Two Rivers insurance told to pay authorities $1.3 million

Local governments accuse it of padding as comissioner talks of trend in industry towards complete disclosure of comissions

Two Rivers insurance told to pay authorities $1.3 million

Insurance News

By Allie Sanchez

Local governments in Iowa will receive more than $1.3 million in refunds from an insurance firm after it was found by the state Insurance Division to have “engaged in unfair and deceptive acts and practices.”

Two Rivers Insurance Co. was accused in 2014 of padding its premiums with fees to cover expenses for the insurance it purchased from Wellmark Blue Cross & Blue Shield, the state’s dominant health insurance carrier.

According to the Des Moines Register, the brokerage “had improperly included up to 7% in its own fees in ‘premium’ costs that it billed to local governments for insurance for 10,500 public employees.”

Two Rivers has denied it committed any wrongdoing in the matter.

“Such representations had the capacity to mislead members into believing the presented amounts were entirely premium established by Wellmark and concealed the amounts of Two Rivers’ compensation,” the regulators were quoted as saying in the report.

Wellmark cut ties with the brokerage in 2014 after an audit revealed the irregularities.

Meanwhile, the settlement will be divided among the 33 local government units that purchased insurance through Two Rivers for their employees. The payments range from around $2,000 to $250,000. The local governments can accept the payments or pursue their own complaints for a larger settlement, the report also said.

Insurance Commissioner Doug Ommen said in a statement, “Any compensation apart from premium, any partial self-funding charges or any other producer or administrator fees or charges must be clearly disclosed so that these amounts and their purpose can be understood by insurance purchasers.

“Our industry has been trending toward disclosure of all agent compensation to avoid even the appearance of a conflict of interest with the customer. We are pleased that Two Rivers made the decision to make changes when the issue arose and has now agreed to settle the investigation.”

Meanwhile, Two Rivers president Todd Ackerman explained, “Rather than prolong what would be an extremely costly and burdensome legal process, Two Rivers is pleased to conclude the review through this agreement. While we still believe our past practices were appropriate at the time, we appreciate the efforts of Iowa Insurance Commissioner Doug Ommen to bring this matter to a resolution."

Related stories:
Why insurers should abandon an inadequate, insecure call center practice
Tennessee insurance producer stripped of license, fined $400,000

Keep up with the latest news and events

Join our mailing list, it’s free!