HOW SPM WORKS WITH INSURANCE BROKERS: PAYROLL BY CLASS CODE, CHECKED EVERY YEAR.
Workers compensation premium is charged on estimated payroll and audited after year end, so a wrong class code costs the contractor every year until the audit finds it. The experience mod multiplies the premium: a mod of 1.25 pays 25 percent more than 1.00 on the same payroll and the same class codes. When a broker brings a client to SPM, SPM books payroll by job and class code, checks the mod worksheet against the books each year and puts insurance cost in the labor rate and the bid. The broker still advises on coverage and places the insurance. SPM does not handle payroll.
This page is for insurance brokers and agents with construction subcontractor clients. It covers the signs that a client needs its payroll and claims organized, how the work goes from the first call, and what the broker gets back.
WHAT IT MEANS.
When an insurance broker brings a construction subcontractor client to SPM The Construction CFO, SPM books payroll by job and class code, tracks claims by job and puts insurance cost in the right place in the bid, and the broker still advises on coverage and places the insurance.
The contractor remains your client for coverage and the carrier makes the underwriting decision. SPM organizes the payroll and claims records that your audit and your mod review are built from.
FIVE SIGNS A CLIENT NEEDS ITS PAYROLL ORGANIZED.
One class code covers the whole field crew
Many small contractors use one code for the field crew, usually the highest risk code for the trade. That overpays on every check for anyone who is not doing the highest risk work.
The premium audit comes in higher than the estimate
Premium is charged on estimated payroll and audited after year end. Payroll that is not recorded by class code makes the audit a negotiation over records that do not exist.
The mod rose and nobody checked the worksheet
The mod is built from three policy years. A wrong class code, payroll recorded in the wrong class, a claim left open longer than needed or a recovery that was never credited are each a reason to read the worksheet every year.
Workers comp is booked to overhead
Workers comp belongs in the burdened labor rate by class code. In overhead it underprices every labor heavy bid, and the overhead rate looks bloated while the labor rate looks cheap.
Claims are not tracked by job
A claim that is not recorded against the job where it happened, with its cost and status, leaves the contractor unable to answer the broker's questions at renewal.
WHAT IT LOOKS LIKE IN DOLLARS.
A mod of 1.25 pays 25 percent more than a mod of 1.00 on the same payroll. On $2M of payroll at a manual rate of $8 per $100, the premium is $200,000 at 1.25 and $160,000 at 1.00.
The difference between a 0.85 mod and a 1.25 mod on that payroll. On $6M of revenue it is 1.07 percent of revenue and about 15 percent of the profit at a 7 percent net margin.
Insurance as an all in load is commonly 3 to 8 percent of revenue for commercial subcontractors, and the range depends on trade, class codes and mod.
FROM THE FIRST CALL TO THE RENEWAL.
The contractor books the call from the scheduling page. Josh asks about cash, job costing and margins. Nothing is sold on that call and nothing is proposed.
When SPM can help, the contractor books a longer second call. The proposal covers the scope for that contractor and the published monthly rate for its revenue band.
SPM migrates the books and books the payroll the contractor's provider produces to the job and the class code, so the audit is checked against books and not memory. SPM asks for the mod worksheet when it is issued and checks the payroll, the class codes and the claims against the books. Workers comp goes into the burdened labor rate by class code and general liability goes into the bid base. Each claim is recorded against the job, with its cost and status.
The month is closed on a schedule, the WIP schedule is built from job cost, and the owner meets with SPM once. The meeting ends in decisions with dates. The owner's own time is about five hours a month.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $2,900 | $1,000 |
| $1M to $3.5M | $2,600 to $3,900 | $1,500 |
| $3.5M to $6.5M | $3,800 to $5,700 | $3,000 |
| $6.5M to $9.5M | $5,100 to $7,100 | $4,500 |
| $9.5M to $12.5M | $6,100 to $8,500 | $6,000 |
| $12.5M to $15.5M | $7,400 to $11,000 | $7,500 |
| $15.5M to $18.5M | $9,400 to $13,500 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
You stop touching the books.
Everything in Core, and we do the bookkeeping and the controllership as well. Your office stops answering coding questions and stops fixing a reconciliation that will not balance on the last day of the month.
We do the books. No payroll.
Every job shows its margin while it is still open.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the books, the job costing, and the software. No payroll.
FREQUENTLY ASKED.
