CDS Insurance Services makes construction safer, more profitable
It’s no secret the three biggest expenses on a construction site are typically materials, payroll and insurance.
Of the Big Three, if there is one area where construction companies and contractors tend to fall short in planning, it is with risk management.
And that’s not typically by design, says Dominic Tapia, one of the Vice Presidents and Producers at CDS Insurance Services in Glendora, California. Both Tapia and fellow Vice President/Producer Drew Carreon say insufficient insurance coverage is often a case of smaller and midsize companies simply not understanding the insurance landscape.
“When it comes to a working policy for many businesses, there are a lot of endorsements and exclusions that the policyholder needs to be made aware of,” Tapia says. “A lot of times, the insurance agencies where you can walk in and walk out with a policy won’t take on the kind of risks these contractors will be facing. Those insurance companies take on basic risks where safety is not a concern, whereas we get people who come in and say, ‘I dig trenches for a living,’ ‘I build houses on the side of hills’ or I’m an electrician and I work 20 stories up.’ What we can do is insure those types of people and those types of risks.
“We have relationships with the biggest insurance carriers that the average person doesn’t have access to. We know how to gather the correct information and present it so that businesses look attractive to carriers and they want to insure them.”
Who They Are
CDS Insurance Services is a boutique insurance company that has been servicing Southern California companies since 1996. Nearly 80 percent of its clients are in the construction industry, ranging from developers and contractors to the trades and cranes and rigging companies. The rest of its clients are in the manufacturing space, wholesalers, retail and nonprofit organizations.
Knowledge and experience are king at CDS, particularly when it comes to workers’ compensation insurance, Carreon says.
“Companies may or may not have gone through a major claim or a drastic change in payroll,” Carreon says. “Either way, they may not understand how that can affect their insurance costs moving forward. This can lead to a scenario where a contractor bids on a project that is no longer profitable. The main point is we can help predict what your workers’ compensation costs will be by using an Experience Modification (Ex-Mod) Projection. This will allow your company to properly allocate funds, not only for insurance costs, but especially to help contractors bid more confidently on projects.
This is where CDS shines.
Each client has a personal CDS representative who can call on the entire staff with more than 70 years of insurance experience to come up with specific solutions for an individual client’s needs.
Besides workers’ compensation insurance, CDS works with all commercial insurance needs, personal insurance and bonding surety.
All of it starts with a unique four-step approach referred to as “IPPI.”
• Identify a client’s exposures. • Package the client’s risk in the most attractive manner for the insurance underwriters. • Present all available insurance and risk management solutions to the client. • Implement the most innovative package available in the insurance marketplace.
“Those four pillars are our foundation when looking at a new client or risk,” says Carreon. “We identify what the business is, what the operations are on a day-to-day basis, and what is causing the liability. We find that out and then we want to package different solutions together for the customer. Once we have an understanding of the exposures, we can then package together new solutions for the customer.”
A System that Works
Aside from the IPPI approach, two more things will happen when working with CDS on workers’ compensation: 1) Companies will get a solid understanding of their Experience Modification Rating and how it affects insurance rates; and 2) Each client will be taken through a 17-point process to help lower their EMR and improve safety. This applies mostly to workers’ compensation.
The main objective of CDS’s 17-point process is for a company to implement procedures that create a culture of safety and minimize or even eliminate increasing workers’ compensation costs.
This approach has helped some clients save up to 40 percent in insurance costs, Tapia says, while other companies may pay a bit more until actions are taken and their EMR is reduced.
“It’s not an overnight fix, especially if the business has no previous safety procedures in place,” Tapia says. “However, if the business is willing to work on each of the 17 points, it is a proven system that will save the company a lot of money.”
“If people just want us to quote them to know if we can save them money, of course it’s something we would be happy to do; but if they don’t appreciate anything we do except the quote, then that’s not our ideal customer,” Tapia says. “Our ideal customer is someone who realizes the risk/management part of their operation needs to be improved. Companies need to have formal safety plans in place. If they don’t have one, we can help them develop it. When it comes to contractors with higher EMRs, particularly above 1.25, they may be subject to a Cal/OSHA (the Division of Occupational Safety and Health) visit. While this may be concerning for most contractors because of how costly it can be, our clients are walked through the process by an experienced professional who can go as far as performing a “Mock OSHA” walk-through if needed.”
Says Carreon: “I hope companies see us not as a quote machine, but also as insurance consultants who can improve their businesses. We can help not only with the bottom line, but also implement new procedures to create a safety culture. We want to make sure they know we are there to help. We’ve developed strong relationships with most of the clients we work with because of how often we communicate with them and the service we provide.”
A company’s EMR is given out by the WCIRB California (Workers’ Compensation Insurance Rating Bureau) and is based on payroll and claims information provided to the state by insurance companies. While premiums may increase based on a claim made within the past year, the claim doesn’t affect the EMR for two years. In other words, a claim filed in 2019 or payroll changes in 2019 won’t show up on an Experience Modification Rating until 2021. EMRs run on a three-year cycle, and companies not familiar with EMR can be greatly affected.
CDS ensures its clients plan for EMR changes by giving them status reports a year out and again six months prior to the ratings. Each analysis is five to six pages in length and breaks down a company’s claims history so they can pinpoint where the company is struggling.
“For example, if there are reoccurring claims due to guys throwing out their backs from lifting boxes, we may want to focus on lifting techniques or proper use of equipment,” Carreon says. “Six months out, the financial projections are typically close to the new rate based on the EMR, and we can provide a more accurate projection of what your new Ex-Mod rating would be. This gives you an estimate of how much your workers’ comp premium will be at renewal. These are the type of potential problems we want to come in and consult with you on to find out where you’re at as a company. We have the knowledge to best cover your needs through the optional solutions out there.”