A New Year for the Staffing Industry

It's been another tough year for the staffing industry but things are starting to look a little brighter. I registered with Google Alerts and it seems like each day I'm getting an alert regarding various temporary staffing companies seeing an uptick in business. Most companies are cautiously optimistic and are looking forward to a sustainable swing toward the upside and as an insurance broker that specializes in the staffing industry I hope for that as well.

I have felt the pain of a continued reduction in payroll and sales of my clients. I've also witnessed a continued reduction in profit margin of many clients. Those declines are mostly due to the competitive pressures applied by the national staffing organizations growing top line revenue and bringing on new business by reducing mark ups. They are also taking advantage of customers that historically paid for value and now need to look only at price in this very tough economy. National staffing companies are looking to catch the upswing in the staffing business when things turn around and are playing a law of large numbers game. They are relying on volume of business not quality of business. Remember the word VOLUME!!

As an insurance broker, I would like to draw a quick comparison and draw some parallels between what national staffing companies are doing and what I'm viewing in the world of insurance for the staffing industry.

This post is a matter of my own opinion but it should be an eye opener to those regional staffing companies competing against the large nationals. As your sales have decreased at a record pace, you may have noticed that your ability to purchase workers compensation insurance at competitive rates hasn't been at this level in almost 10 years. The reason for this highly competitive market is VOLUME underwriting. The temporary staffing industry generates a tremendous amount of premium volume in a long tail line of insurance. If carriers can scoop up as much premium as possible in a short amount of time, they can take tremendous advantage of the investment marketplace. Has anyone else seen almost a 20% return on their investment portfolio this year. Guess who else did? Insurance companies did and they are investing your premium dollars at a furious pace. So ask yourself, what happens when insurance companies can't earn investment income because all of the money they made is going out the door for claims and also going into surplus to pay for future claims because they under charged you for your insurance? Makes you think doesn't it?

The questions you need to ask yourself are:

WHY?

1. Why do I have so many options for Workers Compensation?

2. Why didn't I have these options as recently as 3 years ago for the 2nd largest cost that I have outside of payroll?

3. Why does an insurance company think they can make money on my business now, and they didn't think they could just 3 years ago?

WHEN

1. When are these options going to disappear?

2. When is the cost of workers compensation going to seriously threaten my business again?

3. When do I prepare a strategy to prepare for the eventual upturn in insurance costs?

HOW?

1. How do I make sure I'm aware of the limited options available to me in the future

2. How do I make sure workers compensation isn't a threat to my business?

3. How do I set a 3 year plan for my insurance now that business is turning around?

Continue to follow this blog and I will address these questions and more throughout the year, in order to prepare your organization for the eventual increase in payroll, sales and workers compensation costs.

I hope you enjoy my efforts and I will be updating this blog on a weekly basis. You can reach me at any time by clicking below.

Let's get this year off to a great start and grow the way every business wants to!

Quickly and profitably!