La. Citizens Seeks New Broker for Reinsurance Coverage

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Louisiana’s taxpayer-backed property insurance company will seek a new broker for reinsurance coverage because its current broker failed to disclose that it hired a daughter of the insurer’s embattled former chief executive.

The board of Louisiana Citizens Property Insurance Corp. voted to begin seeking proposals from companies to replace Guy Carpenter and Co. The company has been the broker that shops for reinsurance for Citizens and its predecessor since 1998.

State Treasurer John Kennedy, a Citizens board member, said he wants more information on the fees Carpenter has charged the state in the past nine years, whether it has a political lobbyist and how it won the contract in the first place.

Kennedy said the board should have accepted bids or proposals from several companies before awarding Carpenter a new contract in June.

“I think Guy Carpenter owed us an explanation that the daughter of Terry Lisotta had gone to work for you,” Kennedy told company representative David Duffy. “This company does a lot of business with your company. … This is an appearance of a conflict (of interest). This board should have been told.”

Duffy said his company employed Megan Lisotta for two years as an intern during summer college vacation and hired her full time after her graduation because “she performed to a very high level” during the summer stints.

Her father, Terry Lisotta, was the chief executive officer of Citizens and played a key role in which companies got contracts with Citizens.

Duffy said he passed along Megan Lisotta’s name to Carpenter’s human resources officials who interviewed her for the internships and later hired her full time. Duffy said neither he nor Terry Lisotta lobbied to have her hired.

“I explained she was the daughter of a client we had represented since 1998,” Duffy said.

Legislative Auditor Steve Theriot recently criticized Lisotta; the Louisiana Automobile Insurance Plan, the state’s high-risk auto pool; and the Property Insurance Association of Louisiana, which was hired to manage the two other agencies.

Theriot’s report questioned more than $1 million spent by the three agencies on trips to the Bahamas, London, Paris and New York for officials and their wives; meals; hunting and fishing trips; and expensive cigars and spa treatments.

Terry Lisotta, who has refused to discuss the allegations, was reimbursed more than $26,400 for expenses he reported, but auditors examined only 10 percent of those expense reports and are looking into more now. Auditors say Terry Lisotta was reimbursed $27,702 for expenses he did not incur, spent on personal items or spent on things that “did not have a legitimate public purpose.”