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adp peo
Posted: Thu Mar 24, 2011 10:15 am
by policyman
A client of mine (California) who was contacted by ADP about joining their PEO program primarily for WC. Their mod was recently increased due to reduced payroll and increased claims and looking for a way to lower their costs.
Has anyone (or clients) had experience with their PEO program that they could share with me?
Thank you for your help.
Re: adp peo
Posted: Fri Mar 25, 2011 6:27 am
by Big Dog
Disclaimer: This is my personal opinion only. I used to be a w/c underwriter for a number of PEO's, so my views may be somewhat biased (but most likely accurate).
PEO's promise the world when it comes to reducing the costs of workers' comp insurance, along with increased service such as loss control, safety plans and such, but rarely adequately deliver on their services. PEO's have the advantage of having the "buying power" to sometimes get better benefits, but from my own experience, they really don't deliver. If you can't tell, I'm not a fan of PEO's (and won't ever work for a place that uses them).
There are a number of factors that go into determining an x-mod. Payrolls, classifications, number (frequency) of claims, and the severity of claims. In your case, since your client's payroll dropped, that will have an adverse affect on the x-mod - that it, it will go up. Add into that either increased frequency and/or severity will also have an adverse affect.
ADP branched out into the PEO business in the late '90's, using their strengths as a payroll management company. Although ADP isn't to blame for the drop in payroll, they should be providing services to address the increased frequency and/or severity. If they're not, your client has been hood-winked.
Re: adp peo
Posted: Fri Mar 25, 2011 11:15 am
by justthere
There are a number of issues that I have seen going against ADP. 1) They do not like to give a written proposal. They will only give a net rate per $100 of payroll. So there is no transparency. 2) They will say whatever they need to say to try to close the deal. (OK - this may not be true all of the time. But they are sure telling some whoppers to my client) 3) They do not tell the client that their health rates and work comp rates are not guaranteed for 12 months. So, the client could be told one thing and then see a drastic increase in 2 months. At that point, there is nothing they can do because they signed a 12 month contract. The methods they have used to try and take my client would lead me to believe that they are opening themselves up to massive legal issues. However, their methods have also made it much easier to keep my client. I would steer clear.
Re: adp peo
Posted: Fri Mar 25, 2011 12:15 pm
by Shagster12
So here's my two cents worth.
My agency having over 80 employees places business with only 2 PEOs at this time. And while I generally agree with you Big, I also believe that the PEO alternative makes sense and is a great fit for some clients and makes no sense and is not a fit for others. Now there are hundreds of PEOs out there, the trick is to know who they are and how they operate. I mentioned my agency only deals with 2 out of the potential hundreds, and only 1 gets most of the business. The reason is they are a well established long term company. They are a self-insured program that has been around over 30 years. Well funded and capitalized so there is scant danger of financial difficulties there. And the other reason is the transparency. Every bit of cost is built right into their proposal and they do not have additional fees for special services that are tacked on later, everything is included in their admin costs. So you get a strong well established company that doesn't hide anything... And being self-insured they base their pricing model for the comp rates right off of the Pure Premium rates so there are really no surprises there either. So as previous posts have mentioned, the transparency of the PEO is of paramount importance and I don't believe you get that with the ADP program and I have been told by former clients of their program that there were 'alot of surprises' along the way...
So in summary, there are GOOD PEOs available, my opinion is that ADP may not be one of them....
Re: adp peo
Posted: Fri Mar 25, 2011 1:18 pm
by policyman
Thanks for your input is is very helpful. What has been the experience of employers who have gone into a PEO and then tried to go back to the traditional WC?
Re: adp peo
Posted: Fri Mar 25, 2011 1:32 pm
by Big Dog
policyman wrote:Thanks for your input is is very helpful. What has been the experience of employers who have gone into a PEO and then tried to go back to the traditional WC?
If the client has an x-mod, then that means they're what's known as a "Rule IV" client (at least in California). That is, they have to have4 their own stand-alone policy (they can't be under the master policy of the POS...I mean PEO.
So, it's actually quite easy for them to get a stand alone policy (since they're currently on the same with the PEO).
Note to Shagster12 - I'd be REALLY concerned if a PEO was "self-insured". Of concern is which TPA is handling their claims. I handled a number of larger PEO's, most based in SoCal, but found almost all of them never put their "employees" first on anything.