PEOs Look To Boost Credibility With WC Risk Management Certification

Those PEOs that receive program certification are the PEO industry's vanguard in illustrating compliance with the risk management industry's highest performance practices.

As the insurance market hardened after Sept. 11, 2001, PEOs found it increasingly difficult to obtain workers' comp insurance.

Against this background, the PEO trade group–the National Association of Professional Employer Organizations, or NAPEO–worked aggressively with the insurance industry to lay the groundwork for a certification program to help win carriers' confidence in PEO risk assessment and management.

The genius of the program is that its certified practices were developed primarily by workers' comp carriers, with risk management best practices as the foundation.

The certification program was launched in 2003 by the Certification Institute–an independent, nonprofit corporation promoting industry professionalism and best practices.

The program's board is composed of representatives of workers' comp carriers, PEOs and other executives with experience in workers' comp risk management.

With this program, the PEO industry is aiming to gain insurance carriers' confidence and increase PEOs' opportunities to obtain workers' comp insurance coverage for employees in PEO arrangements. Forty PEOs have been certified by the CI to date, and others are working toward certification.

PEOs arrange workers' comp coverage, provide risk management and manage claims for several million workers as part of their service to small businesses.

While carriers always underwrite and conduct their own risk management, PEOs specializing in workers' comp risk management provide a valuable additional layer of evaluation and client service for the carriers.

PEOs routinely invest in loss prevention and claims management services in addition to the premium cost. Without a PEO relationship, in fact, most small businesses do not benefit from professional risk management.

The certified PEOs are a powerful mechanism for reaching a massive workforce. Currently, they provide services to employees representing over $10 billion in annual wages, and they represent approximately $250 million in annual workers' comp premiums.

These certified PEOs have demonstrated their commitment to using best practices with 100 percent of their clients, 100 percent of the time. They provide workers' comp risk management and attention to claims for small businesses each and every day.

As a former New York State Workers' Compensation Board chairman, I can readily see that the CI and its certification program have important roles in this key policy area.

Over the past two years, I have seen an increasing interest in the PEO Workers' Compensation Certification Program by the carrier community. Seven workers' comp companies are now involved in the program.

The major carriers send industry representatives to various CI events, contribute their expertise to the CI, and support the work of the CI in other ways.

Carriers, brokers and agents joined risk management professionals and executives in the PEO industry for a major NAPEO networking and educational workshop on workers' comp risk management last March in Tampa, Fla.

As the CI certification program matures and expands its initiatives, there is no question that the interest of the carrier community will continue to grow.

For example, the CI has just embarked upon an ambitious project to gather data from the certified PEOs. The data will be of particular interest to carriers as they establish underwriting guidelines for the PEO industry.

The data will demonstrate that a PEO participating in the CI workers' comp program is a much better risk than one that does not participate.

As the certification program progresses, I fully expect that the entire workers' comp community will embrace it. In addition, as the certified PEOs enjoy value from the program, other PEOs will likewise realize the benefits of participation. The trust will grow, one PEO at a time.

-For more information, check the Certification Institute Web site at www. certificationinstitute. org.

Robert R. "Bob" Snashall chairs the Workers' Compensation Certification Board for the Certification Institute. He is a principal with Snashall Associates, a workers' comp professional services firm based in Cazenovia, N. Y.

Infographic, with image of a document stamped "CERTIFIED!"

Flag: Winning Formula

Head: Certification Has Big Benefits

Certification of a professional employer organization's risk management practices presents a win-win-win situation for all parties for a number of reasons. The program:

o Promotes safe work places and thus is a win for workers.

o Requires a verifiable level of diligence and action by the PEO and its clients in safety, claims management and risk management, thus lowering claims costs–a win for the PEO and the clients.

o Ensures the PEO is focused on risk assessment, loss prevention and claims management, leading to fewer or less costly accidents, and ultimately resulting in lower insurance costs for buyers.

o Sets performance practices for PEO accountability and operations, which are underwriting elements insurers consider.

o Demonstrates to the regulator community there is a credible PEO industry program promoting responsible behavior.

"The genius of the program is that its certified practices were developed primarily by workers' comp carriers, with risk management best practices as the foundation. "

Robert R. Snashall