Discount Insurance Broker Claims Blue Cross Stymied Sales Effort

A Los Angeles insurance agency on Tuesday accused Blue Cross of California of blocking its efforts to sell Blue Cross policies at discounts of up to 10%.

Northwood/Roche Insurance Services Inc., formed in January as an agency specializing in discounts, planned to rebate to customers half of its sales commissions on Blue Cross policies, Vice President Alan Rosen said. But Blue Cross, the state’s largest health insurer, refused to do business with the firm, Rosen said.

Blue Cross Vice President David L. Ludwig said his company rejected Northwood because it considered some of its advertising “confusing and misleading.” Blue Cross also had doubts whether Northwood could provide adequate service to customers, he said.

Northwood, in an aggressive direct-mail campaign, has sent brochures to more than 50,000 California businesses touting its rebates. One mailing invited companies to fill out an enclosed form replacing their existing insurance agent and appointing Northwood as broker of record.