Probe: Port Authority of N.Y.-N.J. Paid Too Much for Insurance

July 29, 2013

An internal investigation has found the Port Authority of New York and New Jersey paid millions of dollars in excessive insurance premiums for construction projects.

Chief investigator Michael Nestor tells The Star-Ledger of Newark, N.J., the agency is looking at it as “gross mismanagement” and the agency is negotiating with insurers to get money back.

Nestor says the investigation is largely based on information provided by a former analyst who was fired in 2012 for excessive absenteeism hours. He alleged three executives had accepted gifts and mismanaged the insurance program. The analyst had concluded the agency had paid $58 million in excessive premiums between 2007 and 2011.

The analysis found officials had arranged coverage for estimated contract values totaling $5.2 billion, even though actual values totaled $2.23 billion.

 

Latest Comments

  • August 1, 2013 at 7:59 am
    jw says:
    If I had had a client with these exposures and this large of a risk, I might've given up auditing a lot sooner than I did.
  • July 31, 2013 at 2:09 pm
    Libby says:
    I re-read the article several times, but it doesn't really confirm this is a builders risk, just insurance on construction projects. If it's builders risk, there should have ... read more
  • July 31, 2013 at 11:44 am
    jw says:
    I never audited builder's risk, so I have no clue what type of documentation they would use. I cannot even comprehend the complexity of an audit of this size operation. Yuck.
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