Luzerne County officials are changing the way the county obtains insurance.
Prior commissioners tried to open up competition by inviting agents to present price quotes for each type of policy. The agent fees and costs of the actual insurance were rolled into a package.
But county officials later learned insurance providers typically give quotes to only one agent at a time, blocking out competition from other agents who might be willing to accept lower commissions for the same coverage.
A council majority voted Monday to accept the administration's recommendation to hire a broker – Brown & Brown of Lehigh Valley Inc. – that was selected over two other firms that submitted proposals in response to the county's public request. Wyomissing-based Engle-Hambright & Davies Inc. and Eastern Insurance Group, Wilkes-Barre, submitted proposals at higher amounts, officials said.
The Bethlehem-based Brown & Brown will receive a flat $110,000 fee to find insurance providers and administer all claims for county coverage.
County administrators said the approach should save money because Brown & Brown will be free to obtain prices from any carriers with no ability to tack on additional brokerage fees.
County taxpayer Mike Giamber told county officials Monday he's concerned the new strategy will violate the home rule charter's mandate to bid out insurance.
Charter drafter Jim Haggerty concurred Tuesday that the insurance also must be competitively bid.
The requirement was added to the charter to force the county to accept the lowest price. Insurance is typically considered a professional service, which means counties could consider a provider's experience and other qualities in addition to price.
County Manager Robert Lawton said Tuesday the administration will meet the charter mandate by publicly seeking proposals from all interested carriers to be submitted to Brown & Brown.
This advertising will ensure all carriers are alerted to the opportunity to submit insurance policy prices, Lawton said.
County Solicitor Vito DeLuca said the extra advertising is worthwhile to comply with the charter and make sure no carriers are missed, though he'd expect the new broker to contact all potential carriers if public bids weren't required. He believes the county's decision to use one broker will save money.
The county spends hundreds of thousands of dollars on insurance coverage annually. Lawton said he will provide council with a before-and-after comparison after insurance costs are received.
In other business Monday, county Councilman Stephen A. Urban advised the administration to stop purchasing stop-loss insurance, which covers medical claims that exceed a certain amount. The county must pay the cost of claims because it is self-insured.
Urban said the county rarely uses the stop-loss insurance.
The administration agreed to study the matter.
Luzerne County Manager Robert Lawton will hold a public forum at 6 p.m. Nov. 20 in the council meeting room on the first floor of the county courthouse in Wilkes-Barre.
The forum, required by the home rule charter, allows citizens to offer comments and suggestions to the manager.