If you’re looking to grow your insurance business this year, there’s one simple solution to increase your profits and client satisfaction at the same time: PEOs. If you haven’t partnered your clients with a PEO yet, then here’s your quick and easy guide to understanding PEOs and the benefits they bring to your clients and your business.
PEO: Professional Employer Organization
What is a PEO? PEO stands for Professional Employer Organization. PEOs provide comprehensive HR solutions for businesses, including the management of:
- Workers’ compensation
- Safety training and compliance
How Does a PEO Work?
When an employer partners with a PEO, the two entities form a co-employment relationship. In this co-employment relationship, the employer and the PEO share employer responsibilities through a contractual client service agreement (CSA).
- Employer: retains responsibility for and manages business operations, product development, marketing, sales, and service.
- PEO: provides HR, payroll, and benefits services for employees.
The employer and the PEO will also share some responsibilities, as outlined in their CSA.
In a co-employment relationship, business owners/ employers maintain control over their business operations. Their PEO partner picks up the responsibilities associated with payroll, payroll taxes, and administration of benefits.
In other words, the business owner continues to run his/her business, while the PEO manages employment-related issues.
What are the Benefits of a PEO Relationship?
Partnering with a PEO can provide big benefits to small businesses. When you partner your client with a PEO, here is what they can expect:
PEOs Provide Best in Class Benefits
A PEO can offer a small- to mid-size company the back office and benefits platforms of a Fortune 500 company. Employers can provide best in class health benefits, 401k platforms, payroll systems, HRIS, time and attendance and competitive workers' compensation -- all administered by the PEO.
Many business owners struggle to provide competitive benefits that can help attract and retain talented employees. Not only can a PEO bring these benefits to a small business, it can also take care of administering and managing the complex world of retirement and health benefits.
PEOs Free Up Resources
When a small business owner is struggling to find time to focus on business growth, it’s often because they’re bogged down with administrative responsibilities. PEOs take over the business of employee-related issues, freeing up business owners to focus on running their company while a professional team of people takes care of the non-productive tasks associated with having employees.
PEOs are Surprisingly Affordable
Many business owners are surprised to find they can get the comprehensive services provided by a PEO at around the same cost of a stand-alone workers’ comp policy.
PEOs Help Businesses Survive… and Thrive
According to the National Association of Professional Employer Organizations (NAPEO), businesses that partner with a PEO are 50% less likely to fail (permanently go out of business) compared to similar, non-PEO companies.
The average rate of failure for businesses is 8% annually, but that rate drops to 4% for companies that use PEOs for four consecutive quarters.
PEOs aren’t just the “secret sauce” that can help a business keep its doors open. They can help a business grow and succeed, as well.
Businesses that partner with a PEO for 4 consecutive quarters enjoy:
- 10% - 14% lower employee turnover rates
- 7% - 9% faster growth rates
PEOs can bring big benefits to small companies by offering solutions to an employers biggest business challenges - solutions that are often out of reach for everyone but the largest corporations.
Partnering your client with a PEO can be great for their business. But that’s not all…
PEOs can also be great for your bottom line.
The Value of Placing Your Clients with a PEO
Professional employer organizations can help you build revenue, provide better customer service for your client, and improve your client relationships. Here’s how.
Increase Your Revenues
PEOs generally offer competitive, consistent, and lasting commissions compared to stand-alone workers’ compensation policies.
If you’re used to writing stand alone workers’ compensation policies then you’re probably used to being paid commission based on a fixed insurance premium. With PEOs, however, commissions are paid based on total payroll.
PEO commissions continue as long as your client continues the relationship and don’t decline upon renewal, providing a consistent, non-diminishing, residual commission.
Place More Clients with a PEO
Do you have hard-to-place clients? PEOs can often be the perfect solution for imperfect situations, such as:
- High xMOD scores
- High-risk industries
- Gaps in coverage
- Less than 3-years loss history
Workers’ comp is the #1 biggest insurance issue facing most employers today. Your clients need workers' comp solutions.
At Tailored Solutions, we provide workers’ comp solutions that help you offer top-rated, affordable workers’ comp coverage for hard-to-place clients.
You close the sale, get the commission, and your client gets the affordable coverage they need. It’s a win-win.
Lastly, one of the biggest benefits of providing your client with a PEO solution has nothing to do with saving the sale or earning the commission…
And everything to do with building your business.
Build Better Client Relationships
The insurance industry is changing. New advances in technology have made it easier than ever for clients to self-serve online. From getting a quote to binding a policy and even filing and managing claims, today’s insurance buyers are spending more time online and less time in an agent’s office.
So how do you build lasting relationships in an age of online policies?
By offering better service and better solutions.
When a potential client comes to you because they need workers’ comp coverage, a PEO provides you the opportunity to offer that client solutions to some of their biggest business challenges.
When you position yourself as an expert who can help guide that client away from business failure and towards business success -- at the same price as a stand-alone workers’ comp policy -- you become more than just an “insurance salesperson.”
You become a trusted advisor.
At Tailored Solutions, we do more than help you find the right PEO solution for your client. We provide you with the tools and resources to ensure your customer is getting the best service and support, as well. From helping you understand the details of a PEO quote and agreement to standing by your (virtual) side during a sales presentation or providing a thorough onboarding process for your client, we’re dedicated to helping you provide an exemplary experience to your client.
And as we take over the task of servicing the account, you can devote more time and resources to bringing in more business.
Professional employer organizations offer HR services to small- and midsize businesses. But they also offer so much more. Employers get a competitive edge in the marketplace that can help their business survive and thrive. As the agent who places them, you get higher commissions and a solution for hard-to-place clients.
But best of all, a PEO provides the opportunity for you and your client to build a lasting relationship that benefits you both.