For years, many benefits brokers viewed professional employer organizations (PEO) as competitors to their core offerings. In today's ecosystem, that perception is changing.
Small and mid-sized businesses (SMBs) are facing pressures that extend far beyond health care costs. Talent shortages, multistate compliance, operational inefficiency, and growing administrative burdens are forcing employers to rethink how they run their organizations. Brokers who remain focused solely on insurance products risk missing broader opportunities to add value.
This is where PEO has evolved from a niche solution into a strategic business consideration, and where these partnerships are reshaping how those conversations happen.
Awareness is high, but brokers are missing the moment
Business owners are already paying attention. According to the 2024 NAPEO report, 67% of business owners already know what a PEO is. But they're hearing about it from everyone else but their own broker, which means brokers are losing control of one of the biggest strategic conversations their clients will ever make.
Additionally, brokers are spending significant time servicing SMB clients whose needs can be just as complex as those of larger accounts, but with far less return. That imbalance is pushing firms to rethink how they support this segment of their book.
PEO isn't actually a product
One of the biggest barriers to productive PEO conversations is how the model is framed. The insurance industry is deeply product driven. Health insurance, disability insurance, workers' compensation, and other coverage all fit neatly into defined categories. PEO does not.
According to Carrie Cherveny, National PEO Consulting Practice Lead, HUB International, "PEO does not fit into a traditional product box because it's not a single product at all. It is a co-employment relationship that brings payroll, HR, employment-related compliance, worksite risk management, benefits administration, and workforce strategy together under one operating structure. And that's because PEO is a business strategy, not just a benefits decision. It reflects how a business wants to operate, grow, and manage risk."
This makes one thing clear: When brokers treat PEO as just a spreadsheet exercise or a price comparison, they overlook most of its value.
What employers are actually solving for
Businesses are under more pressure than ever to do more with fewer internal resources. Many lack dedicated HR teams. Others are navigating growth, acquisitions, or multistate workforces without the infrastructure to support those moves.
At the same time, the health care landscape is becoming more volatile. A recent McKinsey health care report found that nearly two-thirds of employers plan to explore new health care options over the next 1 to 4 years, driven by cost pressures and the need for better employee experience. That volatility is pushing employers to look for solutions that go beyond benefits alone and offer greater stability.
Why this is an opportunity for brokers
For brokers, this shift gives them an opportunity to optimize their client relationships and strategically partner with those best suited for a PEO.
According to Carrie Cherveny, winning a client is difficult, and being a good steward of that trust requires understanding more than just insurance placement. "It requires understanding the business. That starts with different questions. How is hiring going? Where are compliance challenges showing up? What are the company's growth plans?" she asks.
When brokers ask questions like these outside of health care, clients often reveal where they are truly struggling. You'd be surprised by the answers you get, because most of your clients will raise their hands and say, "I need more help." And that's where a PEO becomes a valuable option for your clients.
Where a PEO fits
A PEO isn't right for every client. The value lies in knowing when a co-employment model supports a business's goals and when another approach makes more sense.
What matters most in that decision is trust. Any PEO relationship must prove its value, not just to the client, but to the broker who brought the relationship forward. The strongest outcomes happen when there is real collaboration between a broker's producers and a PEO team, with both sides focused on solving the same goal: meeting the needs of their shared clients.
For brokers managing large SMB books, that kind of partnership creates efficiency without sacrificing relevance. Clients who need deeper HR support get it. Brokers stay engaged in the relationship. And as businesses grow or evolve, the advisor remains positioned for what comes next.
In a market where business owners expect more than benefits placement alone, positioning a PEO as a strategic option, supported by transparent collaboration, allows brokers to deepen trust and better serve the clients who rely on them most.
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