A California-based blue-collar company came to their PEO in 2019 when their experience modification score was high. A broker made the introduction, then disappeared, collecting commission every month for six years without ever circling back.
The company grew to 94 employees. In December 2025, they renewed with their PEO and saw another increase.
When you look at what this company actually paid over six years in workers comp and administrative fees versus what the PEO paid out in actual claims, the math is clear: the PEO made a tremendous amount of money on this account.
The client's experience modification score had substantially improved since 2019. That improvement was real. It came from time passing and claims management working as it should. But the client never received the full benefit of that improvement in their pricing. Year after year, despite an improving ex-mod, the PEO's renewals showed increases.
Every employee was on direct deposit. There were no checks to print or deliver. Claims had been minimal over the last 14 to 18 months. The payroll tax estimate on the renewal was higher than what the actual liability should have been based on known numbers. Yet the increase came through anyway.
The PEO had promised quarterly visits from an HR consultant, a risk and safety consultant, and a business advisor. That service structure existed in the early years. Over time, it eroded.
The bigger issue was constant turnover on the PEO's service team, which meant the client could never establish a real relationship with anyone. After years of dealing with different representatives, the owner simply stopped trying. They now handled most things themselves rather than relying on the PEO service team, which kept changing.
For a business in this industry where claims are foreseeable and claims management matters, this decline in service quality was significant.
When we broke down the pricing and compared it with what the market would offer for the same coverage and service, the difference was substantial.
The client was paying 20% more than equally positioned PEOs quoted. On a $1.8M payroll, that worked out to five-digit annual savings, year over year.
But the real value was not just the cost reduction. The new PEO offered something the current one had stopped delivering: a superior claims management process and litigation prevention strategy designed specifically for businesses where claims are part of the operating model. They also included supplemental benefits that the current PEO did not offer.
Moving from one PEO to another at this scale is straightforward. The client had already done the harder work of establishing PEO infrastructure years earlier. This transition was clean and uneventful.
What mattered was what came after: a service team that stayed in place, a claims management approach built for their industry, and pricing that reflected their actual risk instead of a formula that did not.
Six years of increases, despite an improving experience modification score, despite minimal recent claims, and despite no actual service being delivered. The client had earned a better mod through time and good safety practices. They never got the full benefit.
When the math was finally laid out, the question became obvious: why keep paying for a relationship that stopped earning its cost years ago?
If your experience mod has improved but your renewals keep going up, the numbers may not be telling the full story. One conversation is all it takes to find out.
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