By CYRIL TUOHY, managing editor of Risk & Insurance®
Commercial insurance broker Brown & Brown reneged on its promise to sell a workers' compensation program on behalf of an insurance company set up specifically to insure American Indian tribes, a New Mexico state judge has found.
So ends a promising marketing partnership started back in 2002 when Brown & Brown's Seattle office approached Santa Ana Pueblo, N.M.-based Amerind Risk Management Corp.'s about selling and distributing the so-called Tribal Employee Injury Protection Program (TEIP).
By dropping the TEIP program, Brown forced Amerind to incur out-of-pocket expenses to market the program itself and buy an expensive reinsurance policy, wrote Judge Clay Campbell.
Kent Paul, CEO of Amerind, said in a statement that the broker's actions had "jeopardized" the TEIP program.
"Brown & Brown of Washington's breach of its commitment caused financial harm and jeopardized the TEIP program," Paul said, in a press release. Earl Mettler, an attorney representing Amerind, declined further comment.
Brown & Brown, with more than 5,000 employees and nearly $1 billion in 2009 brokerage revenue, intends to appeal the $304,000 breach-of-contract award.
The broker, according to the press release issued by Amerind, claims the deal was orchestrated by its brokerage subsidiaries in Washington state and New Mexico. The deal was never approved by Brown & Brown's Dayton Beach, Fla., headquarters. A message left with Brown & Brown's lawyer last week was not returned.
The marketing of the TEIP program began in earnest in 2004, when Brown & Brown became the lead broker for the program, according to court documents.
Brown & Brown wasn't the only distributor on the TEIP program. Others included Berkley Risk Administrators Co. LLC., acting as a consultant, and Hull & Co., a managing general agent.
From January to March 2005, Brown & Brown promised $6 million in annual premium sales for the TEIP program, and the broker provided Amerind with a list of 200 Indian tribes and organizations considered to be worthy prospects, according to court documents.
In exchange, Amerind, which serves nearly 450 tribes in Alaska and 27 other states insuring businesses, housing authorities and personal property, agreed to offer Brown marketing concessions and exclusive access to certain Indian tribes and territories.
On March 14, 2005, however, Brown & Brown told Hull it would no longer continue to market the TEIP program on behalf of Amerind, the court documents reveal.
Was Brown & Brown guilty of a quick, greedy "in-and-out," or was it simply that there wasn't enough demand for the risk pool's TEIP program?
Either way, Amerind was left to incur the costs of marketing TEIP midstream.
"Amerind incurred marketing expenses disproportionate to the sales produced," Amerind alleged, in court filings.
The TEIP program is an alternative to statutory workers' comp coverage provided by traditional insurance companies. Because Indian tribes are sovereign nations within the United States, the TEIP program reflects the laws or ordinances of a tribe, not that of an individual U.S. state.
August 10, 2010
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