Insurance Company Pays For Caribbean Getaways As Premiums Increase
Posted May 19, 2005 7:11 a.m. EDT
CHAPEL HILL, N.C. — In the wake of insurance premium hikes and big profits, an island getaway for sales agents of a local insurance company is taking heat.
For the ninth year in a row, Blue Cross Blue Shield of North Carolina rewarded its top sellers and brokers with a trip to the Caribbean island of St. Kitts -- even as the company raises its premiums while trying to cut back its overall profits.
The non-profit company sent a total of 275 top sellers and their guests in February.
"This is a common industry-wide practice to really reward your top-flight sales force that brings in the bulk of the business," Blue Cross Blue Shield spokesman Mark Stinneford said.
But, on the heels of $350 million in profit over the past two years, a raise that puts CEO Bob Greczyn in the $2 million club, and $34 million in marketing costs, the trip does not put policyholders in a partying mood.
"I think any policyholder would be a little ticked," said Adam Searing of the North Carolina Health Access Coalition. He said it all sends the wrong message as Blue Cross Blue Shield passes on double-digit rate hikes.
"Why didn't they just go see a Durham Bulls game instead of going to the Caribbean? I mean, Blue Cross is, after all, still a non-profit," Searing said.
When asked if the insurance company should be more in tune to what the trip looks like to public, Stinneford said someone looking at it had to understand the trip in context.
Spokesman said Blue Cross Blue Shield must stay competitive in rates and compensation, while ensuring financial stability for the company.
"They have a lot of money laying around out there, we feel, could be used in a better way to help their policyholders," said Chrissy Pearson of the North Carolina Department of Insurance.
Pearson believes it's more reason to change laws.
"We would like to be able to look at their surplus, look at their expenditures -- any unusual expenditures, such as a trip -- and let that be a factor in whether we grant them a rate increase," Pearson said.
Blue Cross Blue Shield will not disclose how much the St. Kitts junket cost. The company argues that if it took away the trips and paid top executives nothing, it still would not have an impact on the rates.
Blue Cross Blue Shield of North Carolina is a non-profit organization that, for several decades, enjoyed a tax-exempt status. Now, however, the company is fully taxed.
The company tried to change its status to become "for-profit," but earnings picked up significantly. That effort did not work out. Ever since, the company has tried to cut profits to hold on to its non-profit position.