and there's management right. And there's technical and there's inspirational things. And I think leadership is more about motivation, alignment, mission, communication, all those kinds of things.

And frankly, I learned a lot from various leaders I had along the way. Some things I learned what to do and some things I learned who I don't ever want to do that. And more than anything else, I reached the conclusion at some point in my journey that the most effective thing you can do is build an environment that people enjoy being a part of, and they feel like they can trust you and that they're trusted, and that that unleashes the best that they have to offer, right?

And so that's my focus has been for the 12 years I've been at State Fund, my focus has been, let's build a culture that really sets us apart, that values the mission of the organization, which is we're a not for profit organization that were created to help make the workers compensation system work in California and draws people into it, that that mission will give them the day to day rewards and positive feeling about what they're doing.

And I think that cultural part of things. I remember years ago studying, you know, strategy, whether you're thinking about corporate strategy or sometimes it was political strategies, five year plans, ten year plans. And today the world moves so fast that a five-year plan is insane. A three-year plan is insane; you know? But you still have to have a strategy.

And I think the strategy then has to be, how do you get really good at change? And that again boils down to culture boils down to trust that enables that change agility. So I won't name names for who was a particularly great influence or who was a particularly negative influence. You may know a few of them, but it's really just about every interaction I've had along the way with people I've worked with, people I worked for, interactions I had as a leader, lessons I learned of what not to do early on.

And I remember thinking at the beginning of my journey, our experience is overrated. And now I think, wow, experience is really valuable. I don't know if I think that just because I have it now and I want to protect my position, or if it's if it's something you can only really understand after having gone through the journey.

DG: I think you're right. Boy, you hit on so many great topics. I mean, we could spend, you know, forget the insurance world for a second. We could just talk about your philosophy and leadership and culture, because I do. I've had similar experience, both good and bad, from different leaders that I've worked for or been around. Just experience with them.

But what I, what really touched me is I'm big on culture as well, is I do believe there's a difference between employee satisfaction and employee engagement. And I think what you're hitting on is really the engagement side. People can be satisfied, you know, they make a good wage. You know, they don't hate their job, that sort of thing. They have nice benefits.

But how do you get them engaged? And I think the engagement piece is what I've watched you build over those 12 years at the State Fund, because I think it cascades out from the top down. If the leaders are engaged, then then they're going to send that message out. And I just want to commend you on that.

I've witnessed that personally with the people that work with us here at the agency level. So bravo to that. And for those of you that listening, really think about that. Think about in your organizations, you know, the difference between just satisfaction and engagement. And it really focuses on the culture that you're providing. So thanks for sharing that piece. That's a great takeaway for me.

VS: Thank you. And I appreciate the feedback and just adding one more thing to it. I think that engagement, if it comes from how you feel emotionally, your emotional connection with the people you work with, with the way the organization treats you, and it is different than satisfaction.

DG: Yeah, there's there, you know, and I learned that from somebody much smarter than me. They sat me down and said, yeah, do you understand the difference between employee satisfaction and employee engagement? And at that point I'm like, they're the same. And then they explain to me through examples and, you know, different things. No they're not. And so the goal here at Rancho Mesa is obviously employee satisfaction.

But more importantly, we should be accomplished that if you're engaged, you will be satisfied, right? If you're satisfied, you may not be engaged. That’s the reality.

Okay, let's shift gears and let's talk about, you know, the current state of workers’ compensation here in California. You know, how would you describe the current state in California's marketplace and what are the biggest challenges you think employers are should be paying attention to right now?

VS: Well, it's an interesting time. Yeah, it is a loaded question. Yeah. And it's an interesting time in kind of the history of California workers’ comp, at least in my 30 plus year career. We're coming off and maybe still in a period where the market has been stable for a very, very long, the longest time I've ever experienced. Prices had generally come down and cost have generally come down.

So pretty much employers, insurers and even injured workers have benefited from this period. I think there is a school of thought that the injured workers benefited from the last reform, which was pushed through, I think in 2013 initially, and now they fallen behind. But I said we're coming off of it, you know, it's gone on for the last dozen years.

And now there are signs that, you know, the patient's running a fever, right? You know, maybe it's a low grade fever. Yeah. But under underlying all that, it's still we still have a very healthy patient because we've had ten years to condition ourselves. And I think what comes next depends on how high this fever gets and how long the fever lasts and what other, you know, comorbidities we have.

