How does an insurance agent choose which PEO broker to work with? Because PEO brokers are unregulated and not subject to licensing requirements, agents need to find out:

• Does the PEO broker have E&O coverage?
• What are his or her qualifications? Check the broker’s web site for a bio, or ask for one, as well as references from other insurance agents.
• What services does the PEO broker perform? There are “quote only” and “full service” brokers and a number of brokers in between the two. The quote-only broker provides the quote and it is up to the agent to present the quote and deliver a signed client service agreement. The full-service broker conducts a fact-finding meeting with the client, selects a group of PEOs that match the client’s needs, requests proposals, prepares an apples to apples comparison to the client, procures the signed client service agreement, and makes sure that the PEO implementation is properly scheduled and completed.
• Who actually makes the presentation of the PEO proposal to the client--the insurance agent, the PEO broker or the PEO sales rep? Some PEO brokers let the PEO sales rep make the presentation.
• What type of clients does the PEO broker have experience with? Some clients are Workers’ Compensation driven, some focus on Health, and others are driven by the need to outsource HR and administrative services. Still others are dependent upon the human resources information systems capabilities of the PEO.
• Does the broker have experience with large multi-state firms?
• How many PEO markets does the PEO broker have a sales contract with? There are more than 700 PEOs in the U.S. The broker needs an adequate number of PEO markets to match with the client’s needs.
• Will any of the PEOs the PEO broker has contracted with recognize a Broker of Record letter from a competing insurance agent? Will the PEO broker recognize a Broker of Record letter?
• Do any of sales agreements the PEO broker has with PEOs contain any non-solicit or non-compete provisions? If so, this can limit the PEO broker’s ability to provide quotes or sales assistance for clients which are already with certain PEOs.
• The insurance agent’s contract with the PEO broker should state that commissions will continue to be paid as long as the client stays with the PEO and the PEO broker receives commissions from the PEO. It should also state that if the contract with the PEO broker is terminated, commissions will continue to be paid as if the contract was in full force and effect. The insurance agent’s contract should not require any services from the agent.
• Does the PEO broker have a health or P&C insurance license? In certain states only licensed insurance agents can compare health plans.
• Some PEOs purchase Workers’ Compensation insurance from carriers with no A.M. Best rating. The insurance should require the PEO broker to disclose the name of the Workers' Compensation carrier and its Best rating on all proposals delivered to the agent and client.

Insurance agents find it easier to work with PEO brokers because the broker works with the client like the independent agent does: representing the client and not the PEO. However, the insurance agent cannot assume that the PEO broker is qualified. The checklist above will give the insurance agent a good start, with a possible next step of making a joint sales call on a client to observe how the broker works in the field.