A PEO service offers so many advantages for businesses such as employee benefits, managing payroll, HR, and compliance issues- just to name a few. But one of the questions we’re frequently asked by employers is, “How can a PEO lower my workers' compensation insurance rates?” 

Many times this question is followed by, “Aren’t the rates set by the state?” The answer is yes, a PEO can absolutely save you money on workers’ comp insurance, even if you’ve had a poor claims history. Here’s how. 

PEO Services and Workers' Comp

Employees are covered by the PEO’s workers’  compensation policy, which can lower your  rates significantly.

When partnering with a PEO company, the employees of the business are covered by the PEO's workers’ compensation policy. So, just like any other businesses’ work comp policy, if the PEO has managed claims well and has a good history, they’ll have a “credit mod” or positive experience rating – earning a discount on their rates

As with any business, the experience rating with each PEO company will vary based on their quality of safety services and claims management. Understanding these principles, here’s a recent example of how a towing business saved $12k annually on their workers’ comp insurance.  

Real World PEO Example

A towing company has been in business for a decade now. They’ve had a great safety training program in place with regular meetings and for many years had a credit experience rating, paying less than state rates. A little over a year ago, they unfortunately had an employee trip over a cable and break his arm. This led to a large claim and increase in their workers’ comp rates at renewal of their policy. 

We helped them access a PEO company that specializes in the towing industry and also has a great workers’ comp experience rating. The PEO company’s underwriting team recognized their positive history and commitment to safety, by not only eliminating the renewal increase, but lowering their rates from where they were before the claim. 

More PEO Work Comp Benefits

PEOs help to close claims and get  employees back to work as soon as possible

A few important notes of fact to go with this story. The PEO's work comp policy is also your policy. This means that by law, they are still required to report their individual client’s premium and claims to the state's workers’ comp bureau, so the business continues to show history. The other advantage is that since their client’s claims affect their experience rating, they have a strong interest in helping to close claims and get employees back to work as soon as possible. 

ELQ is Your Best Resource

All Professional Employer Organizations are different and many don’t work with towing companies. As one of the oldest nationwide PEO brokerages in the country, this is where we can help your business. We know who works in which industries and states. And we know how their workers’ comp experience rating will affect pricing for those businesses looking to reduce rates. 

Call us today and find out how your business could benefit. As a PEO brokerage, we work for our clients – not the PEOs. You’ll be free to ask questions and get answers that make sense, so you can get on with your day. 

workers compensation insurance peo employee leasing professional employer organization
About the Author: Mike Burgelin

With two decades of experience in the PEO Employee Leasing industry, Mike Burgelin is an expert in helping business owners maximize their growth potential through the outsourcing of human resources and payroll tasks. He is also a fully licensed insurance agent, whose skills and knowledge in workers’ compensation insurance help his clients save over $40 million in premiums each year.