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Insurance, explained clearly by a family with three generations of expertise.
Aaron Bollinger (00:00)
Hello, everybody, and welcome to the Speaking of Insurance podcast. My name is Aaron Bollinger. Today's topic is something that should be running through employers' heads 24 7. Workers' compensation insurance. Now, of course, we're big advocates over here at Bowl Insure. Take time away from your business, right? Mentally, when you're on a vacation, separate, right? Make sure that you're doing the healthy things for your brain, for your body, for your staff, everything. Give people autonomy, give people in your staff that you're hiring the choices and the power to to handle things while you're gone. But
Aaron Bollinger (00:30)
Still, one thing that you can never seem to escape, regardless of how good a job you do, is the requirement in California to pay for workers' compensation insurance. If you have any employees and you aren't paying for workers' compensation insurance, I'm I'm on your head. personally, the government's gonna be on your head. I think that it is one of the most important things that everybody understands is that if you're starting to hire people in California, you've got to have workers' compensation insurance to protect you, your assets. And legally, the employees, because if something were to happen,
Aaron Bollinger (00:58)
in the job that they're doing and it is something that's detrimental to the future of their career ability to get jobs in the future, then you've got to have workers' compensation insurance to pay them. And obviously it'd be really bad if that had to come out of your pocket or the business's pocket. So that's what we pay for workers' compensation insurance for. Hopefully you never need it because that means that the price will go down every year. but you know obviously can't avoid having to need some of these insurance things, which is the reason why it's there. But workers compensation insurance is changing.
Aaron Bollinger (01:27)
And we've had tons of questions, too many to count from business owners about the legal nature of it. And so today we're going to be breaking down the latest workers' compensation news, the rising costs, the common misconceptions and misunderstandings that happen between employees and employers, and employees and the insurance company and employers in the insurance company. It's this, it's this triangle, and then your insurance broker's kind of just in the middle, like watching everybody, you know.
Aaron Bollinger (01:57)
Go crazy during a claim. Obviously, the job of your insurance broker is to be there for you to be a claim advocate. So we are not in the middle, but oftentimes insurance brokers are. And so having an advocate, somebody who will be on your side, also obviously being able to understand the employee side and the legal side and the insurance company side. So I guess that does kind of put us as in the middle, but we're not separated. We're all connected. So it's like a beautiful little web of liability protection to make sure that the thousands, tens, hundreds of thousands of dollars that you're paying for your workers' comp.
Aaron Bollinger (02:25)
Are not going to waste. So another big thing is practical ways that you as an employer can protect your business and your employees. Or as an employee, how you can help your employer if you want to get a raise, if you want to be your, boss's favorite, be the student that brings the teacher the apple. Then there are a few ways that you can do so by helping them with their claim mitigation, loss mitigation, and what my dad coins as the zero loss mentality. Now I have to preface this with a apology.
Aaron Bollinger (02:54)
Brian Bollinger is, of course, a very busy man running the agency. I'm, of course, a very busy man also running the agency, but I've decided to allocate more of my time towards the zero cost to consumer information side, whereas my dad is running the day-to-day operations of the agency. So if you're reaching out to us about workers' compensation insurance, odds are that you're going to be either corresponding with Brian Bollinger or Christina, our new risk manager, one of them. or, there's other people on our team as well that you could be contacting and talking to. Either way.
Aaron Bollinger (03:23)
You guys gonna have to listen to me. Much apologies. But California has recently approved a 6.6% increase in the average advisory workers' compensation, pure premium rates. So big, big, big mouthful. Average advisory workers compensation, pure premium rates. So that probably just means that on average, the pure premium rates before all the discount factors and everything that come in. Let's talk about the discount factors though. How can you get money off? One thing is that if you're paying
Aaron Bollinger (03:51)
A lot in payroll, odds are you have something called an X mod. If you are just starting off, eventually you might have an X mod. It is just an experience modification tool. Basically, just says over the last three years minus the most recent year, how how well has your claim history, loss history been relative to other people in the industry that you're working in? And so it's a way that insurance companies gauge, wow.
