Actuarial expertise that supports PEOs as their business grows and their insurance needs evolve

Workers’ compensation is a significant financial exposure for professional employer organizations (PEOs), and the actuarial support they need can change considerably as their business grows. Pricing new and renewal business, establishing appropriate liability accruals, understanding profitability and evaluating transactions all require increasingly sophisticated analysis.

Davies provides actuarial and insurance consulting services specifically designed for the PEO market, taking an integrated approach that considers individual assignments in the context of the PEO’s wider risk management program. Our experience spans workers’ compensation reserving, pricing and product management, analytics and transaction advisory, combining actuarial expertise with a practical understanding of the particular exposures PEOs manage.

That experience is grounded in the market itself. The leader of our P&C Actuarial Consulting Practice previously served as Chief Actuary for one of the largest PEOs in the U.S., working across virtually all aspects of its workers’ compensation exposure.

Supporting PEOs as they grow

As a PEO matures, its actuarial requirements evolve. A start-up may initially need support with workers’ compensation pricing; as the business grows, the focus can expand to liability accruals and reserving, followed by more detailed analysis of profitability and performance. For larger and more established PEOs, actuarial expertise can also play an important role in supporting mergers and acquisitions.

Our services can develop alongside the PEO, providing additional insight and analysis as the size and complexity of its workers’ compensation program increases. The lifecycle approach extends from pricing through reserving and accrual modeling to profitability analysis, benchmarking and transaction advisory.

Our PEO actuarial services include:

• Actuarial reserving
• Workers’ compensation liability accrual modeling
• Workers’ compensation pricing
• Profitability analysis
• Industry benchmark comparisons
• M&A transaction advisory

These reflect the core services in the current Davies PEO proposition, including reserving and accrual modeling, pricing, profitability analysis, benchmarking and transaction support.

Our PEO experience extends beyond individual actuarial assignments. We understand the connections between pricing, reserving, underwriting, claims, finance, analytics, carrier and vendor relationships, and transactions, enabling us to consider individual projects in the context of the PEO’s wider risk management program.

Our consultants have supported PEOs across different sizes, geographies and industry niches, working with organizations representing approximately 30% of the PEO market. We also bring experience across the wider ecosystem in which PEOs operate, including insurance carriers, brokers, accounting and audit firms, risk management and consulting firms, technology and analytics providers, bankers and private equity firms.

Our work ranges from start-up and program development through to guaranteed cost-to-large deductible transitions, carrier and vendor negotiations, actuarial liability estimation and forecasting, pricing and predictive modeling, and buy-side and sell-side M&A transaction advisory.

Our broader workers’ compensation experience includes developing rates and rate structures, large deductible and retrospective rating plans, early warning and pricing models, carrier renewal negotiation analytics and risk and safety workforce optimization models. Our consultants also regularly evaluate workers’ compensation programs as part of both buy-side and sell-side M&A transactions.