State lists Citizens as delinquent
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The Louisiana legislative auditor’s Web site lists Louisiana Citizens Property Insurance Corp. as delinquent in providing state required audits of its financial activities for the last two years.
However, Citizens Chief Executive Officer John Wortman said the Louisiana Insurance Department has given Citizens until Sept. 30 to file its 2006 and 2007 audits.
Citizens insures properties that no other insurance company will. Citizens’ much-publicized computer problems have prevented the insurer from producing reliable financial statements since Hurricane Katrina. Without the financial statements, no audits can be conducted.
Citizens paid more than $13 million for the system, which had an original cost estimated at $6 million that doubled with various problems and fixes that were needed.
The state’s third-largest property insurer eventually had to hire a consultant to write a program to extract the financial data. Late last year, Citizens’ new management team said the computer system could not be fixed and would have to be scrapped. On the plus side, Citizens expects a new system will cost a fraction of the flaw-ridden and patched-together system now in use.
Citizens just provided its 2005 audit on Aug. 1, said Joy Irwin, director of advisory services in the auditor’s office. Still owed are audits for 2006, which was due June 30, 2007, and for 2007, which was due June 30 this year.
“They are behind; … they are not in compliance with the law,” Irwin said. “We have been in serious discussions with them for a long time.”
Wortman said Citizens expects to be in compliance soon.
Citizens has already completed its 2006 financial statement and sent it to an outside auditing firm, which should complete its review by the end of the month, Wortman said. The 2007 financial statement should be completed in the next two weeks, and then forwarded to the outside auditor.
The 2008 financials are up-to-date, Wortman said, and no extension should be needed for that audit.
“I think we’re making progress,” said Wortman, who was hired to correct problems at Citizens.
Irwin said there has been a lot of media coverage of the problems Citizens has encountered. “(Hurricane) Katrina contributed a lot to Citizens problems,” Irwin said. And the management has undergone change, she said.
“I know they are working very hard,” Irwin said.
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