You have read all of the claims how employee leasing and professional employer organizations can reduce your workers compensation costs by 10% or 20%. If your company has developed a high experience mod rate as a result of a large "shock" claim, or claims that may be questionable, it is possible to receive rate reductions of over 25% from employee leasing companies that are competing for your business. Have you ever wondered how this is possible? How do PEOs do it?
What does this mean for the small business owner who is with a PEO or employee leasing company? Because PEOs really have "skin in the game" when your employees submit a claim, and claims paid come from reserves that will be returned as profits, it is much more likely that claims will be vigorously investigated and contested than in the standard markets.
Some employee leasing companies have more flexibility than others. They can offer small employers unique WC programs containing a claims "cost sharing" arrangement that can further reduce your rates and improve cash flow. Your company assumes more of the risk, but shares in the rewards of maintaining a safety conscience and healthy workplace. Workers compensation programs like this and others, are not available to small and midsize companies because of insufficient premium. Entrepreneurs and business owners who take advantage of the benefit's of using a PEO, now have the ability to compete, and beat a larger company when bidding for that "prize" contract.
Below is a press release from Gevity, a leading professional employer based in Bradenton, FL.
Gevity Announces 2009 Workers' Compensation Insurance Renewal
BRADENTON, Fla., Dec. 30, 2008 (GLOBE NEWSWIRE) -- Gevity (Nasdaq:GVHR), a leading professional employer organization (PEO) that provides HR services to businesses nationwide, today announced that the Company has renewed its 2009 workers' compensation insurance agreement with member companies of American International Group (AIG) Commercial Insurance.
Consistent with 2008, Gevity will maintain a $1 million per occurrence deductible and will make monthly payments to AIG for program costs and estimated future claims costs in the form of loss collateral funds, which will be approximately $17 million lower in 2009. Garry J. Welsh, Chief Financial Officer, commented that "We are very pleased with the terms and conditions of our renewal for 2009. Moreover, we are encouraged that our effective risk management practices and continuing favorable trends in claims costs have resulted in lower loss collateral funding requirements from AIG."
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