Are Payroll Companies Stealing Your Business?

Transcription

1 8 th Annual Independent Insurance Agents of Texas Are Payroll Companies Stealing Your Business? Ed Dittrich Peigo, Owner 105

2 Pay As You Go Workers Compensation Pay As You Go Workers Compensation 2 What is it? Where did it come from? Why is it important to me? Pay As You Go Workers Compensation 3 What is it? How is it different from Traditional Workers Compensation? 106

3 Traditional Workers Compensation 4 Quote is based on Class Codes, Estimated Payroll & Loss History Payment Methods 100% down (may require premium financing) 25% down and 9 fixed payments Monthly reporting (restricted to a few specific industries) Audit at year end Start the process over again Pay As You Go Workers Compensation 5 No (or minimal) Deposit Monthly Premium Calculation based on Actual Payroll No (or minimal) Audit It is NOT Monthly Reporting Why is Pay As You Go attractive to employers? 6 Premiums are Based on Actual Payroll vs. Estimates Maximize Cash Flow by Eliminating Large Down Payments Eliminating Large Installments Eliminate or Reduce Surprise Balance Due at Audit Eliminate or Reduce Time Spent at Year-End Audit Eliminate Writing Checks Sound Attractive? Would your clients appreciate this? 107

4 Pay As You Go Workers Compensation 7 Where did it come from? Where did it come from? 8 Big Payroll companies started it several years ago The Payroll companies contracted with large Workers Comp. carriers and became appointed as agents The Payroll company processes the payroll Weekly, Biweekly, Semi-monthly or Monthly Workers Compensation premium is deducted from employers account along with payroll and payroll taxes, each pay cycle Premium payment is remitted to the carrier each pay cycle or monthly based on carrier preference Pay As You Go Workers Compensation 9 Why is this important to ME? 108

5 Why is this important to ME? 10 Well, the Competitive Landscape is changing. Payroll Processing Companies are increasingly taking insurance business away from the Independent Insurance Agent. They began with Pay As You Go Workers Compensation. They are now expanding into Business Owners Policies (BOPs), EPLI, Health Insurance, Dental, Vision, Voluntary Benefit Plans and 401(k) plans. What s next? So, What is a Payroll Processing Company 11 What they ARE: An outsourced solution for employers of ALL sizes for Payroll calculation Tax filing, Preparation and filing of Payroll Tax Returns Time and Attendance Solutions W-2 and 1099 printing and management What they are NOT: Not a PEO Not employee leasing Who are these Payroll companies? 12 There are over 10,000 Payroll companies in the United States and the are all getting in the Insurance business. The three biggest are: Paychex approximately 561,000 clients ADP approximately 476,000 clients Ceridian approximately 60,000 clients 109

6 Information You Need to Know 13 Paychex has over 75,000 workers compensation policies in force. Big Payroll is increasing their insurance sales staff at a rate of 45% per year. Big Payroll is planning to grow their insurance business at three times the rate of their payroll business this year. 14 How do the Payroll Companies market their Insurance Solutions? Paycheck stuffers Insurance sales call center Local payroll sales force Acquisition of CPA firms 15 Why are Payroll Companies and PEOs so successful at taking business away from Independent Agents? Business owners are overburdened with mundane management issues; issues that are preventing them from doing the things that will actually build their businesses. Payroll Companies and PEOs have listened to employers and delivered a one-stop shop for their payroll, insurance and HR needs. Payroll Companies and PEOs serve to eliminate many internal headaches AND they cut out the need for several vendors, Including insurance sales people. 110

7 16 Carrier s Perspective How does Pay As You Go Workers Compensation benefit the Carriers? How does Pay As You Go Workers Compensation benefit the Carriers? 17 Niche market which sells itself, no asking for credits Receivables go down since money is collected and remitted by the payroll provider directly to the carrier Reduces audit resource requirements Retention rates 20-25% higher than retail sales One of the carriers in the market today 18 Experience working with multiple payroll service organizations. We booked $200M in premium in 2007, and over $45M of that represented payroll billed clients. The number of our payroll billed policyholders grew from 1,016 in 2000 to well over 15,000 in In other words, we've got the process down pat. An A- ("Excellent") A.M. Best rating, providing confidence in our financial stability, credibility, and viability as an ongoing source of workers compensation coverage. Specialization in this line of coverage. We have focused on solely workers comp coverage for 25 years. 98% of our payroll billed policyholders who were offered renewal last year chose to renew their coverage with us again this year. What does this mean to you? It means that your clients are not likely to become disenchanted or frustrated with us as their workers' compensation insurer and that their interaction with us will be smooth, easy, and meet or exceed their expectations at every level customer service, billing, and claims. 111

