It’s been a year and a half since Louisiana’s insurer of last resort last balanced its checkbook, and its computer backup system loses details of records more than two weeks old, the agency’s board recently learned.
The Louisiana Citizens Property Insurance Corp. board heard the news from a consultant hired after it learned that a breakdown in computerized records left Citi-zens and its auditors unable to make a reliable audit or finish financial statements for the past two years. Some board members asked why they hadn’t been told earlier about the problems, and when they would learn about all of them.
The board and the Louisiana Department of Insurance had hired a Texas auditing firm, Bostick Crawford Consulting Group, to deal with the records problem. Billy Bostick said the backup system writes over data more than two weeks old. A new system will be installed to fix that, he said.
Officials with the state legislative auditor, which brought the software crisis to light and is investigating the matter, said it was the first time they had heard about the bank account reconciliation problem at Citizens.
Citizens CEO Terry Lisotta said the board had made a business decision after Hurricane Katrina to concentrate on paying claims as quickly as possible. Everything else was put off, he said.
State Treasurer John Kennedy, a Citizens board member, said disruptions from the storm were understandable, but he could not see why the books had been out of kilter for so long.
A clerical team has been going through Citizens’ records and bringing its bank statements up to date. As of March 22, the bank records had been reconciled through mid-2006.
The Citizens board also insisted that Lisotta immediately request money from 26 private insurance companies that they were due to pay as part of their obligation to the Citizens insurance pool after Katrina. The legislative auditor in December delivered a report showing that Citizens had failed to collect $4.8 million from the 26 insurance companies. Citizens staff were aware of the collection gap in late 2005, Lisotta said. “We made a business decision to put this on hold and take care of this later,” Lisotta said.
Insurance Commissioner Jim Donelon has started a formal search for a new chief executive for Citizens, a job that could pay $200,000 to $225,000.
c:Copyright 2007 Associated Press. All rights reserved.
Topics Louisiana
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