Aaron Bollinger (04:17)
Sally's business over here has five hundred million losses, or let's just call it five losses, totaling to a hundred thousand dollars. But I don't know, Sally B's has zero dollars and similar amounts of payroll, and they use this whole calculation sheet. Sally B is gonna be on the upside of the insurance company's favorite list and not on the naughty list in terms of Santa Claus's Christmas list. if you're the insurance company and you're Santa. But this is effective September first, twenty twenty six. So
Aaron Bollinger (04:45)
Obviously very recent news, 6.6% increase, not substantial. you think about the amount of payouts that are probably going up. We're gonna talk about the statistics and get into those into more detail, but think about the homeowner side and the auto insurance side. Those are going up 40, 50, 60, 70 percent some of the time. So we had recently posted a study that last decade, I think some premium rates for homes are up 70 percent. Absolutely ridiculous. but you think about the wildfires and everything like that, it it's
Aaron Bollinger (05:15)
Understandable, obviously not, understandable to the point where we're looking forward to paying that dollar amount, but understandable from a financial perspective of these companies do have to make money. And so does that mean that every business is going to pay more? The fact that there's a 6.6% average advisory workers' compensation pure premium rate increase? Absolutely not. If you are, again, on the insurance company's good side and you've got great claims handling practices and a zero claims mentality, and you know, you've got all the proper safeguards and all your things and
Aaron Bollinger (05:44)
A great relationship with your insurance company. That's another thing. We've seen people with hundreds of thousands of dollars of premium and they're not hesitating to pay it because the insurance company supported them through claims. And premiums actually drop year over year, even if there is somewhat of a catastrophic loss, if the insurance company trusts you. So big relationship business that we're in, big relationship business for the broker. Important to understand that your broker has relationships with these insurance companies too.
Aaron Bollinger (06:12)
Insurance broker kind of has to make the company money and that they are trusting you to make them money as well. So it's this whole little, you know, dance my dad likes to call it a tango. But today we're going to be discussing the biggest questions that business owners do have to ask. Is workers' compensation insurance required only if you have one employee? Yes. Oftentimes to get jobs and you're a sole practitioner, and so you're just like somebody who's who's operating the business by yourself.
Aaron Bollinger (06:39)
I don't know sole practitioner was the right word there, but it's just an individual ran business and you're the only employee. To get some jobs, if you do have to hire on an if any basis, you do have to have workers' compensation insurance. Absolutely. Of course, it gets tricky into the nuances of the contractual requirements. Now, what is if any? If any means that if you have to hire anybody on any sort of wage that your business is paying them, that you're gonna have to have workers' compensation insurance coverage for them. That's the plain truth.
Aaron Bollinger (07:09)
And so do independent contractors and 1099 workers need coverage? Why are these premiums increasing? How do payroll, job classification, and X mod rates affect pricing? We talked about X mod in beginning. Hopefully, y'all get it a little bit better now. X mod is a good number to have below one. It's just like a percentage thing. If you got an X mod around two, they usually double your price, if that makes sense. So it's like a percentage thing. They they'll cut you down if you're, 0.5 X mod and you're
Aaron Bollinger (07:37)
world's best company. And if you're if you're a 0.5x mod, please reach out to Bull Insure. We we would love to work with you. If you're to two, we might be able to help, but obviously, you know, insurance companies will say no and brokers will say no because that's an added risk to them. And so also like how do these workplace injuries increase insurance costs? We had talked about how the relationship with the insurance company comes into play, right? But how much does that workplace injury actually increase it? It depends. If you're getting a credit
Aaron Bollinger (08:05)
For having zero claims, that credit's gone. But not just that, your X mod might go up. Not just that, the insurance company might up your rate or something based off of the loss history. So there's these little things that are gonna come back, and it's not just that zero loss credit that you're losing. You're losing eligibility. You're losing potentially the option for your insurance broker to quote you with an alternative market next year. You're losing a bunch of other things.
Aaron Bollinger (08:31)
When you file that claim or that that employee gets injured and it hopefully it was, preventable and hopefully it's minor. But regardless, you're losing a lot of different things. And that's what business owners should understand. I know, guys, I'm talking about it like this is you, sports team. That's I I'm I'm passionate about this. I I think liability asset protection is one of the most important things that people can do. And understanding as a person, as an individual, as an employee, as an employer, whatever you are, whatever walk of life you come from.
Aaron Bollinger (08:58)
Absolutely crucial to make sure that you're understanding the nuances of your employment or your employment of people and what happens if you get injured. Because we've seen cases where, you know, I don't know, let's call let's call it a knitting company. Knitting company, you know, built up, you know, pain or arthritis or, you know, a teacher whose, you know, hands stop to work because, you know, they they've been doing X, Y, and Z or you know, a court reporter who's typing way too much and has, you know, pain. I mean.
Aaron Bollinger (09:25)
Job site people drop things on one another, drop things on themselves and aren't able to work. There's there's a hundred different scenarios that you can go through. If you guys have watched Final Destination Bloodlines, it's it's kind of like that. I mean, you just gotta insure yourself against it. Obviously, you know, Final Destination is absolutely worst case scenario. But in events like that, you do want workers' comp as well if it's on the job site and if it's an employee of yours. And so you also have to, this is the this is the big getter.
