October 2021 – CONSTRUCTION INDUSTRY – Building Risks Evolve, Creating Unique Challenges


AS THE CONSTRUCTION industry booms, contractors face evolving risks that, left unchecked, can leave their operation exposed to new liabilities.
If you already operate a construction firm, you know that there is a labor shortage that has made it difficult to find experienced workers and that hiring entities are asking builders to take on more of the design function, as well.
Your liability picture has also likely changed with the increasing use of wrap-ups and, if you’re using technology in your operation, you now have rising cyber-security risks, too.

Lack of qualified workers

The bottom fell out of the construction industry in the U.S. during the first few months of the COVID-19 pandemic, and many worksites were idled. Now that the industry has found its footing, it’s been dealing with a severe labor shortage.
As construction firms struggle to find workers, the ones who are on the job are having to take on larger workloads, which can put them at risk of injury or making mistakes.
Also, many contractors are having to take on younger, less-seasoned laborers, who may lack the experience to identify and avoid hazards, which puts them and others at risk of injury. Those injuries in turn affect your workers’ comp
premiums.
A lack of workers coupled with inexperienced new ones on sites can also end up drawing out projects, forcing contractors to miss deadlines.

Professional liability risks

As more project owners want an all-in-one job with the lead contractor designing and building the project, contractors now face a new type of risk: professional liability.

But the typical contractor’s insurance policy doesn’t provide protection for any design work you take on.
Courts have ruled that:

  • Designers who perform “builder activities” lose limitation of liability typically enjoyed by design professionals.
  • Builders who perform “design activities” assume responsibility for design deficiencies.

Wrap-ups more prevalent

Many construction projects are now covered under one general liability policy to cover the work of the general contractor, as well as of all the subs. More lenders are requiring that liability is set up in one all-encompassing policy.
A properly assembled general liability wrap-up should provide coverage not only during the construction period, but also up to 10 years after the work is completed.  These policies often reduce the cost of coverage.

More cyber-security risks

Like all industries, the construction sector has grown increasingly reliant on technology to get the job done. That exposes contractors to a variety of cyber risks, including keeping project designs, client records and employee records confidential.
Many building contracts today include clauses requiring the contractor to be responsible for potential cyber breaches.
Given the increasing popularity of practices such as “building information modeling,” “integrated project delivery,” and file-sharing between participants in a construction project, contractors may be at increased risk of liability in the event of a data breach.


July 2021 – Non-Admitted Carriers – The Option When No Insurers Will Cover You


SOME BUSINESSES are finding fewer insurers willing to write their policies for certain types of coverage that are seeing rapidly rising claims costs, particularly in liability lines as well as property insurance in areas with exposure to natural catastrophes.
When no insurers that are licensed in California are willing to write a policy, we as your agent have to go to another market made up of insurance companies that are not licensed or regulated by the state.
It’s called the surplus lines (or “non-admitted”) market, and it can be a valuable alternative for insurance buyers.
As insurers get more selective writing some risks, it’s important for you as an insurance buyer to understand this market.

Why use a non-admitted carrier?

The most well-known non-admitted insurer is Lloyd’s of London, famous for insuring insurance companies and celebrities’ or sports figures’ body parts and global sporting events. Often non-admitted insurance companies are located in other states or domiciled abroad, like Bermuda or another tax-haven country.
Unlike licensed insurance companies, non-admitted companies do not have to obtain approval from state regulators for the policy forms they use or the rates they charge.

 

 

Since they are not regulated by the state, non-admitted insurers can offer creative coverage options and they can quickly and easily introduce new types of insurance that businesses need.
Some types of policies that are standard today, such as cyber insurance and employment practices liability insurance, got their start in the non-admitted market.
State laws typically permit a broker to obtain coverage from a non-admitted insurer only if at least a few standard insurance companies refuse to offer coverage. However, most also have coverage options that are not available in the standard market.
When someone needs one of the latter coverages, no rejections from licensed companies are required. An example might be liability insurance for contractors who demolish buildings.

