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Questions on Professional Employer Organizations

A new “old trend” in Workers Compensation. Professional Employer Organizations (PEOs) are another area we are questioned on when we talk or consult with employers. The main question we receive on them is about the recent investigations and convictions of some of the larger PEO owners.

Vector of Professional Employer Organizations Featured

PEOs are a twist on a temporary agency. Most employers seem to think that PEOs only provide Workers Comp services. The PEOs provide almost all and sometimes more benefits than their original employer. The employees of a company that uses a PEO are no longer employees of that employer. They are employees of the PEO. What PEOs give is a “buying power” as they consolidate all the employees of their client companies into one large company.

With Workers Comp insurance, the PEO can negotiate better rates than individual employers. They pass along some of the savings to their client employers. It is a win-win if all goes well.

Hand Presenting Professional Employer Organizations Holding Magnifying Glass

The states’ Insurance Commissioners are starting to monitor PEOs more closely. Two states used to have less than two pages of regulations on PEOs, but now each has more than 24 pages of regulations.

The one area where employers need to look over their WC policies very closely is when and if the company ever decides to leave a PEO arrangement and go back to regular Workers Comp insurance. We have seen this often.

Should a company use a PEO? PEOs have been under a dark cloud as of late. A PEO may be good for a company with a high E-Mod or a quickly increasing E-Mod. I look at them the same as Captive arrangements. Are they a true type of Workers Comp insurance? Time will tell, but do not ignore this option. Make sure you have someone look over the PEO arrangement very closely before signing on, and MONITOR the PEO and the claims services you are receiving.

Next Up– Answering more Work Comp questions from our blog readers.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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