You know, if, if the underlying health is what it appears to be, I think the system still has some stability left in it. But if there's been more deterioration than is obvious on the surface in the last couple of years, because for the last 2 or 3 years, combined ratios for California have been over 100, which means from an underwriting basis, insurers are losing money, and yet they haven't really done anything to address that. Prices have stayed pretty stable.

It depends on how far they're dipping into their savings, for how long that can continue. And I don't know what the answer to that is. We know the numbers, the big numbers that the shares. But those are industry wide numbers. Some carriers could be extremely healthy and some maybe not so much healthy, if that's what's going on, you know, the market will continue to be relatively stable, but if it's an increase the board fever, then we could be heading for a little bit of disruption.

And I think that's against a backdrop of we have a new governor. We don't know who the new governor will be, but a new governor next year. And in my career, with the exception of Governor Newsom, every governor has presided over some sort of significant change.

We'll call it reform, although reform sometimes lower costs and sometimes increases costs to the workers’ comp system. And I think that's overdue. And I'm not saying that I think we need it, although I think there are some symptoms now, particularly the CT issue that maybe demands some attention. But I think the system being reformed is kind of the cycle has gone long enough that it's likely to happen again in the next 2 or 3 years.

DG: Yeah, let's get a tune up. Right? Yeah. And I think, you know, well, I think CT is something we're going to touch on here in a couple of minutes. But in the interim, just like hot off the news just last Friday, current commissioner Laura who will also be we will also have a new insurance commissioner. So the WCIRB had recommended a 10.4 average rate increase several months ago.

He finally got his private actuaries and concluded that there should be an increase. But he's recommending or advising a 6.6% increase. So that marks the second year in a row that we've kind of seen mid, you know, between 5 and 10% projected increase need. So where do you see. And this is where CT’s going to come into play.

But in your view what's driving these increases and how do you think this might actually trickle down to the employer. Do you think we'll see, again some people have rate decreases, we know I mean in terms of their premiums? But you think if you were an employer in California would you be budgeting, you know, for decrease, increase or flat in most cases?

How do you see that, Vern, with this recommendation?

VS: All right. So I'll take the last question first. And I think if for years we've seen whatever the commissioner or the WCIRB has recommended, we've seen the average charged rates by carriers go down. But last year it didn't go down. It didn't really go up either. It kind of held flat. I don't know if it'll hold flat next year in spite of these industry trends or if it will start to adjust up.

I do know that over a long enough period of time, if the trends continue the way they are, rates have to go up, right? But whether that's going to happen this year or not, I think that a lot of different factors could enter into individual carriers’ decision making for how they approach this. I think the underlying factors, if I remember the first part of the question, which is really what's driving this increase, that that also is multiple things and some, some odd, unusual type of things that we're still having I think a bit of a reaction to COVID in here, not COVID itself, but the way that the world changed in COVID and remote work started to become more of a factor. And one of the things that happened with that was the courts started operating remotely as well.

DG: Correct.

VS: California is really not one consistent system up and down the state. You know, San Diego is a little bit different than Orange County, different than LA, much different than the Bay area and way different from, you know, the extreme north or the Sierras. And one of the things that's happened, and it relates to the growth of the continuous or cumulative trauma claims is now that the courts have become virtual, law firms, applicant law firms from Los Angeles are able to represent people up and down the state.

And this cumulative trauma behavior was far more prevalent in LA. And now it's being exported to other areas as well. So there is a growth overall in in cumulative traumas in California. And cumulative traumas are more complicated, almost always more expensive. And another factor that I don't think has been fully accounted for by the WCIRB or the commissioners, actuaries, or anyone else who's studying it, is cumulative trauma claims are usually paid later, and the full exposure is recognized later, because there's a lot of investigation that has to go on at the front end of them that are often not accepted, and a claims person has to do their best to estimate what this is going to cost without nearly enough information.

DG: Right.

VS: I suspect that most of the forecasts that we're working with today are understating what the ultimate liabilities are going to be for the growth of the cumulative trauma claims, because they just develop later.

DG: Yeah.

VS: So those are the things the trauma, this remote work.