Risks

There are risks to purchasing insurance in the non-admitted market. Policies may provide less coverage than do standard policies, or there may be restrictions on when coverage applies. Policies should be reviewed carefully. Also, because the insurers can charge whatever they feel is appropriate, premiums can be higher than you may expect. The policies may also be exempt from state laws regarding notices of cancellation and non-renewal.
Also, in every state but one (New Jersey), non-admitted policies are not backed by a guaranty fund. Guaranty funds cover claims left unpaid when an insurer is unable to pay for them. If a non-admitted company becomes insolvent, the policyholder has no recourse.

The takeaway

Despite the risks, the non-admitted market serves an important function, giving buyers a place to get needed coverage that would be otherwise unavailable.
Those who think they may need to tap this market should consult with us to find the right coverage at an acceptable price.


July 2021 – Construction Coverage – Builder’s Risk, Excess Liability Rates Climbing Fast


INSURANCE RATES are rising rapidly for contractors, particularly for builder’s risk and excess liability policies as the cost of claims continues to increase dramatically.
While rates for builder’s risk have been averaging 10 to 20%, pricing for excess liability and umbrella coverage has in some cases doubled from the year prior.
Both lines of insurance have seen steep and unexpected losses in recent years, resulting in some insurers leaving the market and others becoming stricter in their underwriting and choosier about which builders they are willing to extend coverage to.
If you’ve been in the market for these lines of insurance, you know that it’s become more difficult to secure similar policies to those you may have had in years past. Here’s a look at what’s going on.

Builder’s risk

According to Construction Executive magazine, rates are going up between 10% and 20% for builder’s risk policies. There are a number of factors affecting rates:
• The cost of claims has increased, primarily because of the cost of rebuilding after a loss event due to the rapidly rising cost of materials, in particular lumber, the prices of which have tripled in the last year.
• The increasing cost and frequency of natural disasters. Projects that are near areas at high risk for natural catastrophes like brush fires, hurricanes, tornadoes or flooding, are all seeing higher rates and/or difficulty in securing coverage.
• Some insurers have also left the market, leaving fewer players willing to write this risk, which has driven up pricing.

Insurers are tightening eligibility guidelines and restricting how much they will cover. Some insurers are getting more selective and demanding that their insureds take extra precautions before they are willing to bind a policy.

Some of the more common demands include requiring:
• Video surveillance systems on worksites.
• Guards to patrol worksites at night.
• The installation of fencing and lighting.

One of the biggest pinch points is policy extensions, which are needed when projects go beyond the time expected to complete them.

Due to the issues mentioned in the bullet points above, policy extensions for ongoing projects have been difficult to secure, according to a report by WillisTowersWatson. The problem has been exacerbated by the COVID-19 pandemic, which disrupted many construction projects across the country and required more companies to seek out extensions for their builder’s risk policies.

Excess liability

Renewals for excess liability and umbrella insurance have been running 50 to 100% higher than in 2020, according to a recent report by Marsh LLC. Excess liability and umbrella coverage kick in after a claim breaches the limits of a primary general liability policy or auto liability.

The drivers: Increasingly large jury awards and the spiraling cost of liability claims, particularly for commercial vehicle accidents. Commercial auto insurance rates have also been climbing as the cost of auto injury and property claims continue to rise due to the increasing cost of repairs and medical costs for injured third parties…

Those claims are covered by primary auto and general liability insurers, but because more claims are exceeding limits, excess liability carriers are increasingly on the hook for those high-dollar claims. Like in the builder’s risk segment, this has resulted in fewer insurers willing to write new policies.

Those that are willing to write new business or renew policies have imposed stricter underwriting terms on the policies they are willing to accept.
Additionally, according to Marsh, primary and excess insurers are limiting the overall capacity extended to an individual buyer by capping per-project aggregate limits.

The takeaway

With the volatility in the marketplace, we recommend that you reach out to us early – and months before your policy is coming up for renewal – so we can work with you to make sure we can secure the coverage you need.


April 2021 – Risk Management – Supply Chain Disruption Lessons from Pandemic


BESIDES THE health and economic devastation that the COVID-19 pandemic has left in its wake, it has also caused supply chain disruptions that have affected a number of industries.

