Transportation Company
A major transportation company operating throughout New York City with $125 million in annual revenue was struggling with excessive costs tied to their workers’ compensation and payroll structure. Their insurance was embedded within a Professional Employer Organization (PEO), leading to over $3.5 million in annual costs between workers’ compensation premiums and payroll reporting fees. This arrangement was not only expensive but also left the company with little control over their insurance program and no ability to capture underwriting profits.
- Industry: Transportation/Non-Emergency Medical Transport
- Location: New York City
- Annual Revenue: $125 million
- Total Premium: $1,600,000
- Policy: Workers Compensation
Challenges
- Overpriced Workers’ Compensation & Payroll Fees – The PEO structure inflated the company’s costs, forcing them to pay significantly more than necessary.
- Lack of Control Over Insurance – The company was unable to participate in underwriting profits or optimize its risk management approach.
- Unnecessary Administrative Costs – The PEO charged excessive payroll reporting fees, further increasing financial strain.
Union Risk's Solution
Union Risk Services developed a comprehensive restructuring plan to reduce costs and improve the company’s financial efficiency:
- Transition to a Single-Parent Captive
- Union Risk removed the workers’ compensation coverage from the PEO and transitioned it into a single-parent captive insurance structure.
- This allowed the company to control their own risk, lower long-term costs, and participate in underwriting profits.
- Payroll Cost Optimization
- Union Risk connected the company with a new payroll service provider that significantly reduced payroll reporting fees.
- The new provider cut payroll costs by 45%, eliminating the unnecessary overcharges imposed by the PEO.
Results & Impact
✔ From $3.5 Million to $1.8 Million in Total Costs – The total combined cost of workers’ compensation and payroll reporting was reduced to $1.8 million, saving the company nearly $1.7 million annually.
✔ Cost-Effective & Controlled Workers’ Compensation – The company now benefits from a stable and profitable insurance program within their own captive.
✔ Significant Payroll Fee Reduction – The new payroll service provider provided a 45% cost savings compared to the PEO’s fees.
Conclusion
Union Risk Services successfully unwound the company from a costly PEO arrangement and helped them establish a self-managed, cost-effective insurance and payroll solution. By restructuring their workers’ compensation into a captive insurance program and slashing payroll costs, the company has transformed what was once an excessive expense into a strategic, profit-generating risk management solution.
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