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Make your insurance business more profitable with PEO relationships.

Byline: Mike Oddo

Brokers and agents are always looking for ways to gain and retain good clients and make their business more profitable. However, they may be overlooking professional employer organization (PEO) relationships as a way to help them build revenue and enhance customer service.

Let's take a quick look at how we define the roles of our insurance partners.

Independent insurance agents typically sell insurance policies--and they may not even know about the benefits and commission structure of a PEO. We've found that when independent insurance agents understand the value of a PEO for themselves and their clients, they're more likely to add PEO services to their insurance sales model.

Related: What insurance agents should know about PEO brokers

PEO brokers focus on finding the right PEO for their prospective clients. They identify businesses that can benefit from the PEO model, including workers' compensation insurance, payroll services, risk management and outsourced human resource (HR) services.

We recently spoke to an agent and a broker about their experiences with PEOs, and I'd like to share some of their comments with you.

* Independent insurance agent:Keith Hall of Hall Insurance Agency in Panama City, Fla., can quantify results he has achieved through a PEO relationship, including saving a small roofing contractor $10,000 in workers' comp premiums and administrative fees in one year, while he more than doubled his commissions on administrative fees. He also says that the changing insurance marketplace has opened opportunities for independent agencies such as his to work with PEOs to provide client services at an appropriate price point. He believes that more brokers need to understand how to work with PEOs and cites advantages such as high recurring commissions, low to no overhead by reducing the need to employ agents, and having a resource for policies that would not otherwise be placed in the standard workers' compensation market.

* Broker/PEO broker:Skip Deal of Alpha Business Solutions in Bradenton, Fla., is "all in" with the PEO model. His agency serves as an outsourced sales arm for PEOs, analyzing each client's needs to arrive at the best PEO fit. Variables may include the size of the company, the industry and the services they need. Results, he reports, include easy access to efficient human resource information system (HRIS) self-service systems, quick-quoting systems and other services that can save his clients up to 25% of their time spent on administrative functions.

(Photo: Shutterstock/Jirsak)

What insurance professionals like about PEOs

Whether independent agents or PEO brokers, most insurance professionals who are familiar with the PEO model agree on the following:

* Higher commissions than insurance companies: Commissions are based on total payroll, not a fixed insurance premiums.

* Commissions are residual: PEOs continue to pay you after the sale as long as the client continues the relationship.

* Commissions are consistent: They don't decline upon renewal.

* PEOs don't recognize an "agent of record." Once you place business with the PEO, you don't run the risk of losing the commission if your client should conduct its business through another agent or broker.

* Fewer underwriting restrictions: PEOs tend to have broader underwriting "appetites" and are willing to consider clients with higher risk exposures, as well as smaller firms and start-ups.

* One-stop shopping: Clients can get everything from payroll processing and workers' compensation insurance to health insurance and HR services, all in one place, strengthening the relationship with their insurance provider.

* Leveling the playing field: Just as clients benefit from the one-stop-shop principle, so do insurance professionals, who can provide a full array of services to clients, allowing even smaller agencies to meet all their clients' needs and earn additional commissions for more products sold, such as health insurance.

* Lower overhead: The PEO relationship may eliminate or reduce the need to hire additional agents.

* PEOs offer technology that smaller agencies may not possess.

* PEOs can offer easy access to new products and services.

* Clients get group buying power, saving them money.

(Photo: Shutterstock/Tashatuvango)

What insurance professionals should ask

Of course, not all PEOs are created equal. Here are a few considerations to help you identify the best match for you and your clients:

* How long has the PEO been in business?

* Does the PEO have sales minimums?

* How many states does the PEO operate in?

* What is the PEO's underwriting "appetite"?

* What is the PEO's commission structure?

* Does the PEO have its own insurance carrier? If so, it gives you the assurance of strict government regulation.

* How user friendly and quick is the PEO's quoting system?

* How technologically advanced is the PEO? Technology should begin with the quoting system and extend throughout the service the PEO provides to your clients.

* How reliable is the PEO's customer service? Poor service to your clients reflects on you as well as on the PEO.

If you've ever lost a client to a PEO, you've probably considered adding PEO relationships to your business model. But why wait until that happens? You and your clients may well benefit from a richer set of services and benefits by getting to know PEOs.

Mike Oddo is vice president of broker sales at FrankCrum , a national PEO, where he is responsible for the FrankCrum sales department. While at FrankCrum, he has successfully expanded the company's extensive network of sales representatives, agents, brokers and broker managers nationwide. He can be reached at mikeo@frankcrum.com .
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Publication:Property and Casualty 360
Date:Sep 1, 2015
Words:892
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