The fallout for companies of all types illustrates the fragility of most businesses’ supply chains. The pandemic has left retailers with half-empty shelf space because product manufacturers couldn’t keep operations going due to raw material or personnel shortages, while a number of carmakers and other manufacturers have had to suspend operations because of a global semiconductor shortage.

But it’s not only large companies that suffer, and small businesses are especially vulnerable. That’s why it’s important that you have in place a solid plan for averting and dealing with disruptions to your supply chain if you rely on materials and inputs from outside vendors.

Here’s what you can do to manage this growing risk.

Understand your supply chain

Start by identifying risks in your supply chain and develop ways to mitigate them.

FOUR MAIN EXTERNAL SUPPLY CHAIN RISKS

  • Flow interruptions – Problems with the movement of goods and materials.
  • Environmental risks – Economic, social, political, terrorism threat and weather-related factors that affect facilities and infrastructure. The pandemic falls into this category.
  • Business risks – Problems caused by factors like a supplier’s poor financial or general stability, or the purchase or sale of supplier companies by other entities.
  • Physical plant risks – Problems at a supplier’s facility. For example, a key supplier could have a machinery breakdown and/or regulators may shut the facility down.

 

Develop a plan

The best way to manage a supply chain disruption is to prepare for it. Start by undertaking a business impact analysis to prepare your company.

Form a team of key personnel to:

  • Identify alternatives to key suppliers. One option is to contract with an alternative vendor in advance, so you can certify them and ensure they can ramp up if you lose a critical supplier.
  • Model the impact of disruptions on your production and inventory for the four supply chain risks listed to the left. Think about how non-delivery of a key item
    would affect your operations.

Using that information, you can build contingencies for supply chain failures:

  • Plan for how you would respond to all “what if” scenarios that could affect your operations. Be realistic about assessing your capacity to respond to these scenarios.
  • Create a contingency plan for failure of any supply chain pillars. Identify the points at which you would need to execute risk-mitigating measures, like sourcing from other vendors or using new distribution channels.
  • In advance, amass a contingency management team that will bridge the divide between your departments during disruptions. This team must include senior
    staff who are influential with top company decision-makers.
  • Make sure your supply chain is flexible enough to deal with risks. Look at opportunities to address current supply chain bottlenecks; investigate alternative transportation network configurations or production systems.

 

The final backstop: insurance

You can address supply chain risks with business interruption insurance or contingent business interruption insurance.

Business interruption insurance.
This coverage, which is often included in a commercial property policy, covers lost profits after a company’s own facility is damaged by an insured peril.

Contingent business interruption insurance. This is often a policy rider that you can purchase. It covers lost profits if an insured peril shuts down a critical supplier, part of the transportation or distribution chain, or a major customer.

This coverage is triggered if there is:
1. Damage to property that prevents one of your suppliers from making products or delivering them.
2. Damage to property that prevents your customers from receiving your products.


April 2021- Cyber Insurance – As Attacks and Costs Mount, Rates Climb Higher


CYBER INSURANCE rates are going to increase dramatically in 2021, driven by more frequent and more severe insured losses, according to a recent industry study.

The report by global insurance firm Aon plc predicted that rates would jump by 20% to 50% this year due to two main factors:

 

1. Cyber attacks are becoming more frequent

While publicly disclosed data breach/privacy incidents are actually occurring less often, ransomware attacks are exploding in frequency.

Ransomware incident rates rose 486% from the first quarter of 2018 to the fourth quarter of 2020. The comparable rate for data breach incidents fell 57% during the same period. The incident rates for the two types of events combined rose 300% over the trailing two years.

 

2. The costs of these attacks are growing

The average dollar loss increased in every quarter of 2020. Ransomware attacks were particularly severe – many of them resulted in eight-figure losses. Others may grow to that level as business interruption losses are adjusted and lawsuits against insured organizations proceed.

The combination of more frequent and more costly losses is a
recipe for higher rates.

Cyber insurance rates continued increasing in 2020, with rises of between 6% and 16% in the last four months of the year. In January 2021, most of the top 12 cyber insurance companies told Aon they were planning more drastic rate hikes. Nearly 60% reported that they would be seeking rate increases of 30% or more during the second quarter. None of them expected increases less than 10%.

