New Orleans’ city government has improved the way it handles insurance on its buildings, but it still is falling short of several changes sought by the city Inspector General’s Office, according to a new report from that office.
The report, issued Wednesday morning, follows up on a 2012 evaluation that took the city to task for failing to have accurate information on the value of its property, warned that its insurance program might cause problems with federal funding and identified other issues.
"Evaluators conducting the follow-up found that the city made improvements to its property and casualty insurance program since hiring a risk manager in June 2014," according to Inspector General Ed Quatrevaux.
"However, evaluators found that the city did not develop a complete and accurate statement of values or obtain appraisals on any insured properties," he said. "The accuracy of property values and building construction information play an important role in marketing the city's property to the insurance markets. Successful completion of these tasks could allow the city to achieve additional savings on insurance premiums."
The city insured about $813 million worth of property at a cost of about $2.2 million in 2015, according to the report.
Back in 2012, a report from Quatrevaux's office made five recommendations to city officials to address problems evaluators found with the way the city was handling its insurance coverage.
One was correcting the statement of values for insured properties, which evaluators found was out of date, had errors and had missing information. The report also said the city did not have enough oversight of its contracts with insurance companies and the process for choosing insurance companies did not “generate price competition.”
The follow-up report found that the city made progress on many of those problems. The city was granted a certification that allows it to comply with FEMA guidelines for properties that have been rebuilt after a disaster, something that was not in place when the initial report was written.
City officials also made corrections to their list of insured properties. However, the report found that many properties still had incorrect or incomplete information, including 2.6 percent of properties that did not have information about the building’s value and 71 percent that did not have construction codes listed.
While the city had told the Inspector General’s Office it would complete appraisals of all properties by 2013, evaluators found “no appraisals had been conducted since the original report was issued.” City officials said the city did not have the money for the appraisals, which were expected to run into the “low six figures.”
The city also developed a new process for soliciting contracts for insurance, something the original report had urged. However, the follow-up found that the city did not add performance standards to those contracts that would allow them to be properly evaluated.