Employee Leasing Quotes : PEO Blog

Here’s a great story about how even with a high experience modifier, employee leasing services can save you money on workers’ compensation.

I was contacted by a North Carolina trucking company a few weeks ago that currently has a 1.40 emod and were facing the state assigned risk pool at renewal. This business had been sailing along for many years with little to no claims, until a two larger work comp claims within a ten month period forced a dramatic change in their labor burden costs. Horrible timing is this economy.

We presented their claims information and a company profile to an employee leasing service that specializes in the trucking industry. Within two days, they were a presented with a proposal that would give them the equivalent of a 1.00 experience modifier on their workers’ compensation – that resulted in a savings of just over $160,000 a year!

What’s even better is that the employee leasing provider also saved them another two percent on their state unemployment rate, adding another $12,000 in annual savings. This was truly a great story. When you have a business that pays in several million dollars in workers’ comp premiums over the years, with little to no claims and then has the misfortune of two in a short period of time – yes, there’s something unfair about turning their business upside down overnight.

The benefit of an employee leasing service that will look at the entire picture and history of a business caught in this position is why this industry continues to grow.

This is a simplified and excellent article written by a work comp expert and friend of mine, James Moore, with J&L Risk Mgmt Consultants, Inc. (www.cutcompcosts.com):

How long does one bad year of claims affect a company’s Workers Comp insurance premiums? This is a question we receive very often.

The first thing to look at is the state laws and rules on how your E-Mod or X-Mod is calculated. That will have some bearing on the length of time. Most states calculate the E-Mod/X-Mod over a three year span. However, the three year span does not “kick-in” immediately the next year. What happens, for example in 2008 will not affect your insurance company premiums until the 2010 policy? Why?

Workers Comp is calculated on a delayed system. The E-Mod for a claim in 2008 will hit the E-Mod on the 2010, 2011, and 2012 policy years. Yes, you pay THREE times for a bad claims year. That is the way the Workers Compensation system is structured for losses.

Do you pay 1/3, 1/3, and then 1/3 of the bad claims year of 2008? NO You will pay more like 60%, 60%, and 60%. But wait, that does not add up to 100%. You can now see how a bad claims year can be very expensive.

The NCCI or State Rating system that is in place amplifies the amount that the Work Comp carrier reserves on the claims. Is it a fair system? It is the one we have in place. The best way to stay out of the system is with a safety program, making sure that you are being charged the proper premiums, and making sure that the reserves on your files are accurate.

I had a conversation today with a real estate company that also does some property management. They made the mistake of hiring someone to do some tile work in one of the homes they manage, without asking for his proof of general liability and workers’ compensation insurance.

The worker hurt himself, found an attorney and of course the real estate management company ended paying for his injury – plus a settlement. Fortunately for the company the injury wasn’t severe. This story is one I hear dozens of times throughout the year.

Whether you’re a property manager, general contractor or any other employer who frequently subcontracts work, if you have anything to lose– ask for certificates of insurance!

Since early May, dozens of California workers’ comp carriers have filed for increases, ranging from single digits to a high of 33.9 percent.
In fact, 55 of 71 companies filing on or after May 1 proposed rate increases, with 32 of those increases 8% or higher. The State Fund, which holds about 23% of the market and insures an estimated 180,000 small businesses, filed for a 15 percent increase.

Click here for the full story. http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2009/07/06/story13.html?b=1246852800^1855498&ana=e_vert

The best part of being a PEO broker is helping people find a solution that impacts their business and really makes a difference. Many of those moments happen when we’re able to rescue an employer from their state’s assigned risk pool. What’s a state assigned risk pool? While most employers are able to obtain workers’ compensation coverage through the voluntary market (meaning an insurer agrees to write the employer’s policy), there are many organizations that are not.

These companies may be in a high-risk industry, like a roofer or an arborist.  Sometimes it’s related to a history of frequent or expensive work comp claims- or perhaps it’s just because a company is too new or too small to be a good risk. Since workers’ comp coverage is mandatory for almost all employers in every state but Texas - a market must exist to ensure coverage for employers unable to get access through the voluntary market. Therefore, state assigned risk pools were made available.