 

New underwriting criteria

When insurers evaluate cyber insurance applicants, they will be particularly concerned with the organization’s overall cyber risk profile, its cyber governance and access control practices, and its network and data security. Prior loss history will be less important because the frequency of attacks is growing so quickly.

Some insurers may also cap how much they will pay for ransomware losses, or even exclude them entirely. They may also increase the waiting periods before coverage begins to apply.

 

WHAT BUSINESSES CAN DO

To improve your chances of getting more favorable pricing and coverage, the report recommends that you focus on:

  • Reducing the risk of cyber losses.
  • Measures to keep data private.
  • Building an internal culture of cybersecurity.
  • Preparing for ransomware attacks and disaster recovery planning.
  • How your contracts and insurance will respond to a supply chain security breach.
  • Understanding primary and excess coverage terms and
    communicating primary terms to excess insurers.

December 2020- EMERGENCY REGULATIONS – COVID-19 Workplace Safety Rules Take Effect


THE CAL/OSHA Standards Board has approved new emergency regulations that will impose strict rules on employers to implement safeguards in order to reduce the risk of COVID-19 spreading in the workplace.

The sweeping rules extend the reach of protections to employer-provided housing and transportation, as well as THE CAL/OSHA Standards Board has approved new emergency regulations that will impose strict rules on employers to implement safeguards in order to reduce the risk of COVID-19 spreading in the workplace.

The sweeping rules extend the reach of protections to employer-provided housing and transportation, as well as imposing new reporting requirements on employers who have workers that contract the coronavirus. The new rules took effect Nov. 30, so employers need to ramp up immediately to comply with them.

HIGHLIGHTS OF THE NEW REGULATIONS

  • Physical distancing and mask-wearing are required unless it is not possible to Wear masks on the job. If physical distancing is not possible, the employer would have to explain why.
  • Employers must provide face coverings and ensure they are worn by employees over the nose and mouth.
  • At fixed work locations where it is not possible to maintain physical distancing, the employer shall install cleanable partitions that effectively reduce aerosol transmission between employees.
  • Employers must implement cleaning and disinfecting procedures for frequently touched surfaces and objects, such as doorknobs, elevator buttons, equipment, tools, handrails, handles, controls, bathroom surfaces and steering wheels.
  • Employers will be required to have a written COVID-19 prevention program. Cal/OSHA will allow the program to be incorporated into an existing injury and illness prevention plan or be stand-alone.
  • Employers must identify and evaluate COVID-19 hazards with participation from employees, and then correct those hazards.
  • Employers must investigate cases among their employees. If they discover one of their staff has contracted COVID-19, they must notify all employees at a worksite who might have been exposed, within one day. Workers who may have been exposed must be offered COVID-19 testing at no cost.
  • Employers must report coronavirus cases in their workplaces to local health authorities.
  • Employers must maintain medical records related to COVID-19 and provide those records to the local health department, the California Department of Public Health, Cal/OSHA, and the National Institute for Occupational Safety and Health (upon request).
  • Employers must implement a system of record-keeping to track all COVID- 19 cases in the workplace.
  • Employees with COVID-19 symptoms may not return to work until at least 10 days since symptoms first appeared, and not until after 24 hours have passed since the employee had a fever of 100.4 or higher and after all symptoms have passed.

There are even rules for disinfecting and cleaning employee housing and  transportation if the company provides them. The regs also include provisions that are beyond the scope of workplace safety regulations, such as requiring employers to maintain employees’ earnings, seniority and benefits when they are off work because of COVID-19.

Key takeaways

The new rules took effect Nov. 30, so you will need to immediately prepare.  You should:

  • Prepare for new record-keeping requirements,
  • Write COVID-19 prevention program guidelines,
  • Implement testing protocols according to the
    regulations, and
  • Prepare policies and procedures for notifying affected staff and others of possible COVID-19 exposure.

December 2020 – COVERAGE ISSUES – Your New Year Insurance Checklist


AS 2021 gets underway and while you’re making New Year’s resolutions, you should also resolve to review the state of your business’s insurance program.

The best way to do that is to start by reviewing your enterprise’s activities in the past year and how they may affect your insurance policies in the new year. What you find as you go through the following checklist may surprise you.

