Professional Employer Organizations (PEOs) provide a wide-variety of services for their clients, such as employee administration, payroll, and benefits management. Through an economy of scale, PEO companies are able to provide benefits such as health insurance and workers’ comp insurance to their clients at low costs.
If a business owner can get lower rates on workers’ compensation premiums with a PEO, should that make insurance agents worry?
Some independent insurance agents may look at PEOs as competition - after all, a business owner could just as easily go to a PEO broker to find workers’ comp coverage as they could an insurance broker.
But PEOs can actually be the opposite: a strategic partner that can help an insurance agent grow their business, rather than a competitor.
PEO Companies and Insurance Agents: Partnering for Success
Let’s say you’re facing a case of hard-to-place workers’ comp.
It won’t work in the voluntary market, for any number of reasons:
- High experience modification
- New in business, less than 3 years
- High risk industry
- Coverage gaps
- History of previous claims
- High employee turnover rate
Now you’re faced with the task of placing the comp through the assigned risk market and giving the news to your client that they’ll be facing some pretty high premiums and surcharges. Your client, not fully understanding the intricacies of the markets, isn’t fully convinced that they can’t find a lower rate somewhere else ... and may start secretly shopping around for a lower quote.
But what if you had a different option?
What if you could present your client with the first option - the assigned risk market or a PEO partnership.
PEOs can offer solutions to many of your clients biggest workers’ comp challenges, such as high premium rates. Many PEOs use a Master Policy that passes the PEOs experience modification rating along to their clients. They use economy of scale and bulk buying power to negotiate lower rates than a small business could typically obtain for themselves. In addition, PEOs can offer pay-as-you-go payment options with no (or very little) down payment requirements.
Faced with the two options, most business owners would jump at the opportunity to pay less for workers’ comp with a PEO partnership.
And that’s not all. In addition to a workers’ comp solution, a PEO partnership can bring even more value and benefits to a business owner.
When a business partners with a PEO company, the PEO can offer comprehensive employee administration, including:
- Benefits administration
- Loss prevention
- Claims management
- Employee management
The PEO company takes care of the “business of employment” so their client-partners can take care of the business of doing business.
If your client is intrigued by the idea of a PEO as a solution to workers’ comp challenges, you don’t have to worry about “losing” your client to a PEO. And you don’t have to worry about being a PEO expert, either.
Here’s how we partner with insurance agents who want to offer a PEO solution to their clients at Tailored Solutions.
Submit an application to Tailored Solutions. Send us a completed ACORD, experience modification rating, and loss runs, if available.
We’ll shop the PEO marketplace and find the best fit for your client’s needs. Then, we’ll present you with a quote.
But our agent support doesn’t stop there.
At Tailored Solutions, we’ll partner with you to present the quote and cost savings structure to your client. Once your client decides to move forward with a PEO partnership, we’ll take care of the onboarding process and begin servicing the account.
You become the broker of record and begin receiving competitive commissions that are ongoing and don’t diminish over time. As long as your client retains their relationship with the PEO, you receive commissions. Even if your client takes their other lines of business to another agent in the future, you’ll still receive commissions from Tailored Solutions.
You’ve placed the comp, saved your client money on workers comp premiums (our industry specific programs typically reduce premiums up to 40%), and you’ve provided your client with some valuable services that will help their business grow and thrive.
That’s a formula for a long-lasting, trusted client-advisor relationship. And as that relationship continues, your client brings you even more business. More commercial policies. More referrals.
But what if you hadn’t offered that PEO option to your client?
98% of PEO clients would recommend a PEO to a fellow business owner peer. Imagine if you had left the PEO option on the table and hadn’t presented it to your client. You put them in a State Fund or assigned risk market and their workers’ comp premiums went up. Your client feels like they’re paying far too much for workers’ comp. They’re not sure you explored every option.
And then a fellow business owner tells them about the valuable benefits of a PEO. Your client starts contacting PEO brokers on their own and discovers how much they can save on comp and how many additional services they can get from a PEO.
Or worse, another insurance agent pitches the idea to your client when your client goes rate-shopping.
You could lose the client’s trust, their business, and all of their additional lines of service, as well.
When you have hard-to-place comp that’s not a good fit for the voluntary market, a PEO can be the perfect solution for you and your client.
The PEO industry is growing by leaps and bounds. In each of the last 30 years, the PEO industry has added 6,000 new clients and 100,000 new worksite employees. To put that in perspective, that means every 5 years the PEO industry adds the employment equivalent of the entire US utilities industry.
Your clients are sure to hear about the benefits of a PEO along the way. You can be proactive and present that solution to your client, find them a place to take their challenging workers’ comp, and start receiving easy commissions when you see a PEO as a partner in your business rather than competition for your client. When insurance agents work together with PEO brokers like Tailored Solutions, everyone wins in the end.