PEO Workers Compensation and Master Policies

In consideration of coverage for a Professional Employer Organization or staffing firm, a Master Policy is the best type of Workers Comp Policy afforded to the insurance model for PEO’s; as it offers several benefits unique to a PEO Insurance relationship. First of all it relates to the economies of scale wherein a PEO can leverage the “combination of all premiums” for the PEO corporate employees as well as all their clients. What makes this unique to the insurance industry are the rules that govern who can be an insured on a given policy for workers compensation. The rule as noted by NCCI and basically the norm throughout the insuring industry is that “Entities with ownership in common of 51% or greater may share a single policy.” So the opposite of this is if you have less than 51% common ownership, you cannot share a policy of workers compensation.

Sharing a Master Policy

So how does a PEO and their clients share a Master Policy when there is not common ownership? The key is the Co-Employer Agreement. It is the accepted mechanism that establishes the unique relationship; However, NCCI and many state bureaus have resisted the model which NAPEO has consistently advocated. It remains a battle for our industry and a constant reminder of the necessity to pursue our legal certainty of this insurance model. Maintaining industry continuity through the validation of the Co-Employer agreement as respects to the workers compensation statutes will be the pivotal element in keeping the Master Policy option.

Secondly, the combination of premiums enables the economies of scale pricing option. The ability of a PEO to manage a Guaranteed Cost, Retro-Retention, or Large Deductible program to which underwriting profit can be attained through tight underwriting, risk management, loss control and claims management. This isn’t advocating the arbitrage of your Workers Compensation program for profit in lieu of other more consistent and potentially lucrative venues, but a well run program can net profits.

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Learn how to buy competitive PEO Workers Compensation Master Policies for your PEO…Directly at: (615) 656-3734 or email us
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PEO Based MCP Program

Two examples of the MCP (Multiple Coordinated Policy) structure are found below. Looking at both the PEO based model as shown in Wisconsin and a Client based structure as shown in Louisiana. The goal of the MCP model is to keep the experience and reporting of each employers payroll, premium and loss information unique to itself. The different models that are in effect differ slightly from state to state. The emphasis is on how the information is tracked and the interaction by the employers to secure the coverage in a particular state.

NCCI recommendation is that all states subscribe to method the MCP format in the residual markets and probably would prefer it to be in the voluntary markets as a standard rule. Suffice it to say this would enable data reporting to be more uniform and it ease the processes on their experience rating and proof of coverage systems.

Two Examples of PEO Based and Client Based MCP‘s

Wisconsin – PEO Based MCP

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PEO‘s in Ohio Needing Workers Comp

Securing Workers Compensation coverage as a PEO in Ohio is a process. The level of paperwork and quality control to maintain volume of clients in this Monopolistic state can be hefty. In reviewing the steps and the basic understanding of how Ohio views the PEO and it’s clients relationship we will outline the process and some of the documents you will execute along with your clients to purchase and maintain workers compensation.

How to buy a PEO policy in Ohio

Obtaining workers compensation in Ohio can be accomplished both online and via paper processes. There are usually about seven steps to securing coverage that a PEO will do in conjunction with each of their Ohio based clients. Getting coverage to the PEO comes first, followed by obtaining coverage for the client.

Applying for Workers Compensation as a PEO [click to read more…]

Monopolistic States and PEO’s

October 28, 2010

List of Monopolistic States North Dakota Ohio Washington Wyoming   PEO policy structure varies from state to state in the monopolistic arena. Purchasing directly from these states to afford coverage to both the PEO corporate employees and their respective client employees requires access to the state run workers compensation program facility aka: Office of Workers [...]

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Multiple PEO Policies

October 28, 2010

Combining Multiple PEO‘s on a Single Policy The rule of thumb for coverage extension between multiple PEO‘s on a given policy requires at least 51% common ownership between the entities. Otherwise, in order for two or more PEO‘s to share a single policy for workers compensation the ownership has to be the same at 51% [...]

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