In an excerpt from part one of a two-part series on PEOs, Engage Vice President of Sales, Cindy Edwards, speaks to Daniel Smith, CMO and COO of the Insurors of Tennessee about why insurance agents should consider working with PEOs and what to look for to benefit and protect agents and their clients' businesses.
We'll start with some basics. Why should agents consider working with PEOs, and how can they potentially benefit an agency's clients?
Cindy Edwards, Vice President of Sales for Engage PEO: The PEO industry has been and continues to BOOM! Working with the right one can help agent's clients by reducing administrative burden, lessening employee liability, offering cost effective & quality high benefits, improving talent retention, adding HR expertise and much more.
We have often cautioned our members about working with PEOs. What's changed in the last decade about the way the PEO industry is regulated?
Edwards: The CPEO designation was part of the federal regulatory environment for PEOs created by the Small Business Efficiency Act. Less than 3% of the ~900 PEOs [across the country] have both the CPEO and ESAC certifications, therefore when partnering with a PEO, both certifications should be required for [the] client’s protection.
Let's talk about the concerns with some of the large payroll providers and how they operate their own retail agencies. What should agents watch for there?
Edwards: All of the major payroll companies have a PEO division; therefore if the an agency's clients are payrolling with one of the big box payroll companies – you can be sure they are talking about moving them to the PEO division. In addition, there are another 4 "Mega" PEOs that also sell direct. All of them will be knocking the Agent right out of the equation. They start by selling the easiest component first – payroll. Once the client has successfully processed payroll eight times, they try to convert the client to the PEO model, if unsuccessful, they try to sell them individual lines of insurance; pay-as- you-go work comp, healthcare benefits & 401K, etc.
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