According to the RFP recently issued by the Brownsville Independent School District for group health insurance third party administrator, the district will select an agent through a formal Request For Qualification process. (See Section 5.1 of the RFP) However, it is unclear when the RFQ process will be initiated.
The commissions recommended by the district to be earned by the agent are clearly stated in the RFP: $1.75 per employee per month plus 15% commission on the stop loss insurance.
This could be a pay cut for some agents. Many are used to earning commissions and fees from the pharmacy benefit manager, PPO network, disease management program, and other revenue streams such as a percentage of the PPO discounts and “reinsurance placement fees”, etc. A group the size of BISD can earn an agent substantial commissions.
Of course, the BISD recommended commission schedule are recommendations only. Total estimated commissions and fees based on the district’s suggestion comes in about $350,000 per year.
Brownsville ISD is an anomaly. Most large employer groups do not employ an insurance agent or broker anymore. Instead the vast majority of employers these days rely on expert licensed consultants paid on a fee basis. To employ both an agent/broker and a consultant at the same time makes no sense. Whose on first? Whose on Second?
Cameron County and the City of Brownsville do not employ an insurance agent or broker. Neither do most of the other school districts located in deep South Texas.
The problem facing agents and brokers is that they are hard put to explain and justify just what they do to earn commissions on group health plans these days. The good news for many insurance agents is that some employers really don’t know what their agent is earning off their account. What may be represented as the commissions to be paid, may be understated. Bonus’s, overrides and other compensation streams may never be disclosed.
It is apparent that BISD sees the need to continue to pay an insurance agent. A formal Request for Qualifications will bring forth many interested local insurance agents vying for the commission dollars placed before them by the taxpayers.
It will be interesting to see what services will be required of the successful insurance agent/broker ultimately hired by the district. Perhaps the benchmark should be based on the services provided currently with the fees/commisions to be paid directly proportional to the services recieved. No service, no pay is one model to consider.
Editor’s Note: Don Pedro opines “maybe the successful agent will start a $50,000 BISD scholarship fund for talented students excelling in business courses, especially accounting.”