Ep. 501 Grab Your Popcorn: Tracking California's Possible 11% Workers' Comp Shift

join us on thursday may 8th for an in-person workshop where we'll discuss the competitive advantages of member-owned group captives this workshop will be held at rancho mesa's mission valley office to register visit rancho mesa.com click on workshops and webinars and click on register online under the rethinking insurance description again this workshop will be in person on thursday may 8th 2025 at 10 a.m and it's open to everyone so register today this episode is brought to you by comp west insurance company comp west insurance company is a dynamic provider of workers compensation insurance in california and select western states targeting customers across most major industries they are the western states brand for af group an a-rated excellent company who's collectively one of the nation's largest writers of specialty insurance you're listening to rancho mesa studio one podcast where each week we break down complex insurance and safety topics to help your business thrive i'm your host alissa burley and i'm joined by kevin howard partner with rancho mesa he specializes in providing insurance and risk management solutions to artists and contractors kevin welcome to the show thanks for having me i'm so excited and i got some things to say all right so today we're going to discuss california's workers compensation rate increases and some key dates employers should know and over the last two almost three weeks the california insurance industry has been weighing in on the recent pure premium rate recommendations so kevin will you explain to our listeners what has recently happened in california's workers compensation system i would love to and to start we got to stare at what's going on overall we have inflation going on out there tariff wars auto premiums going up general liability premiums are slowly creeping up and the workers compensation has been kind of the saving grace in the last couple of years it hasn't really hardened um but in this podcast we're going to talk about the timeline that is pretty consistent every year and why it's important for us to stare at this year in particular the bureau just recommended 11.2 percent increase and that's purely a data analysis of how much premiums have been brought in versus claims paid out just matter of factually and so when they make that recommendation their actuaries are saying hey in order for you out there insurance carriers to be profitable we're recommending 11.2 percent increase and so the next couple of months i brought something for you to open it kind of set the tone all right i'm a little nervous okay so kevin has brought in a shiny pink bag um all right so i am i have daughters it's a shiny pink bag okay let's see okay so kevin has brought in it looks like it's a candle but it looks like a bucket of popcorn all right so you have to explain what the heck this means okay insurance people consumers insurance the next couple of months grab your popcorn because we don't know what's going to happen we don't know if carriers are going to follow suit take the 11 percent increase we don't know if it's going to be consistent with the last couple of years where there's this increased recommendation but our commissioner of insurance he doesn't agree and so you know we'll talk about the next couple of months but it really is um a chance for us to pay more attention as insurance agents and for listeners out there that purchase insurance it's important too like are we gearing up for what is coming and are we um on the same page as far as like when will this go into effect okay so you're thinking everybody needs to pay attention to what's happening get your popcorn and watch to see what's going to happen in the future yeah did you smell it again can you smell it it smells like oh it smells like all right so will you kind of explain what happens in the next couple of months those key dates because there's a calendar of events that happens every year will you explain how that kind of works yeah so forever january 1st was when the base rates were officially released from the carriers and so as an insurance agent we had the holiday season and a majority of our clients renew on january 1st and so waiting for the base rates to be officially published it creates such a log jam so thank goodness in 2023 we got away from that and so september 1st is officially when the base rates are locked in from each carrier so you're an independent carrier you know the complex state funds zenith travelers berger hathaway i don't want to leave anybody out they're doing their math while we're eating our popcorn you know they're doing their math on how can they a make sure that their rates are competitive for consumers and so that we can go out there and have free enterprise on how they can earn more business but also how can they stay profitable and they stare at what's called combined ratios which is basically you know the premium in the claims out plus their overhead their bills their electric bill fund bill payroll and so that math now is all locked in september 1st but they're doing the math now um in april which happened right now is when the bureau makes a recommendation so they officially come out and say hey we recommend and this year 2025 an 11.2 percent increase that would happen in september that the commissioner of insurance will make his or her recommendation okay and then between those two numbers the quest for the insurance carriers is to say what do we think thanks for the recommendation insurance bureau thank you commissioner lara for you know for putting your two cents on it here's what we're going to do and this year because there's such a large recommendation we don't know how this is going to shake out other parts of that timeline are in june and july in san francisco lobbyists unions there'll be a chance for people to openly speak on these topics and i did a little research kind of fun when he was you know the governor's coming in and he's fighting for reform that was a big meeting right when he's like hey we need to make change in the work comp system to protect employers when it comes to these big issues so you can imagine this summer we have our popcorn um we're excited to know like what is important to all of our clients some topics will be wage threshold we've seen the split code for construction companies that i work with a lot that wage threshold is crept up year after year um there'll be recommendations on other topics that could be part of a reform in the future and then uh in september again that's when the base rates get officially published but we don't think that these carriers are waiting for that day right they're already underwriting based on future knowledge okay they have the data and why would they sit on it right great point they're not sitting on it if you're insured that has renewal in july and your carrier right now is looking at this math they're probably going to underwrite based on what they predict that makes sense all right so what happens in october in october it all starts over again so you know the base rates are locked the bureau now has this new calendar where they can collect data starting in october that they're going to again make a recommendation on in the next april so next april of 2026 i thought of a theme for this podcast would be like what are the holidays for california a different kind of holiday yeah what would be like the holiday song we sing like oh the base rates i love it you should definitely come up with this song yes okay so with all of that said what do you expect to see in the coming months and how you recommend california employers prepare for what we assume there's going to be changes right so what are you recommended your client for all the listeners out there that are not insurers you're not a business owner you can tune out this is this is for everybody that is worried about workers compensation premiums forget about the popcorn forget about the calendar prepare now there's so many things we can be doing to add more controls to look at your risk profile to brag to these insurance carriers regardless of the base rates regardless of the recommendation what's in control what we have in front of us is a chance to constantly be proactive and so yes there's a recommendation yes rates might go up but there's a lot of work to be done and rancho mesa we are so excited that we have a claim advocate that we have a safety app that we have different things that we can implement they're helping our clients you know shape this submission their risk profile to show to these underwriters to say hey regardless of base rates regardless of increases we deserve this this is where we should be so that that's kind of like the uh here's the popcorn let's take the popcorn off the table and let's go to work yeah and i think that's something that rancho mesa continues to offer to all of our clients and it's something that we're always focused on regardless of what the industry is doing i mean if rates were going down we would still be asking our clients and providing them resources to do better right we're constantly offering trainings and helping with different tools and making sure that their employees are safe and that we can minimize any work comp injuries so i guess it's almost like regardless of what the industry is doing we're going to stay the course we're going to continue to do what we've always done and that is to really make our clients the best that they possibly can be 1000 rain or shine we're doing the same thing and that's what we hope that you know any other company out there that's looking for more action that's what we want to do and you can still smell the popcorn if it's it smells really buttery it does so kevin if listeners have questions about their potential workers compensation insurance rate increases or anything about what's happening what is the best way to get in touch with you i have a direct line at 619-438-6874 you can find me on linkedin i'm on there a lot trying to navigate and get myself out there so um yeah thank you all right well kevin thanks for joining me in studio one thank you thanks for tuning in to our latest episode produced by studio one if you enjoyed what you heard please share this episode and subscribe for more insights like this this is at wrenchamasa.com and subscribe to our weekly newsletter you