Survey Says: The Price Is Always Right for Workers’ Comp Pay-As-You-Go Policyholders

By: | October 17, 2023

Augusto Bortoloni, NYSIF’s Director of Policyholder Services Business Operations, has more than 30 years of loss control expertise, along with policyholder and broker relations experience. Augie served as a supervisor in Field Services (now Risk Control) and Policyholder Services Manager for the Albany office before being named the Albany Business Manager in 2010. In 2019, Augie was promoted to the Assistant Director of Underwriting for Small Markets.

Pay-as-you-go premiums have fundamentally transformed how employers pay for workers’ comp insurance.

Rather than using payroll estimates to determine premium, pay-as-you-go (often shortened to “PayGo”) bases it on actual payroll for each pay period. As payroll changes, the workers’ comp premium changes with it in real time. This ensures workers’ comp costs are directly in sync with business conditions and staffing levels at all times.

Those with high employee turnover rates are most likely to benefit, such as those in the janitorial, hospitality and construction industries.

PayGo Comes Highly Recommended

To measure the impact of pay-as-you-go on the policyholder experience, NYSIF surveyed a diverse range of our PayGo-using policyholders ― from small family businesses to multinationals across New York State. The solution earned high marks across the board, including from one policyholder who actually credits PayGo with their ability to stay in business.

Regardless of the type or size of their business, almost all survey respondents reported having a very high regard for PayGo. When asked if they would recommend PayGo to other businesses, 95% answered with a resounding yes.

Innovative Game Changer in Workers’ Comp

Without PayGo, policyholders are limited to paying workers’ comp premiums by payroll estimates made at the beginning of the policy year. It involves year-over-year analysis, some guesswork and a lot of luck to get premium and payroll to match.

All too often, businesses with high employee turnover and thin profit margins — such as restaurants, cleaning services and certain building contractors — pay monthly premiums that don’t reflect actual payroll and are often much higher than necessary.

PayGo gets each company’s premium and payroll correct from the start with premiums that keep pace with payroll all throughout the year. Any changes to payroll are immediately reflected in the premium. The quick responsiveness and flexibility of PayGo helps make it not just a payment platform but also a valuable tool in managing the business cycle.

NYSIF launched a PayGo system in 2016, and the timing proved fortuitous to policyholders in the years that followed. The COVID-19 pandemic hit New York businesses particularly hard, and many of our customers had to drastically scale back operations or temporarily close. In such instances, it just didn’t make sense for businesses to pay workers’ comp premiums for a workforce on furlough.

Coming out of the pandemic, New York businesses of all sizes were faced with further headwinds, including high energy prices, inflation, supply chain woes and labor shortages. Here again, PayGo came to the rescue with workers’ comp premiums that were directly aligned with current business conditions and the overall economic environment. Paying monthly workers’ comp premiums was one less thing for insureds to worry about while they tended to the more pressing issues of actually keeping their businesses afloat.

PayGo works in direct conjunction with a policyholder’s payroll processor (such as Paychex, InsurePay or SmartPay) to ensure workers’ comp premiums are directly aligned with payroll each pay period. For even greater convenience and centralization of cash flow, NYSIF policyholders have the option to connect PayGo directly to their QuickBooks account.

Top-Ranked PayGo Benefits

Highest among the PayGo benefits revealed in our survey was “improved ease and accuracy of payments,” which was chosen by 70% of our policyholder respondents.

Since PayGo takes the guesswork out of calculating workers’ comp premiums, policyholders can be assured they are paying the most accurate premium at all times. The convenience of using PayGo is further facilitated by direct deposit, which enables premium payments to occur automatically.

Coming in a close second among PayGo benefits was the fact that the “large year-end audit bill was reduced or eliminated,” which was chosen by 67% of respondents.

When premiums are based on payroll estimates, any disparities between premium and actual payroll have to be settled during an often laborious year-end audit. With PayGo, the year-end audit process is easier, shorter and often far less costly, as the risk of any unfortunate audit surprises is virtually eliminated.

Rounding out the top PayGo benefits in our survey was “improvement to cash flow,” which was chosen by exactly half of all respondents. Since PayGo premiums are directly connected to current business conditions, the money going out to pay workers’ comp premiums is intrinsically linked to money coming into the business.

Policyholder Testimonials on PayGo

When asked an open-ended question about the benefits of using PayGo, our survey respondents had plenty to say:

  • I always know exactly what my workers’ comp costs are.”
  • “No need to pay more than payroll costs each month.”
  • “PayGo helps make it affordable to stay in business. Without it, it would be difficult to stay in business.”
  • “One less payment I need to worry about.”
  • “No longer need to estimate the upcoming year’s payroll, which is difficult.”
  • “Less paperwork throughout the year.”

PayGo Pays It Forward for Business Success

Pay-as-you-go premium is one of the most innovative changes in the history of workers’ compensation insurance.

Long-standing workers’ comp requirements and business practices such as up-front premium deposits, paying by estimates and complex audits are a thing of the past for PayGo policyholders.

Those requirements and practices have been replaced with a workers’ comp premium that is always priced just right for policyholders. &

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