A professional employer organization, or PEO, often works with a collective of smaller companies to provide benefits they may not be able to afford on their own. While there may be many advantages for small companies when partnering with a PEO, one major value may be access to PEO insurance policies.
As a small business, offering health insurance may be costlier per employee than the price paid by larger employers. The risk of multiple claims made simultaneously may increase for a smaller company, and the insurance provider may have a higher risk of paying out more in claims than it receives in premiums. Working with a PEO to offer insurance may allow the small company to enter a pool with other small employers to lower the risk to the insurer, and subsequently lower premiums for all participants in the pool.
Employees may have access to more comprehensive insurance coverage when their employer partners with a PEO to offer benefits. The small company may be able to afford policies with lower deductibles and co-pays, as well as higher coverage limits.
Mission Critical Coverage
Since employee insurance coverage may be a major selling point considered by small business owners, insurance levels and rates may be mission critical for the PEO. Working with an insurer that specializes in PEO insurance may allow the PEO to provide even better benefits and coverage to their small business clients.