There's also this period of the post-last reform was, the last reform was so effective in driving down costs that for a number of years it not only erased medical inflation, it created medical deflation. Now that is over. And so medical inflation is going to take hold again. And it is. But that's a pretty severe shift in the trend from cost being naturally or unnaturally lowered by the impact of the reform offsetting other natural increases, inflationary increases in the system.

So now there's no offset. And in fact medical costs are going up and contributing to the inflation in the system. And that's I think that's a pretty significant driver. The last thing that I think is worth talking about is both a change to the way that regulation decided we had to pay for medical legal exams for years and years and years there was no increase in medical legal reimbursement to doctors.

And when the state took a look at that a few years back, the avenue, they chose to address that. And I think it needed to be addressed. I think it was one of the worst avenues they could have chosen. And they decided, well, we're going to pay doctors a dollar per page that they have to review and medical records.

Yeah, well, that's just rife with all kinds of abuse problems and, and so medical legal costs have exploded. And throughout our, throughout my history in this comp system, there have been ways that people that really try to abuse the system find loopholes in, in the regulation that is supposed to make the costs predictable. That had really slowed down for a long time.

But now we're seeing this kind of activity in pain management and I think long-term, kind of severe care, brain trauma, where the actual procedures being provided, provided or not listed in the fee schedule and the providers get to charge pretty much whatever they want. And we're seeing that being used more and more often.

DG: Wow.

VS: Maybe, maybe it's appropriate for a small percentage of claims, but there's a larger and larger percentage of claims where that activity is going on. And so that is also driving some of the cost increase.

DG: Yeah. It's everything you touched on are things that we see daily. You know, when we're doing our claim meetings with our clients and we're looking at the loss information, we see this, you know, put preponderance of cumulative trauma where five years ago we didn't see it. Now we're seeing it regularly. I think I may be misstating it, but I think the total number of average percentage, 27% of indemnity claims California now cumulative trauma obviously that number used to be in the low teens.

So there are some, you know, forces at work that have looked at how to manipulate possibly the system a little bit for their own gain, not necessarily for the injured worker necessarily, but just for their own game. So, you know, that's a that's a cause. And it probably has to do with I've been in the insurance industry about 40 years now, and when I see things like this, I get frustrated because it's just wrong.

You know, it's just, you know, there are, you know, cumulative trauma cases that need to be taken care of. Nobody's arguing that. But two times that number and the cost and the drivers is just too much. So I think you've mentioned several great things that to me, the answer is going to be some form of legislative reform.

Doubtful it's going to happen in 2026. Too much going on. Do you, is there anything that you think is reasonable to believe? Maybe in the ‘27 cycle, maybe we could see some differences here?

And I'm not naive enough to know that if some of these things were to change, you know, that you mentioned like proximity attorneys where they can't do they have to appear, not appear cumulative trauma is 1%, you know, should it be 51?

I mean, some of this stuff is really not complicated, but you're going to have to give something up in order to get that through. So how do you see that balancing out legislation or without, you know, with given your position, I know you'd be sensitive to what you can, you know, share. But do you see that? Is there hope out there that we could see some reform to try to alleviate some of these cost drivers in the next few cycles?

VS: Yeah, I do think there's hope and I don't know anything in particular given my position. We're, you know, we're a quasi-state agency, but I'm not on the inside of any discussions about what's happening from a, you know, potential reform or what any party is going to support. But what I, what I am aware of is there is this pressure building up to it's been years since the last reform, 2013/14, since there's been any kind of increase in the rate that an injured worker’s paid for permanent disability.

And, you know, after 12, 13 years, yeah, there's a belief that what's being paid now is inadequate given the rates of inflation we've all experienced. So that is a, you know, a motivating factor for, I think, labor to start to address that issue. And I, traditionally employers, business has negotiated over that issue. Okay, we're going to raise costs in the system in this way. Where can we recapture some costs?

And cumulative trauma has been an issue that we've all been aware of for many, many years. But it is now exploding. And it just there's no way to say that, okay, it's gone from the teens, as you said, to the mid-20s now and it's over. It could continue to explode. So I think that that is definitely one of the cards to be played to try to offset the increases in benefit rates.

