By Molly Mulebriar (www.mollymulebriar.org)
The Lower Rio Grande Valley of Texas is unique. First time visitors wonder where the Valley begins and ends, as there are no descernable boundaries.
So too are the traditions of indigenous insurance agents plying their trade among political subdivisions in deep South Texas – a well practiced trade with no descernable boundaries, legality aside.
A large number of School districts in the Valley are tax funded cash machines. In other parts ofTexas, over 90% of public school districts have joined the TRS ActiveCare plan, a government run health cooperative that eschews insurance agents. In the Lower Rio Grande Valley however, over 30% of the school districts have elected to remain outside the TRS program.
At least 12 Valley school districts are up for grabs each year. Insurance agents, either acting alone or in packs, know how to count to four. The stakes are high. Commissions range as high as $600,000 per sale, creating taxpayer supported wealth to be shared by various cartels committed to continuing the scheme year after year.
Open records requests can provide interesting reading. One school district in the Upper Valley, for example, hired a new risk manager who soon discovered that the three Agents of Record were earning over $500,000 on their account (A classic case of agents working together in a pack). When called in for an explanation, the agents quickly posed as deer in the headlights. The district demanded a return of the commissions.
Weslaco Independent School District sued their agent and carrier after realizing contract descrepancies. The district claimed that agent commissions were never disclosed by the agent or carrier – Weslaco-vs-Aetna
The recent La Joya Independent School District insurance controversy has now heated up to include one insurance agent suing another agent and the district for “breach of contract.” http://blog.riskmanagers.us/?p=10920
The San Benito Independent School District’s insurance turmoil has been well documented and continues as of this writing. (http://blog.riskmanagers.us/?p=9090) Currently out to bid for Agent of Record as well as third party administrator, controversy swarms around which agent will get the nod (type in San Benito ISD in the search box on this blog).
These examples of insurance agent generated controversies, unfortunately, are not uncommon. http://blog.riskmanagers.us/?p=123……….http://blog.riskmanagers.us/?p=1593
Some districts in the Valley have wised up. The Brownsville Independent School District fired their Agent of Record several years ago and now works directly with their group medical provider. Cameron County and the City of Brownsville have done the same.
Working without an insurance broker is less stressful it seems. Over 90% of Texas school districts do not and cannot employ an Agent of Record for their TRS ActiveCare plan and seem to be doing fine – no agent inspired controversies to deal with there.
A Texas Attorney General Opinion advises against school districts from hiring an insurance agent of record – Commissioner’s Bulletin #B-0041-07 Many districts have taken note. Others, however, continue to use an agent of record. And it is not at all uncommon for a Valley district to employ both an agent of record and an insurance consultant – figure that one out Uncle Hermann!
Next week the San Benito school district will meet to award Agent of Record and third party administration contracts.