Professional Employment Organizations and Temp Agencies Claims and Underwriting Perspective

Presented 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.

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

MCP (multiple coordinated policy)

Co-Employment endorsements

PEO

Own policy, e-mod, etc.

PEO C C C C Combo

Co-Employment endorsements C C C

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

Professional Employment Organization Types Note: Your respective state may have a slightly different interpretation

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

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 For PEO/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 Certificate Rhode Island’s Workers’ Compensation Insurance 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 Employees The 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 Information For 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 Information For 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 ?