Louisiana’s insurer of last resort collected $4 million extra in reinsurance from the 2005 hurricanes and, at the suggestion of the state insurance commissioner, rewarded its chief executive with a 10 percent raise.
The $4 million collection by the Louisiana Citizens Property Insurance Corp. followed its discovery that about 350 to 400 claims for Hurricane Rita claims had been improperly classified as claims from Hurricane Katrina.
Citizens’ board approved the raise for John Wortman, who began his charge to turn around the troubled insurer in April 2007 with a $220,000 annual salary and $1,500 a month in unvouchered expenses.
Board members said hiring Wortman was far cheaper than getting a turnaround firm to fix Citizens.
Citizens still has about 4,000 claims in litigation from the hurricanes and has continued to have problems with its computer system, in spite of a $13.5 million bill to build and reconfigure it.
The board has hired a general counsel and litigation manager to address some outstanding legal issues. Citizens vice president and chief information officer, Dan Laffey, said he’s working with state procurement officials on a replacement computer system, expected to cost $3 million to $3.5 million, while disputes over the failed system are in arbitration.
Citizens also now has a detailed catastrophe plan that would allow it to “pick up and do business within a day or two” if another hurricane hit, said Alvin Jackson, Citizens’ vice president of operations.
Information from: The Times-Picayune, www.timespicayune.com
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