Did your operations change last year? Workers’ compensation and commercial general liability (CGL) insurance premiums are based in part on the type of work your business does.

If your business changed, the insurance company may revise how it classifies your operations when it audits your records. This could cause your premiums to increase; inform the company now to avoid a surprise later.

Did your payroll and sales change? These premiums are also based on the amounts of your payrolls and sales. Employment practices liability insurance premiums are based on the number of employees.

If you had a good year and these numbers increased, expect to pay additional premiums at audit time. Conversely, if both shrunk, ask your insurer to reduce its estimates so you can get the return premium now.

Did you acquire, form or sell any businesses? CGL policies typically provide short-term coverage for some newly acquired or formed entities. After 30 or 90 days, that coverage disappears unless you report the new entities to the insurer.

Workers’ comp policies do not automatically cover a new entity. If your business and the new entity have common ownership, you may be able to add that entity to your policy, but you must report it to the insurer.

Did your properties change? Did you buy or sell any buildings? Lease new ones? Add on to or upgrade any buildings? Buy new equipment? Make sure your insurer knows about these changes.

Some property insurance policies provide limited automatic coverage, but only for 30 days or so. Also, the amounts of insurance on your properties should reflect the cost of replacing them. If your building is 30% bigger than it was this time last year, you may be underinsured.

Did your auto schedule change? If you have sold, replaced or added any vehicles, make sure your insurance company has an up-to-date list of all vehicles. Do you need new or additional insurance? Could you afford to pay for legal costs, settlements, penalties, lost income and recovery measures if you were sued over a network data breach or suffered a ransomware attack? If not, you may need cyber insurance.

Could a client sue you for alleged errors or omissions in your work? If so, you might need professional liability insurance. Also, you may need greater amounts of general liability and automobile liability insurance, especially if you work for other firms. They often require their vendors and contractors to carry high insurance limits. You may need a commercial umbrella liability policy for additional amounts of insurance.

The takeaway

You’ve worked hard to build your business, and your work
deserves protection. By using this checklist, you will get a good
start on protecting what you have while you work in 2021 to
make it grow.


December 2020 – Top 10 Business Laws and Regulations for 2021


EVERY YEAR starts with a bevy of new laws and regulations affecting  employers and business in California, and many of the new rules this time around are an outgrowth of the COVID-19 pandemic and its effects on workers.

 

Employers in the year ahead have a number of changes they will have to contend with, some of which were enacted near the end of 2020 as emergency regulations or legislation. The following are the top 10 laws and regulations affecting employers in 2021.

1. COVID-19 workers’ compensation rules

AB 1159, which took effect in September, requires that workers’ compensation benefits be extended so that any employee who reports to a workplace and contracts COVID-19 is presumed to have contracted it at work, making them eligible for workers’ comp  benefits.

But the law also imposes sweeping reporting rules for employers that have outbreaks in their workplaces (it’s considered an outbreak if 4% of an employer’s workers test positive for COVID-19). Under new rules by the Workers’ Compensation Insurance Rating Bureau, though, COVID-19 illness claims will not count against employers’ experience modifiers (X-Mods).

Under the law, when reporting a COVID-19 claim employers must provide the following information:

  • The date the worker tested positive
  • The workplace address of the worker during the 14 days before the positive test, and
  • The highest number of employees who reported to work in the 45 days preceding the last day the employee worked in the workplace.

The above must be reported for each worker COVID-19 case. The law sunsets on Jan. 1, 2023.

2. Cal/OSHA COVID-19 regulations

Cal/OSHA in November enacted emergency regulations that require employers to implement safeguards i to reduce the risk of COVID-19 spreading in the workplace. The rules require employers to create a COVID-19 prevention plan, require masks in the workplace, social distancing and other ways to reduce the likelihood of virus spread.

Employers must investigate coronavirus cases in their workplace. If a worker contracts COVID-19, they must notify all staff who may have been exposed, within one day. Workers who may have been exposed must be offered COVID-19 testing at no cost. Employers must report every new case to local health authorities.

