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

July 29, 2013

  • July 29, 2013 at 12:27 pm
    reality bites says:
    Like or Dislike:
    Thumb up 3
    Thumb down 0

    From the Star-Ledger article:

    “The analysis found that treasury officials had arranged coverage for estimated contract values totaling $5.2 billion during that time, even though actual values totaled just $2.23 billion. The difference between the estimated and actual value of the contracts, the analysis concluded, cost the agency a total of $58,353,156 in excessive premiums.”

    “It is unclear whether Aon, the insurance broker, also profited from the excessive premiums.”

    Sounds like Aon is getting a write-down. Oops.

  • July 29, 2013 at 1:45 pm
    Cheetoh Mulligan says:
    Like or Dislike:
    Thumb up 6
    Thumb down 11

    Aon or whoever the broker is profited from commissions or fees for the extra premiums.
    Can’t wait to see how good the gov’t handles health insurance and obamacare.

    • July 29, 2013 at 3:49 pm
      youngin' says:
      Well-loved. Like or Dislike:
      Thumb up 10
      Thumb down 0

      Why, will the Port Authority of NJ be running the insurance exchange in that state?

    • July 31, 2013 at 11:21 am
      Libby says:
      Like or Dislike:
      Thumb up 4
      Thumb down 0

      Cheetoh – you obviously haven’t worked on a fee basis before. The fee is the fee regardless of the premiums. That’s why the client wants a fee.

      What I don’t understand is why there wasn’t an audit. When premiums are based on estimated costs, there is usually an audit that would have returned half of their premiums. If this was a builders risk, it should have been on a reporting form with values like that.

      • July 31, 2013 at 11:41 am
        jw says:
        Like or Dislike:
        Thumb up 2
        Thumb down 0

        You would think there would be an audit. It’s possible that the information provided to the auditor was prepared by the same person who provided the “estimates”. I don’t know if that would make a difference or not.

  • July 29, 2013 at 1:57 pm
    Agent2 says:
    Like or Dislike:
    Thumb up 6
    Thumb down 2

    15 minutes could save you 15% on your contract construction costs!

    Incompetents in charge of people who don’t care = government

  • July 29, 2013 at 2:37 pm
    hmm says:
    Like or Dislike:
    Thumb up 3
    Thumb down 1

    Wouldn’t there have to be an audit of the risk and adjustment of the premium anyway? What if the project was set up at a billion less than actual (oh those cost over runs. I would think this is audited and premiums adjusted accordingly. The broker may not have done anything wrong, the projections were just wrong.

    It is suspect when a fired employee is giving the information as well.

    • July 30, 2013 at 7:49 am
      jw says:
      Like or Dislike:
      Thumb up 1
      Thumb down 0

      It’s possible the insurer didn’t audit or that the insurer only did a mail in audit.

      • July 30, 2013 at 7:54 am
        jw says:
        Like or Dislike:
        Thumb up 1
        Thumb down 0

        Keep in mind, I don’t know anything about insurance in NJ. I’m only familiar with premium audits in the Southern states.

        • July 31, 2013 at 11:23 am
          Libby says:
          Like or Dislike:
          Thumb up 2
          Thumb down 0

          jw – there’s no way you would do a mail-in audit on values and premiums this large. Those are usually reserved for smaller risks. Just an FYI. :-)

          • July 31, 2013 at 11:44 am
            jw says:
            Like or Dislike:
            Thumb up 1
            Thumb down 0

            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.

          • July 31, 2013 at 2:09 pm
            Libby says:
            Like or Dislike:
            Thumb up 3
            Thumb down 0

            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 been some reporting form involved.

          • August 1, 2013 at 7:59 am
            jw says:
            Like or Dislike:
            Thumb up 0
            Thumb down 0

            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 29, 2013 at 3:54 pm
    InsGuy says:
    Like or Dislike:
    Thumb up 4
    Thumb down 0

    Wait, Really??

    I just did a review of my HO bills for the last 10 years and discovered I paid excessive premiums as well. I want a refund too!

  • July 30, 2013 at 12:16 pm
    InsGuy says:
    Like or Dislike:
    Thumb up 4
    Thumb down 0

    Not an expert on B/R, but isn’t that the norm? Actual to Estimated ratios run very high when contracts are written and decline as they approach completion, eventually hitting 100% at the close of the contract, at which point a final adjustment is made. Does the article mention anything about which projects, and at what stage they are? I would imagine, being a port authority, that $5B could be only 10-20 projects, given the complexity of their construction/logistical issues.

    How many were in progress when Sandy hit? What are the pre- and post- loss values? Does that have any bearing?

    Article doesn’t give enough details to be sure of anything.

  • July 30, 2013 at 3:19 pm
    Get in line says:
    Like or Dislike:
    Thumb up 6
    Thumb down 0

    We ALL pay too much for insurance!!!



Add a Comment

Your email address will not be published. Required fields are marked *

*

More News
More News Features