Citizens: Problem limits coverage

• By TED GRIGGS
• Advocate business writer
• Published: May 13, 2008 - Page: 1D - UPDATED: 12:05 a.m.

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Around 21,000 homeowners forced to buy wind damage protection from Louisiana Citizens Property Insurance Corp. lack an important layer of protection: money for living expenses if their homes become uninhabitable.

“We would love to sell it,” said Alvin Jackson, Citizens vice president of operations. “But we have systems restraints at this point.”

Citizens’ much-patched computer system basically makes it impossible for Citizens to amend the wind-and-hail-only policies, Jackson said. The living expenses coverage will have to wait until Citizens replaces its computer system.

Some insurers, such as Allstate, dropped hurricane coverage for some homeowners after hurricanes Katrina and Rita. Citizens began writing the wind-only coverage to help those homeowners.

Citizens Chief Executive Officer John Wortman said the company hopes to publish a request for proposals on a new system within 30 days or so and have a new system in place by the end of the year.

Dan Laffey, Citizens chief information officer, said a new system will probably cost around $3 million to $3.5 million, roughly $10 million less than the current computer system.

Citizens is trying to recover the entire cost of the old system, and that matter is in arbitration, Wortman said.

In other action, Citizens board voted to raise Wortman’s salary by 10 percent, or $22,000, to $242,000. Wortman also receives $18,000 a year in expenses.

Insurance Commissioner Jim Donelon, who recommended the raise, said Wortman has done a tremendous job turning around the insurer in the year he has headed Citizens.

Board member Lee Mallet said Wortman has earned the raise. The savings, just on the computer system, amount to millions of dollars, Mallet said.

Wortman’s accomplishments, which include building a great staff, should be acknowledged, Donelon said. Although most Louisiana residents don’t know who Wortman is, it’s in their best interests, and the state’s, to keep him around as long as possible.

Wortman said with the addition of Paige M. Harper as general counsel and Suzanne M. Don de’Ville as litigation manager, Citizens’ management team will be complete.

Harper now serves as assistant general counsel for Century Insurance in Stevens Point, Wis., Wortman said. She is from Louisiana and wants to come home.