Engage PEO Expands into New Risks and Territories with Gradient AI

Through a new tool based on the vendor’s Underwriting Solution, Engage PEO has been able to increase its risk appetite and expand into to new markets.

(Image source: Engage PEO website.)

Business has been booming for Engage PEO (Hollywood, Fla.), but to ensure that profitability marched along with growth, the professional employer organization adopted Gradient AI’s Underwriting Solution to enhance the accuracy and efficiency of its underwriting processes. The company built a tool based on the Gradient AI solution that lets its underwriters leverage real-time loss data to evaluate the projected loss of a prospective client. The AI outcome becomes the basis for the premium charged to clients for their WC insurance. With the new tool, Gradient AI-based tool, Engage PEO has achieved enhanced risk assessment capabilities, letting it increase its risk appetite and expand into to new markets in order to service a broader range of clients.

Julie Cirillo, Chief Risk Officer, Engage PEO.

Engage PEO offers HR outsourcing solutions to small and mid-sized businesses across the United States, including ancillary products, such as workers compensation insurance. For its insurance program, Engage PEO enters into a co-employment situation with its clients and operates similarly to an MGA or MGU and works with insurance carriers. The company has grown rapidly in recent years, including the completion of five mergers and acquisitions, the addition of three operational centers, and a significant increase of clients and worksite employees.

In late 2019, Engage PEO began looking for solutions that would enable the company to take on a wider range of risks. Engage PEO had been struggling to underwrite in certain jurisdictions that were challenging for workers’ compensation and was taking on higher-exposure risk.

“We would have liked to place something like a heavier manufacturing exposure in the book, but we did not feel like I had the experience on my underwriting team, and nor did we have the appetite for that kind of risk,” recalls Julie Cirillo, Chief Risk Officer, Engage PEO. “We were taking very low-rated risks, for example, restaurant and hotels, clerical offices, doctors. We did a lot of nursing homes, which is a tough risk, but we know it really well.”

Cirillo says Engage PEO was familiar with Gradient AI and its WC claims products which had been successfully utilized by many TPA’s and Carriers in the WC industry.  She says the integration of the Gradient AI’s claims tool was critical in Engage PEO selection of TPA partners as the firm moved to a high deductible WC program.

Superior Product

While evaluating tools and partners necessary to move to a high deductible WC program, it became apparent that Engage PEO needed a tool to assist in underwriting new business that would be placed into that program.  “We evaluated multiple actuarial based options and initially started with an actuarial based model, but this model required a lot of knowledge and discretion by the underwriters leading to inconsistent results,” Cirillo recalls. “The concept of an AI model was new to us, and we evaluated two different options that were in the marketplace.  It became obvious very quickly in the review that Gradient AI was the superior product.”

The main reason for selecting Gradient AI was that the vendor already leveraging an industry leading data set, according to Cirillo. “We saw first-hand the success of its claims tool,” she notes. “Second, they were willing to work alongside us and our consultants to build the nuanced product we wanted, which was different than the existing product they had for underwriting. They became our partner.”

It took Engage PEO approximately nine months to build and validate its model. After extensive testing the firm launched the model in January 2021. “We leveraged our internal data management team, our broker’s data management team, our external actuarial consultants, and our underwriting team manager in the planning, building and testing of the model,” Cirillo says.

Increasing Profitability, More Jurisdictions and Riskier Exposures

Cirillo’s team delivered the model four months behind schedule, but within budget and without serious challenges. “Most of the issues were resolved during the testing phases and before the rollout to the team,” she says.

Through the adoption of the Gradient AI Underwriting Solution to build the new tool, Engage PEO has achieved everything it set out to accomplish—and more, according to Cirillo. “The profitability of our program continues to increase year over year,” she reports. “We are now writing in more jurisdictions and riskier exposures than we ever have in the program.”

Engage PEO is also now using the model to improve selection in its M&A processes and ensure seamless integration when we acquire other PEO’s.

Making Underwriters’ Jobs Easier

“We improved the efficiency and consistency of our risk evaluation process—reducing evaluation times from hours to minutes—and this has brought great satisfaction to the underwriting team. We have made their jobs easier!”

Through the success of the AI underwriting model, Engage PEO is now focusing on engaging AI in its broader business model to continue to improve its overall operation, its growth engine, and client satisfaction, Cirillo reports. Gradient AI has also had a significant impact on the company’s sales and renewal season.

“This year, we relied on Gradient AI during our busiest season from October through January, and the results were remarkable,” Cirillo says. “Since the sales and renewals were driven by AI powered data insights, the experience was seamless for both our team and clients.”

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Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at AnthODonnell@IIReporter.com or (503) 936-2803.

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