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PEO

Professional Employer Organization (PEO)

A Professional Employer Organization (PEO) is able to cost-effectively manage all HR-related functions by acting as a co-employer of your staff.

Using a PEO allows your business to use its resources to focus on its core area of expertise.

PEOs cost-effectively outsource:

  • Payroll
  • HR Administration
  • Workers’ Compensation
  • Employee Benefits

With hundreds of PEO companies to choose from, we narrow down the companies and plans for you based on your unique business and budget.

To learn more about PEOs and how they can free-up more hours of your time, send us a message through our contact page.

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What Every Insurance Agent Needs to Know About PEO Brokers

Historically, PEOs, or professional employer organizations, and insurance agents have been t odds as competitors. This is mainly because PEOs are able to provide clients with health insurance and worker’s compensation as part of larger plans. However, times are moving on.

Three PEOs were created in the 1990s with marketing agreements with insurance agents. Quickly, they grew to be some of the largest PEOs in the United States, inspiring many others to offer sales contracts to insurance agents. This allowed the PEOs to retain a direct sales force, and today most large PEOs will provide a sales contract to insurance agents.

This has changed over the last five years, when two things have happened that have changed the relationship between PEOs and insurance brokers even further. These are:

  • The PEO marketplace has changed. Five years ago, if there was a PEO sale that involved an insurance agent, it probably meant that the agent was working with a PEO sales rep to handle all point of sale communication with the client. Today though, like with the independent insurance model, agents look to PEO brokers to find PEO solutions for clients.
  • The NCCI released a study in 2013, authored by Harry Shuford, its chief economist, that found that PEOs have a positive impact on Worker’s Compensation across the country. Many insurance agents who before held negative views of PEOs were encouraged to now look to them to give an alternative solution to their clients.

In 2016, there are more than 700 PEOs in the United States. Each PEO broker usually has contracts with multiple PEOs, so they can match client needs with the abilities of a larger group of PEOs when requesting proposals. This gives the PEO broker the opportunity to analyze proposals from the group, and give clients and insurance agents a side-by-side comparison. The client when saves time, because they don’t have to go through four or five different PEO sale reps when looking for a PEO, and they get a comparison from an independent agent. Of course, it helps the insurance agent too, because the PEO proposals don’t come from competitors.

So, as an insurance agent, how do you choose which PEO broker to work with? They’re unregulated, and don’t have to fulfill licensing requirements, so it’s up to the insurance agent to ask:

  • What are the PEO broker’s qualifications? Look for or as for a bio and references.
  • Do they have E&O coverage?
  • Do they have experience with larger, multi-state firms?
  • What type of clients does the broker have experience with? For example, are they more focused on healthcare, Worker’s Compensation, admin, or other services?
  • Does the PEO broker or the PEO sales representative make the final presentation to the client/insurance agent?
  • Is the broker full-service or quote only? Or somewhere in between? A full-service broker will initiate a meeting to determine needs, pick a group of PEOs that match those needs, request proposals, prepare a comparison, procure the agreement, and ensure it is scheduled and completed. A quote-only broker will provide the quote, but the agent will have to present it and deliver the signed agreement.
  • Do any of the sales agreements between the PEO broker and PEOs have non-solicit or non-compete provisions? This could limit the broker’s ability to provide a full range of quotes.
  • How many markets does the broker have sales contracts with?
  • Will the PEO broker recognize a Broker of Record letter from a competing insurance agent, and will the PEOs recognize the letter as well?
  • Does the broker have a P&C or health insurance license?
  • Make sure to look at the name of the Worker’s Compensation carrier, and are able to see its A.M Best rating.
  • Your contract with the PEO broker should say that commissions will be paid as long as the client stays with the PEO and the PEO broker is receiving commissions from the PEO. If the contract with the PEO broker is ended, commissions should still be paid. Your contract should also not require any services from the agent.

It’s easier for insurance agents to work with PEO brokers because the broker represents the client and not the PEO. It is important though to determine whether or not the PEO broker is qualified. When thinking about working with a PEO broker, go through the above questions to determine whether you want to continue to the next step, which would be making a joint sales call so you can see how the broker works.

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