Authored by NCCI Chief Economist Harry Shuford, yesterday’s report concluded that PEO claims experience as measured by loss ratios or claim costs relative to premium was no worse and was typically better than that of non-PEOs.
Paul Hughes, founder and chief executive officer of Florida-based Risk Transfer Holdings, said the research validates what many advocates of the PEO model have said for years. He believes the report is a game-changer for the industry in terms of improving its image and relationship with insurers.
“I’ve been waving the flag for years and showing my results leading the general industry by 20% to 25%,” Hughes said. “Whereas I have credibility, I don’t have the credibility of NCCI, nor the market knowledge or the actuarial knowledge. When the NCCI comes out with a study like that, people listen.”
One might even say Mr. Hughes underestimated the performance of the PEO industry, since performance in certain areas exceeded 25%. For example, the NCCI report reveals the ultimate cost of claims for voluntary large-deductible accounts increased only 27.8% for PEOs, compared to 41% for non-PEOs.
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Click here to download the full NCCI report: Story Behind PEO