8 19 How does Pay As You Go Workers Compensation benefit the Carriers? Reduce Audit Costs - What is the percentage of current audits that result in no overpayment or underpayment of premium? Cost of the audit Cost of disputed audit Cost of re-audit Cost of resources working with client and/or their CPA Cost of negotiations around balance due Loss of goodwill as a result of balance due from or refund due to employer Cost of collection activity for balance due Who is already in the game? 20 Hartford AmTrust The Guard Employers First Comp Dallas National Travelers Swiss Re AIG Zurich Service Lloyds Companion Current Models of Distribution 21 Big Payroll QuickBooks (Hartford) Directly to Independent Payroll Service Bureaus/Payroll Software Providers (Hartford, Guard, AmTrust) This means that you have over 10,000 competitors you didn t even know about. 112

9 Current Models of Distribution 22 Marketed to Payroll Bureaus and Payroll Software providers (Hartford and Guard) Typically open to any payroll bureau that can support the data file Agent not required for payroll bureau solution, the Carrier acts as the Agent Payroll Bureaus are paid a data processing fee or royalty fee to provide payroll data directly to carrier QuickBooks - Hartford XactPay Web 23 XactPay Web marketed directly to employers Available to QuickBooks users with or without an Agent 24 Agent s Perspective How does offering Payroll Processing Services And Pay As You Go Workers Compensation benefit YOU the AGENT? 113

10 Increasingly, Agents are realizing 25 I am losing business to payroll companies and PEOs My clients want a Pay As You Go premium remittance option My carriers are not allowing me to have access to Pay As You Go without a payroll solution I can t find a Payroll Service Bureau to work with me. They don t need YOU, but you need THEM Let s sum it up 26 Business Owners are looking for: One stop shopping Comprehensive Suite of Services Wouldn t it be great if they could get that kind of solution from YOU a Trusted Partner Want to get in the game? 27 You already have: The relationship Their trust An understanding of their business A comprehensive suite of insurance products You need: A Comprehensive Payroll Solution A Pay As You Go Workers Compensation Solution 114

11 Why Payroll? 28 Payroll drives customer retention Another entry point into prospect company Needed by nearly every small business owner with more than 1 employee Natural fit with insurance products Provides additional cross-sell for other products including insurance and retirement solutions 29 How can an Agent use Payroll Processing to their Advantage? Selling Payroll Processing service to your clients will: Save your clients money Generate additional revenue for your agency Increase client loyalty and retention Excellent tool in a soft market 30 How can an agent use Payroll Processing to their advantage? Providing your client with a payroll solution allows you to more easily sell: 125 Plans (Premium Only and Flexible Spending Accounts) Voluntary Benefit Plans Pay As You Go Workers Compensation Keep Big Payroll from Stealing your Clients 115

12 How do I get started? 31 First: Look at your own agency. Almost 2/3 s of insurance agencies outsource their payroll. If your agency is currently outsourcing their payroll you are funding your biggest competitor every time you process payroll They are using that income to market Insurance products to YOUR clients You need to STOP that NOW How do I get started? 32 Second: Contact all of your clients to determine which of them currently outsource their payroll. About 45% of them do. This is your opportunity to secure additional revenue for your agency and protect your client from competition. If your client is outsourcing their payroll you have a competitor inside your clients office and they are marketing insurance to your client every pay cycle. You need to know if they are. How do I get started? 33 Second: Contact all of your clients to determine which of them currently outsource their payroll. About 45% of them do. This is your opportunity to secure additional revenue for your agency and protect your client from competition. If any of your clients are outsourcing their payroll, ask them for a copy of a recent invoice. PeigoLLC will guarantee to reduce their fees by a minimum of 15%, process their payroll the first month free, perform all the setup at NO Cost. And PAY YOU A COMMISSION 116

13 How do I get started? 34 Third: Partner with a quality Payroll Processor that will work WITH you instead of AGAINST you. If any of your clients are outsourcing their payroll, ask them for a copy of a recent invoice. PeigoLLC will guarantee to reduce their fees by a minimum of 15%, process their payroll the first month free, perform all the setup at NO Cost, And PAY YOU A COMMISSION Important things to know! 35 If you are not talking to your clients about Payroll, you can be sure that your clients Payroll provider is talking to them about Insurance PeigoLLC is the only Payroll processor designed BY Insurance Agents FOR Insurance Agents Good Luck! PeigoLLC The Insurance Agents Payroll Partner 36 PeigoLLC P.O. Box Garland, Texas Ed Dittrich ed@peigollc.com Cell: Paul Dozier paul@peigollc.com Ginger Dittrich ginger@pdigollc.com 117