Benefits consultants and PEOs: a winning partnership

It goes without saying that small and mid-sized companies everywhere have had to respond to countless disruptions brought about by the pandemic. Now, more than a year since COVID-19 started wreaking havoc on the traditional American workplace, the situation continues to evolve. New challenges are ahead, but there are even more encouraging opportunities for businesses, and the insurance brokers and agencies who serve them.

Whether it’s figuring out how to transition from an all-remote workforce, or deciding what should go into a vaccination policy, employers continue to grapple with challenging HR issues, all while having to smartly manage cash flow. As the disruptive tide begins to turn, however, businesses are poised for a return to normalcy and for breakout opportunities to grow. To do so, they need the best resources on-hand to help them swiftly ramp up to full operations, with a sharp eye on profitability. Who will businesses turn to for help to get back on track? Most likely, they will start with someone they trust.

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Small and mid-sized businesses who may not have previously considered outsourcing their human resources and compliance may now explore a strategic relationship with an established HR provider, such as a professional employer organization (PEO). Insurance brokers who partner with a PEO can not only offer their clients critical, high value services at just the right time, they can gain a competitive edge and increase their own earning potential.

The broker/PEO relationship

Historically, insurance brokers and PEOs were viewed as competitors, until agents quickly learned that some PEOs were a valued resource to clients and brokers alike. As a result, the landscape has changed drastically in recent years; in fact, collaborations between these two sectors were growing in popularity long before the COVID-19 crisis emerged.

New employment regulations and HR trends are continuously in the headlines: minimum wage hikes, required harassment prevention trainings, expanded parental leave policies, the rising cost of health benefits. Needless to say, companies are looking for solutions. An insurance broker who partners with a PEO to refer clients can instantly boost their value by providing their clients access to a comprehensive suite of services that address critical needs and deliver economies of scale: payroll and tax administration, HR compliance, health and welfare benefits, risk management, and secure HR technology solutions.

Benefits of aligning with the right PEO

In today’s environment, you’ll find that an increasing number of insurance brokers are choosing to work side by side with PEOs to offer solutions that benefit all parties involved – the broker, the PEO and most importantly, the client.

• For the insurance broker: Partnering with a PEO allows brokers to differentiate their agency in a crowded market and retain and expand their book of business. By selecting the right PEO that protects its referral partners and offers financial incentives including guaranteed commissions, insurance agents can build a strong defense against other potential competitors, including big payroll companies, while increasing their future earnings potential. Producers looking for flexibility in the PEO offering can also look for a PEO that allows for a carve out on health benefits or workers’ compensation, or both.
• For the PEO: Investing in and cultivating long-term partnerships with successful referral partners result in long-term success and increased growth for the PEO. These strategic partnerships allow PEOs to expand their footprint and work closely with more small and mid-sized businesses around the country.
• For the client: The exponential growth of the PEO industry itself is testament to the value that PEOs deliver to clients. A report from the National Association of Professional Employer Organizations (NAPEO) found that clients of PEOs on average can save up to 35% on HR administration costs. Surveys of PEO clients have also shown that small businesses that partner with a PEO grow 7% to 9% faster and are 50 percent less likely to go out of business. Through PEOs, companies can sharply improve workforce management efficiencies across the board, particularly in the area of compliance. PEOs also help small and mid-size companies attract and retain talent by helping them offer sought-after employee benefits and perks that would typically be out of reach, including FSAs, 401(k) plans, telehealth, employee assistance and various discount programs.

Businesses of all sizes, including insurance brokers, are looking to recover from an incredibly tough year and bounce back strongly with a determined and enthusiastic outlook. Consider partnering with a PEO to offer additional solutions to clients, increase retention, and build back your book of business.

Alex Pisani is general counsel and EVP of sales at Engage PEO.