What Affects PEO Pricing?

The Factors That Move PEO Pricing the Most

Not all pricing factors carry the same weight. Workers comp loss history and your experience modifier are the two biggest levers. A company with a clean loss history and an EMOD below 1.0 can pay 20 to 30 percent less for workers comp than a company with the same headcount and a poor loss history. Industry classification sets the floor. Payroll size and employee count set your pooling power. Benefits demographics set your health insurance cost.

• Workers comp loss history is the biggest single pricing factor
• Experience modifier directly scales your workers comp premium
• Industry classification sets your base rate floor
• Total payroll drives pooling power and per employee pricing
• Benefits demographics affect health insurance pricing
• Compliance history adds or removes risk premium

PEO Pricing Factors You Can Actually Influence

You cannot change your industry, but you can change your loss history over time through safety programs. You can correct misclassified employees before you apply. You can resolve tax liens and compliance issues before the underwriter sees them. You can increase your pooling power by applying to PEOs that welcome your size. The factors you control are the ones worth focusing on before you submit your application.

PEO Pricing Factors Outside Your Control

Your industry, your headcount at the time of application, and your prior claims history are largely fixed when you apply. You cannot rewrite the past. But you can shop your fixed risk profile across multiple PEOs with different underwriting guidelines. The same fixed risk profile gets different pricing from different PEOs. That spread is where a broker creates value.