Aaron Bollinger (09:54)
Should you switch your insurance company to save money? Well, I would say that depends. There are some insurance companies that I've said in so many videos that offer you credits. They're saying, come come, we've got you over here. We'll give you 40% off first year. They get you in, right? And then all of a sudden, next year, it's where'd the 40% go? We're up 10%. We had to file one claim. That was it. One claim. What happens there? Probably got to move again.
Aaron Bollinger (10:23)
And then you don't have the existing relationship with an insurance company. Possibly the one you were with before was more stable on pricing, but maybe they didn't offer you that 40% off credit. This is where the expertise of your insurance broker comes in. They'll be able to advise you. They'll be able to say, listen, we've seen historically that this insurance company or companies similar to this insurance company have had this experience with our insurance. I think that it experiences is one of the most important things. And I'm a hypocrite.
Aaron Bollinger (10:49)
Because I'm recently 21 years old talking on an insurance podcast, like I've been in the industry for 50 years. I'm just passing down the knowledge that my grandfather, my father have given me, the notes that I've written, the research that I have coordinated and and constructed for this podcast. So a little bit of the combination of all the above, of course, you would not be corresponding directly with me unless you want to. My phone number is probably public information. You could probably search me up and find me. my LinkedIn is also public.
Aaron Bollinger (11:17)
So shoot me a message if you have any questions. But if you want to talk to somebody with some gray hairs, as my dad likes to call it, then I would definitely reach out to him or our other business insurance team. So we'll look at some of the statistics today. We'll look at the claim trends and the employee classifications, safety practices, and the fact that an annual palsy review can, in some cases that we've seen, save you tens, hundreds of thousands of dollars because it's it's super important.
Aaron Bollinger (11:46)
Whether you're a contractor, small business, a growing employer, this episode will hopefully give you guys some insights into what is happening. So let's go into one of the biggest statistics. It's California's 2026 advisory increase. It was a 6.6%. So this is approved, of course, September 1st, 2026. So the average is now up by 6.6% to $1.65 per $100 of payroll. So that's 1.65%.
Aaron Bollinger (12:11)
That you're paying on average for that worker's compensation insurance. What does that mean? That means that if you've got a clerical employee and they're not doing really any work that could get them injured. Of course not. Of course, there's always possibly injuries that that happen even with clerical work. That just tends to be one of the lower loss run or lower loss frequency class codes that we see. That doesn't immediately mean that that rate is just $1.65 per $100 of payroll. It might even be less. It should be less. I think from last time we checked, it might be less.
Aaron Bollinger (12:40)
But if you get into plumbing, if you get into roofing, roofing is the big one, guys. If you're thinking about getting into roofing or you're already in roofing, you get it. You get it. It's ridiculous. But you think about it. People are falling off roofs. You think about it. People are on ladders. You think about it. These people are doing very heavy lifting and very strenuous on your body sort situations. And it's it's very important to understand that the rate on that might be ten times the rate on clerical, because the risk is ten times or more for the injury and likelihood to pay out a claim.
Aaron Bollinger (13:08)
That's where things like your XMOG come in. That's where things like your loss history come in. That's where things like your claim mitigation or prevention strategies come in that you develop with an insurance broker where you say, listen, Aaron, probably not Aaron, Brian Bollinger, I want you to come in and help us get a zero claims mentality going. That would get my dad obscenely excited because nobody's really ever talked to him about the zero claims mentality. you guys, it would be a it would be a
Aaron Bollinger (13:38)
A giveaway that you listen to this podcast if you talk about that because it's something that he's been wanting to trademark. and of course, we do a bunch of business with a bunch of different companies, but he's never really told people about this zero claims mentality. It's more just like in practice, he he'll encourage it. He he won't give them the exact words. So if you guys shoot Brian Bullinger and email and he and you talk about, you know, Brian, I want to get that zero claims mentality going. I I I think he'll get it for you guys. I think that we'll be able to get some loss mitigation strategies in place to prevent.
Aaron Bollinger (14:05)
Some of the crazy things that happen on job sites and workplace injuries from happening. And so let's talk about the numbers on the workplace injuries. 2.5 million nonfatal workplace injuries and illnesses in 2024, according to figures released in January 2026, is 2.5 million based off of private industry employers. So this is private industry employers. So this is a ridiculously obscene number in the US. 2.5 million. You think about that, obviously it's it's a
Aaron Bollinger (14:34)
Shell and they're a very very small number relative to all the people who are working. But as an employer and as an employee, it's frequent. It happens. It happens to people that It happens to yourself. It happens to to everybody. There's been five thousand seventy workplace fatalities nationwide in twenty twenty four. That's one every what is that? That's one every two hours. This is horrible. It's it's absolutely horrible. And if you know anybody who's gone through that, I'm I'm horribly sorry for for you and and that experience.