3. Cal/OSHA law adds confusion

Before Cal/OSHA came out with its emergency COVID-19 regulations, Governor Newsom signed into law AB 685, which adds to Cal/OSHA’s responsibilities in policing COVID-19 protections.

The law expands the agency’s authority to issue stop-work orders to workplaces it deems a COVID-19 “imminent hazard.” The law also requires employers to notify a number of parties (state agencies, local authorities, employees, contractors and more) if they have coronavirus infections in any of their facilities.

Notice to employees must include information regarding benefits the employee may be eligible for under federal, state and local laws, including workers’ comp, COVID-19-related leave, company
sick leave, state-mandated leave, and more.

4. Expansion of California Family Rights Act

SB 1383 expands the California Family Rights Act to cover even smaller employers – those with five or more staff. The CFRA, which requires covered employers to provide up to 12 weeks of unpaid leave a year for family and medical leave purposes, had until now applied to employers with 50 or more workers .

The new law also expands the scope of “family members” for whom employees can take leave to help care for them to include siblings, grandparents, grandchildren and domestic partners. Also, the law expands the definition of “child” to include all adult children.

5. Independent contractor law tweaked
AB 2257, which took effect in September 2020, revises the controversial AB 5 independent contractor law by adding a number of exceptions for certain classes of workers.
AB 5 created a new standard for discerning what workers should be classified as employees or independent contractors and it swept up a number of professions in its net, causing some
consternation and hand-wringing among both employers of those contractors and the independent contractors themselves. The professions that are now exempt include (among others):

  • Graphic designers
  • Web designers
  • Consultants
  • Freelance writers
  • Translators
  • Editors and content contributors.

6. Wildfire smoke safety regulations

Cal/OSHA is working on permanent wildfire smoke regulations to protect  outdoor workers when the air worsens during major events. An emergency regulation is set to expire Jan. 31, 2021, at which time Cal/OSHA hopes to introduce the permanent replacement that would require employers to protect their outdoor workers from smoke if the Air Quality Index (AQI) exceeds 150.
The regulations apply when the AQI for airborne particulate matter 2.5 microns (PM2.5) or smaller is 151 or greater. The permanent regulations are expected to cover training and methods for protecting workers (like moving them inside or providing N95 respirators during high-smoke conditions).

7. New classification for telecommuters

There is a new workers’ compensation class code to assign to employees who work from home, an outgrowth of the coronavirus pandemic which thrust so many people into working from home. The new class code, (Clerical Telecommuter Employees – N.O.C.), applies to employees that work from home or “away from any location of their employer,” doing office clerical work. This class code, available on policies effective Jan. 1 or later, is to be used for employees which would have been classified under class code 8810, Office Clerical employees, that are doing work at home 50% or more of the time.

8. Sick leave and kin care law

Under Labor Code, an employee was entitled to use up to half of their annual accrued sick leave to care for a family member, but not the full amount of sick leave they have. AB 2017 gives employees the sole discretion to use as much of their sick leave as they want to care for a family member, with no approval from their employer required. The law took effect. Jan. 1.
A “family member” is defined as a child, parent or guardian, spouse or domestic partner, grandparent, grandchild or sibling.

9. Data protections strengthened further

California voters last year passed Prop. 24, which established a new law: the California Privacy Rights Act of 2020. The CPRA amends and strengthens the state’s current data protection
privacy law, the California Consumer Privacy Act (CCPA), which governs how organizations have to protect personal data that they collect. The CPRA gives additional rights to consumers and places extra obligations on businesses. It provides additional protections for sensitive personal information, expands the CCPA’s opt-out rights to include new types of information-sharing, and requires businesses to provide additional mechanisms for individuals to access, correct or delete data, with a particular focus on information used by automated decision-making systems.

While the law doesn’t take full effect until Jan. 1, 2023, it has a 12-month look-back period. Privacy experts advise companies to start working on their data protection infrastructure in 2021 in order to be ready for this expansive new law.

10. State minimum wage increases

As of Jan. 1, California’s minimum wage increased to $14 for employers with 26 or more employees, and to $13 for those with 25 or fewer employees. Local minimum wages may also have risen. Check your local rules for other minimum wage requirements.


