Small and medium-sized businesses (SMBs) face a constantly changing landscape of regulations and economic pressures. Workers' compensation (workers' comp) is no exception. The COVID-19 pandemic upended traditional practices, and legal and regulatory environments remain challenging.
To address this, many SMBs are turning to Professional Employer Organizations (PEOs) to outsource some of their administrative and compliance tasks, particularly those related to workers' comp.
PEOs: A Helping Hand for Busy Businesses
PEOs have been around for decades, but they've seen a surge in popularity recently. They offer a range of services to SMBs, including:
- Compliance: PEOs help businesses navigate the complexities of government regulations, payroll administration, and benefits and insurance services.
- HR Support: PEOs can take over many HR responsibilities, freeing up business owners to focus on core operations.
- Workers' Comp Expertise: As Julie Cirillo, chief risk officer at Engage PEO, points out, PEOs "bring the knowledge and experience of a large employer right in the back room of that small or midsize business."
PEOs operate through a co-employment model, sharing certain employment responsibilities with the SMB through a contract. This allows PEOs to assume control of administrative tasks, including workers' comp.
PEOs and Workers' Comp Risk Management
PEOs offer several benefits for workers' comp risk management:
- Cost-Effectiveness: PEOs can leverage their buying power to secure competitive workers' comp rates for SMBs.
- Claims Administration: PEOs can handle the complexities of claims administration, freeing up SMBs from this time-consuming burden.
- Safety Expertise: Many PEOs have experienced safety and loss control teams that conduct safety audits and provide training to help prevent workplace injuries and reduce claims.
PEOs and Brokers: A Partnership Strengthened by Data and AI
Traditionally, there was some tension between PEOs and brokers. However, this is changing. Some PEOs are increasingly using data analytics and advanced tools to ensure accurate pricing and efficient claims management. This aligns well with the needs of brokers and their clients.
Today, many brokers recognize the value PEOs can bring to the table. By working together, PEOs and brokers can provide a comprehensive suite of risk management services to SMBs. PEOs can handle safety consultations and claims management, while brokers continue to offer their core expertise.
Note: Some PEOs also offer the flexibility to carve out their Workers’ Compensation services to better serve the needs of a client and insurance broker partner.
A winning partnership
As Julie Cirillo says, "Some brokers out there have definitely understood that there's value in working alongside a PEO." In today's challenging environment, PEOs offer a valuable solution for SMBs struggling to manage workers' comp risk.
By partnering with brokers, PEOs can ensure that SMBs have the resources they need to keep their workplaces safe and their businesses thriving.
EXCERPTED FROM RISK & INSURANCE ARTICLE: How Professional Employer Organizations Aid Workers’ Comp Risk Management