As you can imagine, any business involvement with government usually isn’t good. Many employers face work comp rates in excess of twice the amount of the going industry rate - just because they’re a new or small business. Plus, you can be asked for up to 90% of that up front!

We’ve recently helped tree service, roofing and staffing companies get out of these programs and into an employee leasing service. These employers have saved 33% as an average versus what they were paying for work comp through their states assigned risk pool. They’re also starting services with the employee leasing company from $0 to $500 down, pay-as-you go! I know there are thousands of companies out there that need this help to stay competitive - to just stay in business. We can help.

www.EmployeeLeasingQuotes.com

1-888-582-8388

I recently had a conversation with an insurance agent who asked me to help a long time client out by connecting them with an employee leasing company. Of course I was glad to help but was immediately curious, why the breakup?

Turns out this employer specializes in mechanical services to sawmills across a number of states where jobs can last as little as a few days or as long as a few months. His insurance agent explained to me how it was driving the work comp carrier crazy trying to keep up with the auditing issues involved with this multi-state employer. And although he had been a great customer with a clean claims history, the work involved was taking out the profitability for the insurance carrier.

This client will benefit greatly from an employee leasing/PEO service that has a multi-state policy. He can call or email his payroll hours from anywhere on the road and have the employees paychecks delivered or direct deposited at his convenience. His payroll technician asks the state or states he was working in and automatically generates the correct rate to be used for work comp premiums. No audits, no forms to be filled out and no more hassles.

To see if we can help your business save time and hassles, call 1-888-582-8388 or visit our website at www.EmployeeLeasingQuotes.com.

Part II:

Workers’ Compensation

Through the years, saving money on workers’ compensation insurance has been the #1 reason business owners partner with an employee leasing/ PEO service.

No matter the size of your business, management of workers’ compensation presents a different set of battles for every employer. See if you can identify with some of the questions below. The answers may help you pay less and work less on workers’ compensation administration throughout the year.

1.      Are you certain that you’re getting the best workers’ compensation rates?
The average work comp premium savings with a PEO is between 15-30%. It could be more, but you won’t know till you call.

2.      Have you ever felt cheated or frustrated with work comp audits?
You’ll never deal with an audit again with a PEO!

3.      Are you confident legitimate or fraudulent claims have been handled properly to help keep your work comp costs low?
Because your insurance is the PEO’s insurance, all work comp claims affect their bottom line. They have a strong, vested interest in managing claims quickly and properly.

4.      Would you like to spend more time on employee safety programs but need help with information and implementation?
A PEO can tailor a professional safety programs just for you. You’ll also have access to experts for questions - when you need answers.

5.      Did you know that you can pay up to 40% less on workers’ comp with a PEO compared with many state pools?
If you’re a small business or work in a higher - risk industry, these state pools are often your only option. The right PEO can save you up to 40% - without the huge deposits!

6.      Would you like an easier way of dealing with workers’ compensation insurance?
A PEO won’t charge you annual state fees, you won’t get regular letters, rate/code changes and you’ll never deal with audits!

Even if you’ve had a business for just a short period of time, you can probably identify with a few of these workers’ comp questions. You may find other issues that you can identify with when we look at employee benefits.

www.EmployeeLeasingQuotes.com 
888-582-8388

I spent last week on the road visiting with clients, insurance agents and PEO principles. I was curious about how insurance agencies and the PEOs who use AIG were handling customer comments and if they were still selling AIG services- so I asked them about it.

The agents I spoke with acknowledged trying to slowly move AIG accounts over to other providers. The PEO principles also stated it was an issue they were trying to overcome and were currently in negotiations with other carriers.

This makes perfect sense from a business perspective. I can’t imagine trying to overcome the AIG questions time and time again, when you realistically can’t give a solid, comforting answer. My next thoughts are, how long will the government throw money at this sinking ship- and do they even understand the buyer/seller mentality that will quickly tear this giant down? I hope they do and that our tax dollars have been used to buy time for other insurers to clean AIG’s house. What are your thoughts?