Choice of insurance broker draws criticism

Board members say rep. from Delaware Valley works with new company

BY DANIELLE MEDINA

Correspondent

The Brick Township Board of Education appointed a new health insurance broker last week. But the selection has left some board members unhappy with the association the new firm has with the district’s current broker, Delaware Valley Financial Group.

At the board’s public meeting on March 17, NIA Group Associates LLC, Cape May, was installed as the district’s health insurance broker, taking over for Delaware Valley effective July 1. Board President Daniel Woska, Dr. William Boyan, Catherine Lindenbaum and John Paredes voted for the appointment while Sharon Kight, Frank Pannucci and John Talty voted against it.

“It was an extremely long and competitive process,” Paredes said. “In the final analysis, the Board of Education’s choice is the most effective over time.”

NIA will serve a three-year term and will receive a flat fee of $100,000 annually, plus additional fees for renewals, qualifying events and new hire notifications. In the first year, the fee translates to approximately 0.56 percent of the district’s $18,000,000 estimated premium.

The board also considered proposals from Commerce Insurance Services, Fleet Insurance Services LLC, Grinspec Consulting, and LDP Consulting Group Inc.

Delaware Valley had served as the district’s broker of record since 1997 and was expected to be reappointed last April. However, at that time, Kight and Talty, the board’s two newest members, made a motion to table the appointment so they could get more information on the contract.

Kight’s husband, Richard, had also raised ethical concerns about whether the relationship between Delaware Valley and the board is a conflict of interest. Delaware Valley employs Edward Bendokas, the son of former board member John Bendokas, and Delaware Valley’s managing partner, Thomas Schirmer, is a longtime friend of the elder Bendokas.

Talty and Kight also questioned whether the district was getting the most competitive rate from Delaware Valley and suggested soliciting bids from other brokers to get a benchmark.

By August the board voted 4-2 not to reappoint Delaware Valley, but the firm has continued to serve as the district’s broker, operating on a month-to-month basis.

Since then, the board’s business and finance committee, which consists of Paredes, Woska and Boyan, sent out requests for proposals to 25 firms and received 10 back. Of those 10, five met all the criteria listed in the 21-point application.

“The process certainly created an atmosphere of competition and brought to the table five firms who were interested in servicing the school district,” Paredes said in a statement released on Friday.

The selection of NIA, however, disturbed Sharon Kight, who questioned the fairness of the choice.

“This is nothing but a shell game,” Kight said. “We voted to put Delaware Valley out last August and in essence we voted to get Mr. Senior out.”

Kight was referring to Mark Senior, who is an employee of NIA and also works as a representative for Delaware Valley, according to the company’s Web site. Business Administrator Nicholas Puleio said last May that the board typically conducted business with Delaware Valley through its representative, Mark Senior.

According to Kight, the district has seen a 30 percent increase in its insurance premiums over the last two years under Delaware Valley and Mark Senior’s watch.

“This is cronyism at its worst,” Kight said.

Talty added that he was “extremely disappointed” with the flat-fee structure, saying that the brokers have little incentive to drive the district’s insurance premiums down when their fee is derived from a percentage of the premium. Instead, Talty wanted to continue negotiating with all five brokers to set a fee based on the percentage of money they saved the district.

“The second largest expense in the district is health care costs,” Talty said via telephone on Monday. “This is an area where there is potential savings. We’re not going to save money by cutting back on books or roof repairs.”

If insurance premiums continue to increase at their current pace, Talty explained, in five years the district will face health care costs in the $26-$27 million range, which would translate to a 7.5-cent tax rate increase, without including salaries in the equation.

“What was done here was not in the best interest of the taxpayers of this town,” he added. “To do business the same way we’ve been doing business is not going to save us money.”

Puleio and Paredes did not return messages asking for additional comment for this story by press time Tuesday.