Aaron Bollinger (15:03)
it's an infrequent number, but it does happen. And this is where the insurance comes in. It's like if your house burns down, super sorry about that. It's like if somebody in your family who's, financially responsible for it dies, super very, very, very sorry about that. Condolences from the Bollinger family. But you think about the life insurance, you think about the home insurance, you think about things like that that can help people in the home and the job and the business that that happened to
Aaron Bollinger (15:29)
And the fact that they can rebuild, that's what insurance is here for, is to prevent from the worst case situations where otherwise your business would have to pay out hundreds of thousands of dollars.
Aaron Bollinger (15:37)
So in California, public self-insured employers are seeing fewer workplace injury claims, but the average medical payment per claim has jumped thirteen percent in one year. So even though fewer people are getting hurt, workers' comp costs can still increase and they are still increasing.
Aaron Bollinger (15:53)
The claims between 2018 and 2025 have nearly doubled in terms of frequency and cumulative trauma. So I wouldn't be surprised if we see workers' compensation premiums going up. So be ready as an employer for that.
Aaron Bollinger (16:06)
As your payrolls go up, as whatever happens, the economy happens. If you're growing 100%, look into your class codes, make sure you're properly classifying things, making sure that you're doing proper payroll projections as well, or that monthly audit that comes in, making sure that you're being really, really good on that, because you don't want the final audit to come in and the premium jump a few hundred thousand dollars. You want to make sure that you're given up-to-date information. You want to make sure that you're giving the insurance company up-to-date information and that when you get those quotes,
Aaron Bollinger (16:35)
If you are shopping in the market, that all of them are properly coordinated in terms of the payroll. So one company can quote you at $4 million payroll, but then let's say another broker comes in and says, listen, we we have this, extrapolated payroll of $2.4 million. And that's based on your last four months of payroll averaged out for the rest of the year. That quote might very well be more accurate than the incumbent $4 million estimate that you had.
Aaron Bollinger (17:03)
Or the renewal quote. And so just looking into the little nuances of the payroll calculations can be the difference between a final audit coming in and saving you money versus actually costing you even more money, or you having to pay more money up front and go vice versa. So just making sure that you guys understand all these things, making sure that you guys are practicing all the proper safety procedures, making sure that you guys understand the distinguishment between a 1099 employee and independent contractors and who you are hiring, subcontractors as well. Workers' compensation insurance is
Aaron Bollinger (17:32)
On the uptick in terms of pricing. It is on the uptick in terms of claim payouts and cumulative trauma. And it is not something to be toyed with. The increase of 6.6% on average is not just a statistic that comes blind. It is a heavily intentional and indicative result of this last year's increase in the susceptibility of employers, in particular class codes, to have claims.
Aaron Bollinger (18:00)
The biggest thing that you can do today is to make sure that your claim mitigation practices are in place, to make sure that you have a broker who has existing relationships with insurance companies alternative to the one that you currently have, in addition to the one that you currently have, and make sure that you are getting a proper market gauge. If you are paying hundreds of thousands of dollars, tens of thousands of dollars for workers' compensation insurance, your broker should be giving you an email letting you know about your renewal pricing, letting you know about the audit.
Aaron Bollinger (18:29)
Letting you know about information as it comes up, different guidelines, different recommendations. If you guys want a free pamphlet, you guys can contact me. If you guys are an employer or an employee and you're just interested about it, we can give you guys our risk mitigation pamphlet that we give out to special people, to podcast listeners. That helps you with the claim mitigation aspect of this in regards to specific industries. So with that, I hope you guys have a awesome Friday. Friday, finally.
Aaron Bollinger (18:59)
I appreciate you guys listening along to an insurance podcast where a younger individual who does have three generations of insurance experience talks about his experience, his grandfather's experience, his father's experience on behalf of all of them, and shows a little bit of insight. last little note from me is my grandfather used to be a workers' compensation insurance heavy broker. His business took a turn down, I think, in the 2000s because of the workers' compensation rate shifting down. But
Aaron Bollinger (19:27)
He's one of the reasons why I I help run this. Wanna try and, obviously keep growing and help more people. And yeah, so if you don't trust me, trust him. If you don't trust him, trust my dad. if you don't trust my dad, we have a bunch of different people on our risk management team who have plenty of experience that you can trust as well. if you have any questions, reach out to our team, reach out to me directly. It's in the description of this video or this podcast. Hope you guys have an awesome rest of your day. Once again, happy Friday. And stay safe out there.