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When we started Treatment Magazine and began our planning
over a year ago, one of the editorial themes that stood out as a
natural for a publication focused on the business of addiction
treatment was risk management, the century old practice of
insurance agencies and carriers working with clients to lower the
risk profile of their businesses. These practices almost always result
in lower claims, which means higher profits for carriers. In the end,
though, the savings in practice are usually mostly passed along to
consumers because competition in insurance markets is typically
quite fierce, with carriers cutting prices whenever they can in order
to keep existing customers or bring new ones in the door.
In the personal lines side of the insurance business, coverages for
the auto or home of individuals, for example, it is not uncommon
for insurance companies to have captive sales forces, with Allstate
and State Farm being prime examples of this model. But in the
commercial lines side of the business, while it is not unheard of for
carriers to employ captive sales forces, the vast majority rely on
the many thousands of insurance brokerages scattered across the
nation to bring in sales. Insurance brokerage is a business that is
almost as fragmented as the addiction treatment business itself.
Now, there is always a fair degree of politics involved in any sale,
but the degree to which politics enters the commercial lines
insurance trade is truly remarkable, with politics playing a crucial
part in transactions probably more than in any other business.
Here’s why: While there are thousands of brokerages, these
brokerages are all selling literally the same product, which is
insurance that is underwritten usually by the same several dozen
carriers. In specialty markets like addiction, the pool gets
even smaller.
So, because brokers are all selling the same product, sometimes
at exactly the same price, what insurance brokerages are often in
effect selling is a relationship. And, just like in love, these
relationships are constantly being broken as the players routinely
swap partners, giving rise to an often unfortunate brew of jealousy,
hard feelings, back biting, gossip and, sometimes, lawsuits.
The story of the awarding of the Therapeutic Communities of
America, TCA, insurance program - business that was ultimately
won by Sterling & Sterling of New York - is indeed a vintage
insurance brokerage tale. We began following the story about six
months ago, and it has more curves and turns than an alpine road,
with enough plot twists to satisfy even the most ardent Film Noir
fan. Unfortunately, the juicy details were provided to us on a
confidential basis, so we can’t elaborate. But look for the novel, it’s
coming soon - maybe even a movie!
In fact, so supercharged is the political atmosphere surrounding the
awarding of industry insurance contracts, that Naatp doesn’t even
go where TCA does, refusing to endorse any one broker with a
captive program. Says President Ron Hunsicker: “We haven’t ever
been able to get the members to commit. Many have on their boards
their local insurance brokers, so they are often reluctant to sever
that connection.” Of course, it’s politics... as usual.
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Ted Jackson
Editor and Publisher
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Publisher's Note 
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