Undercover Work Exposes Bonus Arrangement For Insurance Consultants


“Yes, and it’s beautiful! The client does not have a clue about this. It will not show up on the 5500 Form either! It simply is not disclosed at all to the client.”

Molly Mulebriar hit a home run again in her continuing undercover work and life long committment to expose the truth about hidden health care revenue streams that consumers unknowingly end up paying for in ever increasing health insurance costs.

We recently sent Mulebriar on assignment to South Padre Island. The suspect to be trailed, videotaped and  recorded is an insurance consultant from North Texas.

The mission was to secure information about one particular insurance carrier operating in Texas who we have suspected for some time in paying undisclosed overrides and bonus’s to certain agents and consultants. This consultant has a history of favoring this particular carrier time and again, assignment after assignment.

Contact was made, plans were arranged and multiple electronic devices were operational. The trap was set.

Mulebriar: Tell me, how does ABC Insurance Company compensate you? By the way, is that your Lamborghini?

Suspect: Well, it is really cool. For every dollar in premium earned by ABC, one quarter of one percent is put into a fund. At the end of the year, these monies are paid to qualifying agents and consultants. Once qualified, they become elite members of a Blue Ribbon Panel of producers/consultants. And yes, the car is mine thanks to ABC Insurance Company! Wanna ride?

Mulebriar: So how does one qualify?

Suspect: Qualification is based on productivity, i.,e, new business and persistancy. For example, if you place two groups in a year, you get X % from the pot, but if you write three groups you get a greater % of the pot. And, if you keep existing business on the books and dont move them to another carrier, you get even more from the pot.

Mulebriar: So, do consultants who get paid a fee from their clients, get access to the “pot” too if they recommend ABC Insurance Company?

Suspect: Yes, and it’s beautiful! The client does not have a clue about this. It will not show up on the 5500 Form either! It simply is not disclosed at all to the client. So, what do you think an astute consultant will do? Will he recommend XYZ Insurance Company and only receive a fee from his client, or will he recommend ABC instead and get an undisclosed bonus? Do the math.

Mulebriar: Interesting. Give me an example of how much you can earn on a case through this Blue Ribbon program at ABC Insurance Company.

Suspect: Well, recently I placed a small municipality with ABC. Very small case of about 100 employees. My undisclosed bonus came out to about $25,000 and change.

Mulebriar: Ok, so let me get this straight. One quarter of one percent of all revenue to ABC Insurance Company is put aside to compensate qualifying agents and consultants through some sort of Blue Ribbon club. To qualify one must produce business for ABC consistantly. What about all those other agents and consultants who from time to time place business with ABC but end up not qualifying for part of the “pie?”

Suspect: Well, those poor bastards get nothing which leaves more for me. We are talking about a lot of money here. Just look at ABC’s annual revenue then multiply by one quarter of one percent.

Mulebriar: I see. Could you please speak a little louder into my left ankle while looking at that vase over the cash register by the bartender?

Note: This article appeared on this blog on 24 June 2011