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PEO Workers Compensation
Insurance Models
PEOs offer work
comp to their clients in several different forms including fully
insured master policies, captive policies, high deductable
master policies, and client owned policies.
PEO Master Policy
A fully insured
master policy means the PEO writes clients' workers compensation
under their own FEIN and experience rating with an insurance
carrier that is fully insured at "first dollar cost" for claims
made under the policy. This means the carrier pays all
expenses for all claims.
PEO Captive Policy
A captive policy
is a separate insurance company set up by the PEO via another
licensed carrier for the purpose of writing insurance under the
captive. The typical arrangement entails the PEO and the
fronting carrier sharing expenses, profits, and losses developed
within the policy.
PEO Deductable Policy
A high deductable
master policy is the same as a fully insured policy written by a
carrier except that the PEO is responsible for claims up to a
certain limit per claim with a aggregate limit to limit their
exposure.
PEO Client Owned Policy
A client owned
policy is a policy written only for the client company but
administered by the PEO. Client owned policies are more
portable and allow the client's NCCI experience modifier to
continue to develop over time. Employers with health
modifiers may be best served by retaining their experience
modifier in case the PEOs modifier increases or they exit the
PEO relationship.
PEO Master Policies vs. Pay As You Go Policies
In recent years
more workers compensation carriers have entered the PEO payroll
arena by offering Pay As You Go programs to certain
insurance premium aggregators such as The Insurance Shop.
Many carriers
prefer writing polices for each client company separately
because experience modifiers are a true reflection of their
claims history over time. Carriers often feel like they
are more adequately able to price these policies on an
individual basis as opposed to utilizing the experience of an
entire PEO.
Now days many
insurance companies have Pay As You Go programs in place to help
reduce deposit costs, improve cash flow, and prevent large audit
balances. These programs mirror the PEO workers
compensation process by collecting premium via the payroll
process. Therefore, the original value of master PEO
policies has been diminished except for clients with higher
experience modifiers who will still benefit from accessing PEOs
with a lower experience modifier. These PEOs will benefit
as well as long as loss ratios remain low.
Pay As You Go
insurance options have also expanded into the payroll only
industry as more and more payroll companies continue to partner
with insurance aggregators like the Insurance Shop to offer
these programs.
Learn more below:
Pay As You Go Workers Compensation for PEOs
Pay As You Go Workers Compensation for Payroll Companies
Pay As You Go Workers Compensation for Employers
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