With the US economy facing volatility in recent years, businesses no longer want to work with large teams. The staffing industry has emerged as a winner, with benefits such as flexibility, speed, specialization, and cost-effectiveness. According to Statista data, the market value of this industry topped $200 billion in 2022 and 2023. The sales touched a whopping $170 billion in 2023.
High-risk staffing agencies place workers in industries such as construction, manufacturing, trucking, and healthcare. Workplace injuries in these sectors are more likely, and claims are often severe. This makes workers’ comp more than a regulatory checkbox; rather, it becomes a core part of the business model and risk management strategy.
Workers’ comp covers medical care, lost wages, rehab, and death benefits for employees who suffer work-related injuries or illnesses. For staffing agencies, it also curbs costly lawsuits and protects relationships with client employers.
In this article, we will explain how high-risk staffing companies can find the right workers’ comp coverage to keep them legally secure and compliant.
Understand Complex Risk Profiles
High-risk staffing firms must first understand the specific exposures tied to each placement before choosing coverage. For example, the US Bureau of Labor Statistics highlights the data showing the hazardous nature of construction work. In 2023, the industry reported about 1 in 5 workplace deaths. Notably, falls, slips, and trips were the reasons for 38.5% of these deaths.
If your staffing company works in the construction sector, you need to know about the complex risk profile. Different class codes, such as roofers and clerical staff, carry very different expected loss rates in the same industry. Premium levels also vary accordingly. Misclassification of workers can lead to underinsurance or regulatory penalties.
Additionally, underwriters scrutinize loss history, safety culture, and claims frequency before agreeing to insure a staffing firm. They also analyze the mix of placements, such as on-site supervision, equipment use, heights, chemicals, etc. Staffing companies need to map each client assignment to the correct class code and risk level.
Implement Robust Screening Protocols
Strong screening is one of the most effective tools for reducing workers’ comp claims and making high-risk accounts more insurable. Specialty workers’ comp carriers often expect staffing agencies to verify experience, licenses, and fitness for specific hazardous tasks before placement.
Beyond a robust screening protocol, agencies in high-risk sectors must also prioritize safety-focused onboarding. Measures such as job-specific training and clear communication of site rules can materially reduce injury frequency. These are critical, regardless of the clients these workers work for.
Using detailed applications to capture prior work history, certifications, and prior injuries is a good start. Agencies can provide safety orientations tailored to each high-risk industry, such as lockout/tagout, fall protection, and PPE requirements in the construction sector.
Look for Specialized Insurance Providers
Traditional carriers often decline or overprice high-risk staffing accounts, so specialized markets are critical. When looking for workers’ comp coverage for high-risk staffing businesses, agencies must consider specialized providers. These are ideal for tough segments where traditional markets tend to back out.
Worksperity notes that specialty brokers work with carriers that accept broad and tougher class codes and multi-state risks. Some high-risk workers’ comp providers bundle value-added services such as claims management support, safety consulting, and loss-control visits, which simplify things for agencies.
When looking for providers, prioritize experience with staffing agencies that place workers in construction, manufacturing, healthcare, and other high-hazard sectors. Flexible program structures, with elements such as guaranteed cost, large deductible, and PEO, can be extra plus points.
Consider Excess Insurance
For agencies with a concentration in very hazardous roles, a catastrophic loss can exceed primary limits or self-insured retention. Excess workers’ comp can be an important layer for broader protection. According to Investopedia, excess insurance offers coverage for claims after the primary limit is exhausted.
For example, the primary coverage limit of $50,000 can be supported with an excess policy of $25,000. If the agency faces a claim of $60,000, the primary coverage will provide a $50,000 payout, and $10,000 comes from the excess policy. Excess workers’ compensation offers protection against severe or multiple large claims.
Exploring excess is a good idea if your firm uses a high deductible or self-insured structure for workers’ comp. Similarly, you can consider it if you place workers in roles with potential for catastrophic injuries, like those involving heavy industrial work, high elevations, and hazardous material exposure.
Regularly Review Policies
Risk profiles and regulatory requirements change quickly for staffing agencies, especially those operating across multiple states or adding new industry verticals. According to StaffingHub, 2026 will be the year of “more rules, more places”. Expect more state-level variation, more scrutiny on AI in hiring, and more focus on privacy.
In light of evolving state laws, coverage thresholds, and enforcement priorities, there may be an impact on who must be covered and how policies must be structured. Rapid growth, new client industries, or worsening claims experience may require midterm adjustments to limits, endorsements, or carrier relationships.
Staffing agencies must conduct at least annual reviews with a broker that understands multi-state staffing and high-risk placements. Additionally, they should audit job classifications, payroll allocations by state, and certificates of insurance issued to clients.
FAQs
Who is usually covered by workers’ comp?
In most US jurisdictions, workers’ compensation covers employees who suffer work-related injuries or illnesses, including full-time and part-time staff. Many states also include most temporary employees for this purpose, with responsibility often falling on the staffing agency that hires and pays them.
Is workers’ compensation insurance required by staffing companies?
In almost all states, employers that meet minimal employee thresholds are legally required to carry workers’ compensation. In this context, staffing agencies are treated as the employer of record for their placed workers. They are generally required to provide workers’ comp coverage for all their employees on assignment, even if they work under a client’s supervision.
Is insurance mandatory for contract employees?
Whether workers’ comp is mandatory for contract workers depends on how the state law defines “employee” versus “independent contractor”. Moreover, the structure of the working relationship is a factor to consider. In many states, true independent contractors are not automatically covered under workers’ comp. However, misclassified workers can be treated as employees, triggering mandatory coverage and penalties for noncompliance.
High-risk staffing businesses cannot overlook the need for workers’ compensation coverage, even if employees are set to work for clients. The nature of the clients’ jobs, in fact, makes it even more crucial to prioritize coverage. These agencies need to choose coverage wisely to ensure thorough protection if workers sustain injuries and need to be compensated. Proper coverage translates into peace of mind, good reputation, and high retention.
