That's What She Said: A Guaranteed Cost Case Study
While we won't become Michael Scott and annoy the whole office with "tha'ts what she said" jokes, we'll still provide you with a client case study to better understand the measurable difference some clients have experienced with a guaranteed cost program.
Here's a case study demonstrating the value one of our clients received from switching to a guaranteed cost plan.Problem
The staffing company had purchased a guaranteed cost Workers' Compensation insurance program for the first five years of business. In year six, the company was sold which led to the purchase of a loss sensitive captive insurance program. During the second year of the new program, the client realized they would need to post additional collateral and pay loss assessments. These unplanned additional cash items eroded the headroom on their borrowing basis and eventually restricted their ability to continue to grow.
The following year, the staffing company elected to return to a predictable guaranteed cost program and not post additional security to the loss sensitive captive option.
As the client was no longer required to pay into a collateralized insurance program (captive), the staffing company was able to generate additional headroom on it borrowing line and increase revenue by 17%.
Jim, Pam or Dwight - You've Got OptionsWhile guaranteed cost is the most commonly purchased plan and can create a measurable difference (as outlined above) in bottom line, it might not work for your organization structure.
ABOUT THE AUTHOR