Risk Management and the PEO
Risk management is the elephant in the room of any business. It lumbers, threatens, and worries everyone in the place. Risk management supports workers’ compensation by reducing the occasion for accidents and injuries among employees.
Below is clarification on a few of the terms and concepts associated with managing the risk in your business:
- Risk Management Plans assess the potential for risk.
- Risk Identification marks and documents the risks that can occur per specific job.
- Qualitative Analysis studies the probability of specific risks and their financial impact.
- Quantitative Analysis studies the numeric effect of the identified risks in terms of frequency and cost.
- Risk Response designs remedies for incidents in order to improve experience or reduce negative impacts.
- Risk Control implements a self-improvement process to track the specific risks, identify the new risks, execute risk response, and evaluate the effectiveness of response.
Response mechanisms include:
- Continuing training needed of management and employees.
- Equipment and physical safety measures that must be expensed and installed.
- Return-to-work programs which are best practices to reduce long-term claims experience.
- Third-party professionals who can assist with risk analysis, safety materials, and training.
- Design and control of drug-free workplace programs.
- Assistance with litigation defense and claims controls.
Risk Management
The burden of the health and safety of employees can overwhelm employers. Without behavior, precautions, and preventive policies, pain and injury are inevitable. Law mandates workers’ compensation programs. They spread the risk and manage and control the potential individual harm and corporate expense.
Of course, total elimination of injuries is the best control. But, absent that, the business must insure the risk in a litigious culture. The cost of the insurance is loaded with the cost of the claims experience, cost controls, and potential litigation. Each of the layers affects productivity and profit.
Worker’s Compensation and the Professional Employer Organization
A Professional Employer Organization (PEO) can meet and simplify the challenge. The co-employment contract provides experienced trained professionals and other risk management services.
- Any PEO worth its salt has a PEO safety staff to assess, evaluate, develop, and monitor safety programs that work for your company, its business segment, and number of employees.
- By increasing the labor force with co-employed workers, the PEO is positioned to negotiate group insurance discounts.
- Using its fraud detection practices, the PEO investigates and manages claims while keeping the employer arms-length from the audits.
- The PEO builds the premium payment into the payroll process thus fulfilling statutory requirements.
- The PEO complies with OSHA and other government compliance issues.
- It remains in the PEO’s interest to visit the business worksite and to monitor and instill safety precautions and training.
Direct benefits
- Economies of scale usually assure immediate and significant savings.
- Better coverage follows from improved experience, and some contracts assure high maximums.
- Workers’ compensation insurance vendors require payment upfront against which the company’s claims experience draws. The PEO runs interference on that front-end cost.
- Claims administration and management complicates things for the individual employee and for the business, but the PEO assumes that administrative task with professional abilities and experience.
- Claims in the larger co-employed pool define the loss experience allowing the PEO to manage its contracts and markets to keep premiums at a cost effective level.
Compare PEOs
- When shopping for a PEO arrangement, add value to the provider that shows a drug and alcohol program, extensive training materials, emergency response programs, safety policy manual, and the like.
- Ask for a review of the PEO's OSHA experience, record keeping, investigation procedures, and loss control record. Have the PEO walk you through a claim and its subsequent management of fraudulent behaviors.
- Confirm the integrity, ethics, and reliability of the PEO workers’ compensation response. There are PEOs that relieve you of the personal worry and corporate responsibility.
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