What is a PEO? Here's What Businesses Need to Know

October 4, 2023


Rebecca Batisto
What is a PEO? Here's What Businesses Need to Know

For many small to midsize businesses one of the primary headaches of running their business is likely the administrative responsibilities. These responsibilities can include finding insurance policies, managing payrolls, or managing human resources. Business owners often do not have the time to allocate for these tasks and may want to hire a professional employer organization (PEO) to outsource these responsibilities. But what is a PEO, and how does it work? Here are some answers to the most common questions about these organizations and the logistics behind them. 

What Does a PEO Do?

A PEO partnership can help businesses outsource their administrative work in various ways. Most often, they handle employee benefits, human resources, payroll administration, workers comp insurance, and risk management. Not only is the burden of all these tasks taken off the business owner, but the organization often gets discounted services for these businesses. 

Where Does the Insurance Come From?

Each PEO will partner with a workers comp insurance provider who will cover each business's employees. These will vary from organization to organization and from region to region within each organization, as most insurance companies only operate in certain states. At Normandy, we offer these master policies to professional employer organizations in our operating states. 

Why is Insurance Cheaper?

Because a PEO is a group of businesses, there are some significant pricing benefits to outsourcing, especially with insurance. Instead of getting insurance policies based on fewer employees, the group of companies is on the same policy, and they split the cost of a more extensive policy, which is a lower cost for each business. These master policies are a better investment, especially in the long run, as savings add up. 

How do The Organizations Pick the Provider?

The provider each PEO uses will depend on the states they operate in and how easy it is to file claims or pay a bill. Normandy offers some of the policies to PEOs across the country. Many of these organizations chose us because we provide top-notch service, from cost-saving resources to efficient claims management. 

For the operators of professional employer organizations searching for the best insurance provider for their companies, visit www.normandyins.com/peo to learn more about how we make the process easy and efficient.

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