As an independent insurance agent, you want to offer the best products to your clients. However, for some small hard-to-place businesses, an alternative market for Workers’ Comp is necessary.

Riskier industries, new businesses who don’t have the standard 3 years of claims history, or small employers who find themselves non-renewed due to changing rules in the standard market may have trouble in the standard comp market.

Where do you go from here?

When the standard market is out-of-reach for a small business, a state fund it typically available as a last resort. Unfortunately, the rates, terms, and service aren’t going to be as competitive as they could be in the standard market.

Selling the state fund to a client can be tough. They may shop around for a better rate. You could lose their business to someone promising a better way.


PEO companies can offer a creative alternative to state-funded workers’ comp insurance if the standard market feels out of reach for your client’s business, which can be the case for:

  • New businesses with no claims history
  • Businesses with coverage lapses
  • High-risk industries
  • Business with high MOD rates

PEOs (professional employer organizations) provide human resource services for their small- and midsized business clients. PEOs partner with a business, who essentially outsources the management of human resources, employee benefits, and payroll services. In addition, PEOs can provide cost-effective benefits such as 401k plans, dependent care, health, dental, life, and workers’ compensation insurance.

A Pay-As-You-Go Model

PEOs typically administer workers’ comp through payroll services, which provides a pay-as-you-go model that eliminates the need for deposits and audits. This can be a big benefit compared to state-provided comp. In California, for example, the State Fund requires a deposit on all workers’ comp policies, based on a percentage of the annual estimated premium.

PEO companies who offer pay-as-you-go workers’ comp tied to payroll for their clients can save their business clients money and hassle. Estimating payroll can be challenging, particularly for seasonal businesses or those with highly-fluctuating payrolls.

A pay-as-you-go option with no deposits or audits can usually be enough for your client to choose a PEO company over the state fund. But when you include all of the additional services that your client gets with a PEO, such as payroll and human resources services, often at the same price as a stand-alone policy — well, it’s usually an easy decision to make.

Did you know? Businesses that partner with a PEO company often reduce overhead, enjoying an average of 21% (or more) on their HR services.


PEO companies can provide a very attractive alternative market for challenging or hard-to-place workers’ comp insurance. Most of your clients will jump at the opportunity to avoid the state fund.

Worried about selling the benefits of a service that you’re not overly familiar with? Don’t be. At HRD Markets, we do all of the work for you.

Simply submit your workers’ comp package and we’ll take it from there:

  1. We shop the PEO marketplace to find the best fit for your client
  2. We provide sales support in the form of a virtual meeting at your place of business
  3. We onboard and provide continual support for your client

You place the comp, receive a competitive, ongoing commission, and your client gets the benefits and cost savings that come with a PEO partnership. It’s a win-win situation for you and them.

Want to see how easy it can be to place that difficult comp? Find out if your client is a good fit for a PEO and let us find them the right solution today.

What is Human Resources Development?

Human Resource Development (HRD) refers to the process of developing the knowledge, skills, and abilities of employees in an organization. The goal is to create a workforce that is able to meet the challenges of a rapidly changing business environment.

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