Professional Employment Organizations and Temp Agencies Claims and Underwriting Perspective

Professional Employment Organizations and Temp

AgenciesClaims and Underwriting

PerspectivePresented by:

Amy Newton and Theresa Keegan

Claims Management and PEO/Temp Agencies

Presented by:

Amy Newton

Background Information

• What’s a Professional Employment Organization (aka employee leasing company or PEO)?

– PEO assumes or shares employment responsibilities for all of the employees of the client company. They should not be confused with “temp services”.

– The client and the PEO are contractually joined via a co-employment endorsement.

Professional Employment Organization Types

Note: Your respective state may have a slightly different interpretation

PEO C C C C

PEO C C C C

C C C

PEO

C C CC

The PEO and all clients have coverage under 1 policy with 1 e-mod for all.

The PEO and some clients share coverage under one policy while other clients have individual policies with their own separate e-mods.

The PEO has it’s own individual policy as does each of the client companies. No shared e-mod.

Co-Employment endorsements

Co-Employment endorsementsOwn policy,

e-mod, etc.

Master Combo

MCP (multiple coordinated policy)

Why Is It Tough to Manage PEO Claims?

• PEO’s may refuse to allow direct contact with the policyholder.

– So why is that a problem for us? It creates an unnatural barrier between the insurer and the policyholder. Direct contact with the policyholder is always preferred.

The PEO Barrier

• Safety consultants are not allowed to meet with the policyholder.

• PEO’s will use forms of their own to avoid using documents from the insurer.

• Will not allow claim adjusters to conduct investigations with the policyholder directly.

• May cause meeting delays due to accommodating several schedules.

The Barrier Grows and Grows

• The first report of injury delay. It costs us all money.

• Delays occur in notifications of return to work which result in overpayments.

• Policyholder confusion over settlements and other legal issues.

Lack of Knowledge

• PEO’s may not have the knowledge to handle difficult claim situations.

– Lack of legal resources

– Unable to keep up on law changes

– Use of antiquated forms

– PEO staff may be handling several different areas (HR, payroll, safety, etc.)

– PEO staff turnover – we can’t keep up on the education

PEO versus the Policyholder

• The PEO and the policyholder may have different views on settlement, legal issues, or return to work.

– This can result in a claim languishing until the PEO and the client come to an agreement on the approach.

A Good PEO Partnership

• PEO’s can assist the claim adjuster in getting a policyholder on board with a tough claim issue (settlement, reserves, return to work, or litigation).

• The PEO may be able to provide immediate wage documentation for the claims adjuster.

A Good PEO Partnership

• The claims adjuster may benefit from having one PEO contact person for many different policyholders.

• A savvy PEO will proactively seek claim updates and provide those to the policyholder – relieving the claims representative of that responsibility.

How to Create a Strong PEO Relationship

• Know your PEO (claim) staff.

• Be visible with the PEO and their claim staff. It’s all about relationships.

• Consider providing the PEO with online access to claim information.

• Ask for feedback on when they want to know about reserves, settlements, etc.

More on Relationships

• Consider setting up a periodic claim review. It helps with:

– Building relationships

– Providing claim-level action plans

– Providing education to the PEO

Claim Review Hints

• Schedule them regularly

• Provide a form with consistent content:– Basic claim info– Reserves– Action Plan– Obstacles

• Approach from a marketing perspective– Assemble the forms

in a binder– Put your logo on it– Include frequently

needed phone numbers

• Include necessary staff such as RN’s, etc.

Underwriting and Loss Prevention Requirements ForPEO/Temporary Employment Agencies

Presented by:Theresa Keegan

PEO/Temporary Employment Agency Requirements

• Objective:

– Partner with the PEO/Temp Agency

– Ensure safe working environment for their employees

– Educate insured as to services we provide

– Provide tools for effective administration of Workers’ Compensation program

Rhode Island Workers’ Compensation Insurance

Coverage Certification

• RI State Law:

– Insurance Carrier issued CertificateRhode Island’s Workers’ CompensationInsurance Coverage Certification (DWC 09)

– If a client company does not have a carrier issued certificate, then the leased employee will be considered an employee of the client company

RI DLT DWC 09

Underwriting Requirements

• All new client companies must be reported to insurer within 48 hrs

• Executed Contract between PEO/Temp & client companies

• Completed Work Site Evaluation form (WSE)• Completed Job Descriptions• Conduct Accident Investigations• Documented Safety Training• Loss Prevention – Client Company Site Visits

Work Site Evaluations

• WSE for all client companies prior to placement of employees at the client co.

• WSE reviewed during loss prevention visits

• Additional worksite inspections may be required

• Loss prevention and underwriting are available to assist in training PEO/Temp Agency in completing/collecting WSEs

Job Descriptions

All employees must be provided with written job descriptions for any new job assignments at the client company

Accident Investigations

PEO/Temp Agency is required to conduct and document accident investigations for all claims.

PEO/Temporary Employment Agency Requirements

Loss Prevention Procedure includes an audit of:

• Worksite Evaluation forms (WSE)

• Safety Training documentation

• Accident Investigation records

Job and Safety Training

• Safety training and functional job training documentation

• Certifies all employees are trained for the positions in which they are placed

Job and Safety Training

Documentation required:

• Instructor name

• Topic

• Date

• Employee signature

Reassignment of EmployeesThe PEO/Temp Agency’s Policy

• Language in client agreement/contract

• Employees must remain in positions they are assigned

• Client company must contact PEO/Temp Agency for approval to change

• Document that employee is properly trained for new job assignment

Client Site Visits

PEO/Temp Agency must work with Loss Prevention consultant:

• Coordinate site visits with client companies

• Accompany Loss Prevention consultant

Client Site Visits

Periodic site visits at client company locations on an as needed basis:

• Nature of exposure

• Number of employees

• Proper loss prevention controls

• Injuries (analysis of loss trends)

Premium Audit

• Typically quarterly or semi-annually• Staff premium auditors• List of premium audit requirements

Premium Audit Records and InformationFor PEO/Temporary Employment Agency

Required:

• Payroll Journal/Register

• Payroll Separated by Client Company

• Sales by Client Company

• Employer’s Quarterly Federal Tax Return – form 941

• State Quarterly Tax and Wage Report – RI DET-TX-17

• Cash Disbursements Journal / Business Checkbook

• 1099’s / 1096

Premium Audit Records and InformationFor PEO/Temporary Employment

Agency

The following additional information may be requested:

• Files of the invoices to client companies for random samplings

• Photocopies of checks / payments from client companies (first audit on new account)

• Invoicing/billing reports

• 1120 Federal Tax Return

• Bank statements

• Job orders if utilized

• General ledger or Profit and Loss Statement

QUESTIONS ?