Cal/OSHA Rulemaking – Permanent Wildfire Safety Rules on Tap – OCTOBER 2020


AS WILDFIRES continue raging throughout California, Cal/OSHA has issued a reminder to employers that they are required to protect their outdoor workers from smoke if the Air Quality Index exceeds 150. Cal/OSHA has extended an emergency regulation it put in place in August 2019 through January 2021 as it works on a permanent regulation on wildfire smoke protection for outdoor workers in the state.

For the safety of your workers and to comply with the regulation, it’s important that you follow the regs and know when you will need to take action to protect them from outdoor smoke.
The regulation applies when the AQI for airborne particulate matter 2.5 microns (PM2.5) or smaller is 151 or greater in an area where employees are working outdoors. Here are the details:

Identification

Employers must monitor the AQI for PM2.5. You can monitor the index using the following websites:

  • U.S. EPA AirNow
  • U.S. Forest Service Wildland Air Quality Response Program
  • California Air Resources Board
  • Local air pollution control district websites or local air quality management district websites.

Training and instruction

Employers with outdoor workers need train their workers in:

  • The health effects of wildfire smoke.
  • Their right to obtain medical treatment without fear of reprisal.
  • How they can obtain the current AQI for PM2.5.
  • Actions they must take if the AQI exceeds 150 PM 2.5

Communication

Employers must implement a system for communicating wildfire smoke hazards to all affected employees, as well as a system for employees to inform the employer of smoke hazards.

The takeaway

If you have outside employees who may have to work in smoky conditions, you should stockpile a two-week supply of N-95 masks for all of them if you are unable to implement other controls to reduce their exposure.
Cal/OSHA is in the process of making the emergency rules permanent and has sent them out for public comment. We will continue monitoring the agency’s progress on the rules and update you when they have been completed.

 

 


Worker’s Compensation – COVID-19 Prompts Rate Hike Recommendation – OCTOBER 2020


THE COVID-19 pandemic seems to have reversed years of falling workers’ compensation rates in California, as the Workers’ Compensation Insurance Rating Bureau has recommended that average benchmark rates be increased by 2.6% for 2021.
The recommendation was forwarded to the California Department of Insurance, which will schedule a hearing on the recommendation in the fall.
It should be noted that the 2.6% increase recommendation would be an average across all class codes, as the Rating Bureau plans to allocate the expected COVID-19 costs by weight across the state’s overall industrial sector. Note that even low exposure classes will be surcharged.
The Bureau in its recommendation aims to apply the surcharge on a weighted basis according to each class code’s share of growing COVID-19 claims costs. It is considering a tiered surcharge model based on an employer’s risk, as follows (for examples, see below):

High risk – A 12-cent surcharge per $100 of payroll.
Medium risk – A 6-cent surcharge per $100 of payroll.
Low risk – A 4-cent surcharge per $100 of payroll.

 

The X-factor


The Bureau’s actuarial committee noted that the pandemic does present challenges for predicting workers’ compensation costs. “The 2021 policy year will still be impacted by COVID-19, but some trends may stabilize. The challenge will be projecting exposure and claims frequency (for COVID-19 claims),” the committee wrote in a report. Actually, the overall effect of COVID-19 on rates going into 2021 was 4%, according to the Rating Bureau. Had it not included the COVID-19 surcharge, it would be asking for a 1.3% decrease in benchmark rates.

The reason is that claims costs and claims frequency have been falling and long-term claims are costing less than originally anticipated. The Bureau also forecasts that the recession caused by the pandemic will also have a profound effect on overall claims: it projects an overall 6.3% decrease in claims frequency due to slowing economic conditions.

Interestingly, COVID-19 claims are not supposed to count against employers’ experience rating and loss histories, according to new rules that took effect in May. However, the claims are having an overall effect in terms of workers’ comp benefit payments. The Bureau also has to price in the uncertainty over the future of COVID-19. Will it get worse, or will it begin to wane? Will there be a vaccine and new and improved treatment regimens that reduce mortality or decrease symptoms and hospitalizations?

It is concerned that some low-risk industries may be getting a surcharge that is still out of proportion to their actual risk, particularly with people who are working remotely. It plans to further study the issue and will likely amend the filing depending on the results.