A principal of South Jersey insurance brokerage Connor Strong & Buckelew today defended his company’s handling of local government insurance contracts after a state comptroller’s report pegged brokerage fees as one reason private insurance is often more costly than the state sponsored plan.
Joseph M. DiBella, managing director in the firm’s benefits practice, said the firm evaluates all options, including the state-sponsored plan fairly, and recommends the option best suited to the client, regardless of potential commissions.
“We examine every market including private market placement and the state health benefit plan and/or state educators employee benefit plan for every public entity account. Our recommendations are made regardless of any impact to our compensation to ensure we deliver the best solutions for our customers,” DiBella said in a statement issued today.
The statement came hours after comptroller Matt Boxer issued details of an audit that showed local governments could save as much as $100 million per year by switching to the state plan. Among the findings of the audit that looked at four local governments was that brokers were paid a total of $1 million for their efforts.
Connor Strong, which counts South Jersey power broker George Norcross as its chairman, was the broker for Essex County, one of the four governments looked at by Boxer. The firm was paid $756,000 under the contract. Had Essex gone into the state plan, Boxer pointed out in the report, there would be no commissions.
Boxer said also that because the state plan has no commissions attached, there is no incentive for a broker to recommend it.
But DiBella said the firm often recommends the state plan as the least costly insurance option, including recently when it handled contracts for both Camden and Gloucester Counties.
“As recently as the past six months, our firm has recommended that both Gloucester and Camden Counties seek application to enter the state plan,” DiBella said. “In both cases, the entities are self insured and their emerging claim costs are in excess of the state plan rates.”