The PEO Potential for Your Insurance Agency

Making Sure Any PEO You Partner With is Bringing Value to Your Clients

In part two of an informational series for insurance agents on PEOs, Engage Vice President of Sales, Cindy Edwards, speaks to Daniel Smith, CMO and COO of The Insurors of Tennessee, about how PEOs can benefit insurance brokers and their clients.


There are often concerns and confusion about PEOs and "employee leasing" agreements. Can you help clarify the differences for us?

Cindy Edwards, Vice President of Sales for Engage PEO: PEOs do not lease out employees or provide staff to their cli­ents. When a client partners with a PEO, their workers enter into a co-employment arrangement in which they have two employers – the client company and the PEO (the employer of record). The client company maintains control over the em­ployees: hiring, firing, and managing. The employer of record, PEO, is just the administrative employer for the purposes of providing the products of the PEO: benefits, WC, payroll, technology, 401K, Compliance – types of products will vary from PEO to PEO.

What concerns should agents have about cyber and data security when working with PEOs, and how do you address those?

Edwards: The agent should question the amount of encryp­tion the PEO provides in addition to the encryption provided by the IT vendor (systems used for payroll, HRIS, benefits ad­ministration, etc.). Engage hosts its technology platform in its own high-availability cloud environment. And internal pro­cesses and system capabilities are routinely tested internally by external security audit firms. Also, several certifications that demonstrate the high standards the company demands – these would include certifications like SSAE-18, CPEO, and ESAC.

Is there a "sweet spot" for businesses that should be discussing PEO opportunities?

Edwards: It will depend on the PEO. If the PEO mandates the work comp be moved to the PEO, then the sweet spot will de­pend on the PEOs work comp appetite for risk. If the PEO does not mandate the work comp be moved, that opens the doors for any company with employees ranging from 20-1,000 employ­ees. Any group smaller than 20 generally doesn’t have a need for a PEO unless it’s a start-up company looking to expand.

And finally, what do you think is the competitive ad­vantage for your company in regards to partnering with agents?

Edwards: Engage was created to help brokers compete with PEOs that sell direct. We do not have a direct sales force; we are 100% dedicated to brokers. We're a highly credentialed na­tional PEO offering a flexible product configuration that allows brokers to keep current lines of insurance in place plus earn residual compensation on Engage services: Technology inte­grating Payroll, HRIS, HR & Tax Compliance, affordable Fortune 500 Benefits & Administration, Risk Management, 401k and employee self-service. All services are delivered via a certified dedicated team of professionals, HR services and trainings are delivered via our employment attorneys, exclusive to Engage, and the most important member of the team is the Broker. En­gage offers professional sales support & customized collateral. Engage will not accept BOR and offers Client Referral Protec­tion. Engage is on top of impactful HR issues and continues to assist clients with COVID-19 recovery and support, including customized roadmaps to help businesses reopen fully.

Summarizing the PEO Potential for Your Agency

Whether you are utilizing PEOs for your clients or not, others out there are. The National Association of Professional Em­ployer Organizations (NAPEO) has stated that PEOs operating in the U.S. represent a $150+ billion industry. The most basic princi­pal in a PEO partnership is to understand all the agreements involved. Be aware of charges, fees, structure, and setup – and be able to convey this info to your clients. From the agency side of the issue, be sure that the PEO is not or will not be compet­ing with you for business. Do those things, and a PEO may be the right partner for you and your clients.


Tennessee Insuror Magazine - May/June 2021 Edition

The Tennessee Insuror Magazine is distributed bi-monthly to the entire membership, which represents over 3700 licensed agents, agency staff members, and industry personnel. For more information, contact Insurors of Tennessee: