Any Experience with ADP/Travelers WC ?

[Scottyj]

Just to preface, I am in my first year of P&C so this is pretty new to me still.

So over the last few weeks I have been working with a commercial Janitorial service company who have been using ADP for just about 4 years now and over those 4 years they used ADP insurance services to supply them with Workers comp coverage placed through Travelers... While doing my homework and talking to my underwriters at Travelers I came to find out the coverage they had through Travelers according to my commercial underwriter was some proprietary master policy Travelers created for ADP and is structured similarly to what other PEO services provide.

Well on to the good stuff. He came to me for a quote back in August because Travelers kept raising his rates and he had paid over 20k last year. I did some searching and was able to quote him at just under 15k through AmTrust. He loved it and immediately cancelled his PEO service through ADP/Travelers mid-term and we got him started with Amtrust effective 10/01/11.

Now for the best part just yesterday my client receives a letter in the mail from Travelers stating he owes them 15k???? on a pay-by-pay policy? (this particular policy he had was audited every two weeks after each pay period, so tell me how do they owe more premium?)

Anyone have a similar experience?

I know this is not necessarily my problem being I told him I don't know a ton about these proprietary products through Travelers made for ADP before I got him the quote and I even told him there could be issues in switching over but he did not seem to care. Now that this is all said and done I would like to lend him a hand as he does look to me as his insurance advocate... I will be receiving a copy of this letter on Monday but am pretty sure this is not a short-rate/fee, so I am wondering if there is some sort of mid-term cancellation penalty in the ADP contract ?

 

[redsquash]

Workers comp rates are subject to audit - and are edited after the year end. At the time of app, they are just "best estimate"
So, alert your client not be surprised if he gets a new bill (after premium audit next year) from "new carrier"

Since, your client had Traveler policy for last four years, and IF the revised rate has happened only this year - then its strange. Especially if his payroll has been the same for last three years.

 

[Scottyj]

Yes he is aware of year end audits.with the carrier ive placed him with.

Where we are confused is adp and travelers market this pay by pay that he had as a.way to avoid a suprising audit by using a 3rd party report/audit each pay period..
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I guess just another reason for business owners not to go the PEO route. At least I got him back in the normal market and with a policy that will fully cover his exposures

 

[TwiLight]

Yes he is aware of year end audits.with the carrier ive placed him with.

Where we are confused is adp and travelers market this pay by pay that he had as a.way to avoid a suprising audit by using a 3rd party report/audit each pay period..
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I guess just another reason for business owners not to go the PEO route. At least I got him back in the normal market and with a policy that will fully cover his exposures

Well you are talking to the guy who started the pa....s...go work comp in the mid 90's with Hartford. Can't say the whole word because....lawyers you know.

If they are in a PEO arrangement with ADP Totalsource than he would still be subject to audit, but it is a simple one and rarely has an amount due. Now if the PEO arrangement had Travelers make an additional insured arrangement with your client than that is different. Any payroll, including contractors/1099 that was not run through the payroll of ADP is subject to additional premium.

This is also done on a non-PEO arrangement using payroll service plus work comp and is more used as a group WC Policy. Still subject to audit and 1099 inclusion.....remember, most people lie and cheat on classification and 1099 in a normal sale with an indy agent. More so with PEO arrangements.

The insurance industry has declared PEO arrangements as adverse business and does not like them and has steadily killed this market over the past 15 years. Less than 2% market share now and barely a blip on the radar.

Payroll companies that use a system like my company RapidChex, partner with Insurance companies and essentially create an alternate payment arrangement (Monthly Reporting) and collect premiums for this payment while still maintaining the relationship with the insurance agent and commissions with the originating agent. It is still the responsibility of the agent to have properly classified employees and to account for 1099 premiums and this is revealed at audit.

Patrick

 

[Scottyj]

Just to clarify I just pulled him out of a peo. I am an independent agent and placed the risk through amtrust financial
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Thanks pat. I will take a look at the letter tomorrow and see what they are trying to pull on my client.

 

[Scottyj]

Well my client called ADP and it turns out they were just holding on to the premiums and the letter was issued before ADP sent the money to Travlers however now Travelers is telling my client he will end up paying a short rate, which is pretty normal but with the way these PEO companies run i dont even know if there was an actual policy issued with my client as the named insured. I asked my client if he remembered signing an Acord app he said he does not remeber signing one then again it was four years ago. So if he never signed one that means this short rate should not be an issue.

Now I am smart enough to know that clients tend to get random amnesia when they owe money or have a claim that are not covered so I will not be convinced until I know for a fact.

TwiLight... you wouldnt happen to know if PEO companies require their clients to sign an accord app upon policy issue would you ? I mean it would make no sense especially because they usually just throw clients into their master policy anyways. Isnt the PEO company the named insured and not the client ?