Louisiana’s Department of Insurance improperly made $29 million in incentive payments to five insurance companies before having all the agreements finalized, according to an audit from Legislative Auditor Steve Theriot.
Auditors with Theriot’s office said the department awarded the cash grants before either side signed “cooperative endeavor agreements,” which spell out the terms of the program. The money came from the Insure Louisiana Incentive Program, passed by the Legislature to help lure qualified insurers to the state if they matched the money pub up by the state.
The audit said the $29 million – part of a $100 million incentive pool – was provided to the companies in January 2008 although the agreements “governing those grants were not signed by both parties until June and July” of that year.
The audit said issuing the checks before all the agreements were signed “increases the risk of loss to the state as an insurer can not be legally required to comply with an agreement until (it) is signed by both contracting parties.”
Jim Donelon, state insurance commissioner, acknowledged that “we dropped the ball on that.”
Donelon said his agency used a copy of agreements used by the Department of Economic Development “but we are not as used to doing this as they are.”
Information from: The Times-Picayune, www.nola.com
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