Back in the 70’s Blue Cross of Texas sales reps were captive agents. Or were they?
In 1973 the starting monthly salary of a Blue Cross of Texas sales representative was $840. That was before taxes. No commissions were paid. Straight salary. Damn good income, better than the starting salary of a public school teacher. Life was good, Vietnam was a fading memory.
Independent insurance brokers were viewed as less than human, slithering creatures unworthy of representing the largest health insurance company in the world. Back in those days only college educated graduates were qualified to apply for a BCBSTX sales position, subjected to a grueling vetting process including psychological testing and a personal interview by the President of the company at the home office in Dallas.
BCBSTX didn’t broker business until 1982. At least that’s what the HOSOBs thought (Home Office SOBs).
I found out differently when transferred to another office in the later part of my tenure with the company. Unknown to management some of my fellow sales reps. were selling insurance outside the company, on company time and expense. They were brokering insurance with great success, some earning more in commissions than they were on the company tit.
In 1982 the HOSOBs decided it time to enter the brokerage business. Little did they know members of their sales force were seasoned brokerage professionals, slithering creatures worthy of representing the largest health insurance company in the world.
In the late 70’s a senior BCBSTX executive left the company to start an insurance brokerage in east Texas. Everyone was surprised because he was a rising star in upper management, young and had not an ounce of sales experience to hang his hopes on.
Little did anyone know his silent partner was the BCBSTX senior vice president of marketing. Suspicions were aroused when the small east Texas brokerage was experiencing rapid growth, writing business throughout the state, often in competition with BCBSTX. It wasn’t long afterwards the BCBSTX vice president of marketing left the company to join his partner in Tyler.
BCBSTX brokerage was systemic, from top to bottom, well before the company’s official transition from captive agency to independent brokerage.
The immoral and unethical practice of internal sales diversion is widespread throughout the industry. I learned that early on when moving into independent brokerage:
I eagerly waited for proposals, checking my mailbox for yesterday’s mail. The first response in letter form went something like this: “Thanks for sending us ABC Fence Company for a quotation. Unfortunately we have received a request from another broker. We only honor requests for proposals on a first come, first served basis. Please continue to think of us on future prospects.”
The practice continues to this today.
