March 5, 2009-Bismarck Tribune

Blue Cross Blue Shield of North Dakota, under fire for a weeklong Caribbean retreat attended by more than 30 sales employees and guests, says it will end such trips. Insurance Commissioner Adam Hamm is calling for an audit of the insurer’s spending.

Blues Chairman Dennis Elbert said Thursday the decision to halt future retreats was made by the board and management.

“Obviously, this has gotten the board’s attention and we’re taking it very seriously,” Elbert said. “As we move forward, there will be no more incentive trips.”

The Caribbean trip was booked in 2007, “when times were significantly different,” he said.

Blues CEO Mike Unhjem said in a statement that the trips have been used as compensation for 18 years.

“Given the current economic conditions, we should have more adamantly questioned the appropriateness of this trip,” Unhjem’s statement said.

Unhjem, marketing vice president Chad Niles, and 33 employees and their guests took part in the Cayman Islands retreat. The trip, which began on Monday and ends on Friday, cost the insurer more than $250,000, or about $6,500 per couple, said Denise Kolpack, a Blues spokeswoman in Fargo.

The Blues trip came after the insurer reported huge losses last year but a big pay increase for Unhjem.

Kolpack said the insurer lost $28 million last year, including $9 million from operations. She said the company now has a hiring freeze, and has cut expenses by more than $3 million.

Records show Unhjem’s total compensation has increased 61 percent, from $412,371 in 2006 to $664,431 last year. Unhjem’s bonus, which is included in the compensation package, tripled in three years, from $90,245 in 2006 to $285,909 in 2008.

Hamm told The Associated Press today that he has called for a “targeted financial examination”‘ of the company, which is North Dakota’s dominant insurer. He has denied three recent rate increase requests by the insurer.

He said he has fielded many telephone calls and e-mails this week “from a mixture of extremely angry and confused policyholders” questioning the Caribbean trip and Unhjem’s pay boost.

“Policyholders want answers,” Hamm said.

Hamm said the financial examination by his agency would review company’s executive pay and bonuses and “a whole host of issues focused on the expenses of this company.”

Hamm, who took over the agency in October 2007, said he did not know the last time a similar audit had been done.