Trustees Approve Stop Loss Policy – To Pay Insurance Commissions To Avoid Risk?


“Today, the district has 100-percent liability if a mistake is made on filing a stop loss claim,” Hillyer said.

By  Fernando Del Valle

SAN BENITO — The school district will spend about $96,000 for an insurance company’s commission a year after it voted against paying a commission to another insurance agency.

Meeting Tuesday night, the board voted 5-2 to approve about a $1 million “stop loss” health insurance policy that protects the district from assuming liability for claims that exceed $125,000.

The Salazar Insurance Group’s 10-percent commission is about $96,000 to oversee employee health insurance claims that exceed $125,000, Glenn Hillyer, the district’s insurance consultant, said. (Who is getting the additional 5% commission? – total commissions on stop loss insurance is usually 15% or more, split between the broker and TPA – editor)

The policy becomes effective Oct. 1, Business Manager Emma McCall said.

The district buys for stop loss insurance coverage every year but has not paid a commission to an insurance company to oversee the larger claims since September 2012, Hillyer said.

Since that time, the district’s risk management department has overseen employee insurance claims in excess of $125,000, assuming liability for any erroneous filings.

“Today, the district has 100-percent liability if a mistake is made on filing a stop loss claim,” Hillyer said.

In September 2012, the district stopped paying a 12-percent commission to the Bob Treviño Insurance Agency in Pharr, Hillyer said, because the school board wanted to save money.

Trustee Anna Cruz opposed the proposal to pay the Salazar firm because the board had agreed to stop paying Treviño’s company

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Editor’s Note: We know of no case wherein insurance agents file stop loss claims on behalf of their clients. That function is normally performed by the third party administrator. The San Benito ISD insurance program continues to grab local headlines. This group pays both an insurance consultant and a broker.  On another note, a group the size of San Benito ISD should have a much higher stop loss threshold – $125k is too low. A higher threshold of $250,000 or more is appropriate, with premiums reduced in half or more.