Managing the myriad details involved in hiring, retaining, and managing employees is what professional employer organizations (PEO) do best. Workers’ compensation is just one of the many types of insurance policies they must optimize to manage risks to their partner companies. Here are three potential solutions available for this coverage.
Guaranteed-cost insurance has a premium that does not change, no matter how many claims occur during the period the policy covers. The benefit of this type of workers’ comp is that it makes paying your premiums more predictable. One disadvantage is that guaranteed-cost policies tend to be more expensive.
Pay-as-you-go insurance also allows you to budget for your premiums. What makes it different is that payments are due monthly, rather than annually. Another important difference is that the cost can still fluctuate based on new personnel hired.
Loss-sensitive premiums fluctuate depending on the number of claims. This is a good option for small businesses or those that have low risks of personal injuries. Premium costs are lower, allowing companies to assume the financial risk of injuries themselves.
The differences among guaranteed-loss, cost-sensitive, and pay-as-you-go policies are subtle but important. Talk to your insurance agent for more details and advice about which one is right for your PEO and your partners.