Have you ever picked up two seemingly identical products at the grocery store? At first glance, it appears they have essentially the same ingredients, but when you look at the price, you realize that one item costs a lot more than the other – and you are not quite sure why.

Something similar can be said of PEOs, according to Ryan DeJong, head of underwriting for AXIS Group. On paper, many of them look like they are offering the same services – for example, the same payroll/HR software or the same worker’s compensation carrier – and yet the costs are dramatically different. So how do business owners and commercial agents determine which PEO will be best for them or their clients?

First, it is important to understand why pricing can vary so much even among PEOs with the same carrier. The answer is simple. Just as every company has its own experience modifier that will adjust its base rate, the same holds true for a PEO. The experience modifiers that each PEO has an impact how competitively they can offer pricing to their clients. A second piece of the puzzle is the deductible on the master policy program. One PEO may have a first-dollar coverage program in place. Another could have a $250,000 deductible while third might have a $1 million deductible. That third PEO will likely have much cheaper buy rates and even if they have the highest experience modifier of the trio, they may still ultimately be able to price themselves more competitively based on how their program is structured.

That is good background information to have, but many commercial agents and business owners may not know what the experience modifier for a PEO is, nor do they know the deductible is embedded into that program for the each PEO. That is where AXIS Group comes in.

“Our job is to know how our PEO programs are performing,” DeJong said. “Our job is to know what the deductibles are on each program and what types of industries each one of these PEOs specializes in.”

That said, there are representatives for all three types of PEOs who will go to prospective clients and promise to save them money – and in most cases and under the right circumstances, that is probably a true statement. However, it is not so much about how much money the PEO can save them today. It is about how much it can save them down the road. That is because a PEO program is not like the traditional market where a carrier solution is put into place and can easily be reevaluated and changed if it is not working out. It is an employer partner that earns its greatest value over the long term.

AXIS Group can help commercial agents and business owners choose the right PEO up front. This not only means they will not have to change carriers year after year, but they’ll also enjoy cost efficiencies and cost smoothing over time, freeing them up to focus on growing their businesses without the headache and hassle of annual audits and new rules to follow.

Interested in finding the perfect PEO for your company or client but not sure where to start? The team of professionals at AXIS Group is here to help you navigate the process and answer all your questions. Contact us via phone or email by clicking here.