Legislation would end DRPA insurance fee-sharing

A New Jersey state legislator said Thursday that she planned to propose a state law to prevent insurance brokers from splitting commissions from public agencies without performing services for those agencies.

Sen. Jennifer Beck (R., Monmouth) said the proposed legislation was prompted by recent revelations of commission-splitting arrangements at the Delaware River Port Authority.

State Comptroller Mathew Boxer last month issued a report critical of mismanagement and political cronyism at the DRPA that also detailed an insurance payback deal allegedly orchestrated by George E. Norcross III, the South Jersey insurance executive and Democratic Party power broker who is chairman of the board of Cooper University Hospital in Camden.

The Norcross insurance arrangement provided $455,000 over seven years to Norcross' insurance company and an insurance broker designated by Norcross. The money was paid by Willis Insurance of New Jersey as a "referral fee" for securing DRPA insurance business for Willis, executives of that company told Boxer's investigators.

Norcross told the comptroller's investigators that the money had nothing to do with the DRPA but was for other marketing and referral efforts on behalf of Willis.

Norcross is executive chairman of the Conner Strong & Buckelew insurance company, and he and Joseph Buckelew, the firm's chairman, are among the local investors who recently purchased the parent company of The Inquirer.

Much of the comptroller's report last month focused on exchanges of money by insurance companies that worked for DRPA in what the comptroller called "a series of ambiguous and nontransparent dealings."

More than $1.5 million in commissions derived from DRPA work was shared among "disclosed and undisclosed insurance brokers," regardless of whether they performed any work for the agency, the report said.

One of those arrangements was a payment-sharing deal by New Jersey and Pennsylvania insurance brokers for the DRPA. The New Jersey broker was Willis and the Pennsylvania broker was the Graham Co. of Philadelphia.

The DRPA required the two companies to split insurance commissions equally regardless of work performed, the report said. This "true-up" arrangement required Graham to pay Willis more than $500,000 over six years, the report said.

Beck said her legislation would prohibit "politically motivated and wasteful commission sharing arrangements for public contracts. That practice has been condemned by investigating officials in New Jersey and other states, such as New York, which has banned brokers from being paid public money for nothing."

"We must end a shameful allowance for licensed insurance companies to profit off the public dime in return for performing zero or proportionately minimal services," Beck said in a statement.

Beck's bill also would require insurance producers contracted by public entities in New Jersey — including state, municipal and school governments and agencies — to disclose proof of services, proportional payment and sharing arrangements with the state's commissioner of banking and insurance.

Michael Tiagwad, president and chief executive of Conner Strong, issued a statement in response to Beck's announcement saying, "We have always supported any effort to advance transparency and trust in the professional services provided to public entities.

"Beyond the stringent and very public qualification requirements, we hold ourselves to the highest standards of accountability," Tiagwad said. "According to public actuarial reports, we have saved the municipalities we serve more than $1 billion over the past 25 years."

Contact Paul Nussbaum at 215-854-4587 or pnussbaum@phillynews.com.