La. Citizens Insurance Lacks Paperwork for Much of its Spending

May 31, 2007

Louisiana's state-run insurance company of last resort for homeowners in storm-prone areas paid almost $300,000 for consultant services and expenses from 2004 to 2006, but lacked paperwork to back up almost two-thirds of that spending, according to the legislative auditor's office.

Louisiana Citizens Property Insurance Corp. paid $296,094 for professional services to its third-party administrator, the Property Insurance Association of Louisiana, without proper contracts or documents to back up $187,344 of that- 63 percent.

"PIAL invoiced Citizens for some expenses that were either not Citizens' expenses or do not appear to be necessary and reasonable expenses necessary to conduct Citizens' business, such as hunting and fishing trips and contract fees,'' the report said.

The report is one of a series of audits that Legislative Auditor Steve Theriot's office is compiling on the performance of Citizens.

Since the property insurance group took over the operations of Citizens in 2004, it has billed the corporation for more than $20 million. Auditors recently said that Citizens' books are in chaos and documentation is hard to find.

They also have complained that a computer software program has not worked properly and much of the data may be lost. Citizens has not balanced its books in two years, Theriot said earlier.

Insurance Commissioner Jim Donelon recently hired John Wortman as chief executive officer of Citizens and has told him to operate the state-run insurance program in a more businesslike, efficient manner.