There's also been a long term attempt by, you know, the doctors lobby, the applicants’ attorneys lobby to undo the medical networks, the medical provider networks and/or utilization review and IMR. And I think both are very effective ways to make sure that medical care is appropriate. Particularly UR an IMR. And if these things are attacked or unwound, it's impossible to really estimate what the impact on the system will be.

But my estimate would be without these controls, medical care will go wild and costs will escalate rapidly. So that's, I think, something we have to be very careful about as the next round of discussions take place. And, and these discussions generally take place between key stakeholders, which labor and employers.

DG: Right.

VS: You know, insurers are maybe invited to a third table, but it's this is really a bargain between labor and employers and, and the effectiveness of the people negotiating on both sides of that table in the next year or the year after, I think will determine where we end up.

DG: Yeah, I think that's great. I know that, you know, from a grassroots perspective, you know, we've drafted letters to the committee chairs that would deal with something like this, both the senator and the committee chair, and just trying to raise the level of awareness and try to get we know it's going to come from, as you said, employers.

So we need to raise that like they feel the people that we've spoken with just on the CT issue in particular, they just feel helpless, you know, they don't know how to prevent it. You know, what can you know, they've asked this a hundred times. What can we do as an employer to try to mitigate this exposure? And there are certain things they can do. Their hiring practices, how they treat their employees, if they're going to lay somebody off, have a really good process to do that. All of those things. And many people say, yep, and we're doing all of those things, but we still have a lot of these claims. So they're really looking, I really think the employer is looking for legislative reform to answer some of this question.

It sounds like, you know, you're talking about everybody's talking about it. At some point it's going to be addressed. And I think the giveback everybody's in favor of, You know, raising some of that permanent disability. Think nobody's going to argue that, you know, and that goes actually to who? The injured worker, not to a third party that's kind of feeding off the system.

So sorry, I'm letting my 40 years of, you know, fighting for the advocacy of, you know, clients and business owners. But anyway, so I'll get off that soapbox.

All right. We'll wrap it up here pretty quickly. So, Vern, here you go. This I always like this question at the end. If you had one minute to speak directly to every California employer listening, what message would you want them to hear relative to workers’ compensation for the next year?

VS: Well, I think you've set that up pretty well in that when we're at one of those forks in the road in the workers’ compensation system, the last one was 2013. The one before that was probably 2003. The one before that was around 1995. Where decisions are going to be made that will change the system. And the people making those decisions do not always get it right, and they do, generally do not understand what the total impact of those decisions are going to be, particularly when you start changing the not the amount of benefits, but what determines whether you're eligible for a benefit.

And those things drive behavioral changes that are really hard to quantify when you go to actuaries and say what's, they get it wrong every time. This last time, they wildly understated the impact of things like independent medical review. This next time. Yeah. The more that we tweak that part of the system, the more volatility we're going to introduce to it. Maybe on the upside, maybe on the downside.

But get involved.

DG: Yeah.

VS: This is one of those forks in the road. I mean if you make sure your voice is heard go to your Chamber of Commerce. You figure out how to make sure that your legislator knows where you stand on these issues, because it is likely that in the next year to three years, we're going to take another path, with workers’ compensation.

And it could be another path that isn't so different than the one we've been on, or could be one that is wildly disruptive. And we're already at a stage now where the health of the system, which had been accumulated and been very healthy for a ten-year period, is starting to deteriorate. You know, as I said earlier, the analogy, the patient definitely has a fever now.

Maybe it's just a little cold. Maybe it's going to turn into something else. Well, we don't want to turn into is a whole new disease that we don't understand. And that's why involvement in this political process, the voices that matter most in this, are the voices of California employers and the folks who represent labor.

DG: Perfect. Well, listen, I can't thank you enough for joining me today. Your candid insights, your leadership, and, you know, the impact you've just made throughout your career is second to none. So thank you for spending time with us, sharing your expertise with our audience. Really appreciate you jumping into StudioOne. Love to have you back at some point in the future.

So Vern, thank you for your time today.

VS: My pleasure Dave, it's been fun talking to you.

DG: Great. Everyone, thank you for tuning in to our latest episode produced by StudioOne. If you enjoyed what you heard, please share the episode and subscribe. For more insights like this, visit us at ranch and or subscribe to our weekly newsletter. Until next time, thank you. Goodbye.