PEOs and Workers
Compensation Insurance
After 15 years in the PEO business I can honestly say that
the number one reason employers decide to go with a PEO is for
workers compensation insurance. Nearly 85% of the
prospects we work with are weighing PEO services primarily on
their workers compensation programs and rates.
There are typically one of a few driving forces behind
employers seeking PEO quotes:
- Employers are trying to save money on workers
compensation insurance
- Employers are trying to reduce the start-up
costs associated work comp
- They are trying to maximize cash flow and
eliminate audit risks associated with estimated plans
Many of our clients have either experienced a renewal with a
significantl increase in rates or they simply can't afford the
typical 15% to 25% down payments required by many standard
market insurance companies.
PEOs for Employers with
High Experience Modifiers
A few short years ago, PEOs had a monopoly on the cash flow
and high experience modifier game. And they are still a
solid solution for some companies with high experience
modifiers.
Quick note:
Experience modifiers are distributed to employers by
NCCI in most states and either increase or decrease an
employers final work comp rates based on the ratios of incurred
losses (claims) vs. premium paid.
Because PEOs are the only vehicle (co-employment, employee
leasing) in which employers can utilize the PEOs master policy
insurance rates, they can often be a good solution for employers
with higher experience modifiers, also known as debit mod's.
Alternative Solutions to PEOs
Today many insurance companies have allowed some agencies and
payroll service providers to offer workers compensation programs
designed to compete with PEOs. These insurance programs
are known as Pay As You Go Workers Compensation or PayGo Work
Comp.
Pay As You Go workers compensation benefits most employers
because it significantly reduces or eliminates down payment
requirements freeing up valuable operating cash flow for
employers. Insurance companies benefit because much of the
policy administration is assumed by the payroll company and/or
insurance aggregator (agency running the program) which reduces
the insurance companies costs.
There are several distribution methods available for Pay As
You Go Work Comp:
- Many PEOs actually utilize Pay As You Go
programs for some or all clients
- Some payroll companies have access to one or
more PayGo program partners
- A few agencies like us offer
Direct Pay As You Go insurance programs
Click below for a complete list of our workers compensation
solutions for consumers, PEOs, and payroll providers.
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