Oklahoma Lawmaker Wants Audit of Insurance Department

An Oklahoma state senator wants the governor to request a performance audit of the agency that regulates insurance in that state.

Sen. Harry Coates sent a letter to Gov. Mary Fallin requesting the audit because Republican senator feels that the information is necessary in determining if expenditures being made by the the Oklahoma Insurance Department conform with state statutes, according to a statement released by the Senate. Coates is also questioning whether OID expenditures are being used for the manner intended by the Legislature and Ethics Commission.

Coates said he was disappointed in his Republican colleagues’ lack of interest in what he believes to be questionable spending by the department in the last couple of years. He said he has “been labeled a troublemaker” for questioning Insurance Commissioner John Doak’s actions as head of the department.

“If a Democrat were in that office and a Republican raised these same questions, that individual would be praised as a watch dog for the taxpayers’ money, but I guess as a responsible public official I’m not supposed to question the actions of a member of my own party,” Coates said.

In response to an emailed request for comment by Insurance Journal, Doak said the department had “commissioned an independent audit of our office in October 2012. Sen. Coates would have received a copy if he had bothered to attend our budget hearing at the Capitol on Jan. 24.

“He has also refused to meet with me or my colleagues to discuss his issues, despite several offers to do so. It would seem to me that Sen. Coates’ only true concern is to gain media attention. The fact of the matter is this: In the last two years, the Oklahoma Insurance Department has returned $9 million to the state’s general revenue fund. Our office was legally authorized to spend those funds but did not. While an additional audit would be a waste of time and money, we welcome it.”

The state auditor’s office is prohibited from investigating the department without a request from the Governor, the Attorney General or a joint request from the Senate Pro Tem and House Speaker.

According to Coates, the department has spent hundreds of thousands of dollars “on motivational books, chamber memberships, uniforms, media equipment for PSA’s featuring Doak himself, weapons, catering, fast food, restaurants and lapel pins among other things.”

He said other state agencies don’t make similar expenditures.

If the insurance department “has so much money to blow perhaps they should lower fees for businesses and also stop accepting any funding from the legislature,” Coates said.

Coates’ announcement said the department’s state appropriation for the 2012 and 2013 fiscal years was just under $1.9 million per year.

The bulk of the agency’s revenues, however, are derived from premium and other taxes.

Coates has previously criticized the department’s $180,000 purchase of high-tech shotguns, bulletproof vests and seven police-package vehicles that the department said are necessary for protection of its anti-fraud unit.

The October 2012 audit covered the fiscal years of 2010, 2011 and 2012. Following are financial highlights reported in the insurance department’s October 2012 independent audit:

• In 2012 the department brought in revenues of $243 million, including $223 million in premium and other taxes, net of refunds. The amount is an increase of approximately $9 million in total revenues from the prior year. Around 65 percent of the department’s expenditures were related to direct regulatory and enforcement activities.

• Earned revenues for 2011 were $234 million, including net revenues of $203 million of premium and other taxes, net of refunds. Total revenues increased by $30 million compared with the previous year. Regulatory and enforcement activities accounted for approximately 64 percent of departmental spending.

• In 2010, insurance department revenues came to $204 million, $174 million of which came from premium and other taxes. The amount was a decrease of 5 percent from the previous year. Around 64 percent of departmental expenditures were for regulatory and enforcement activities.

In each of the three years investigated, the insurance department spent less money than it budgeted for, according to the audit prepared by Arledge & Associates P.C., an accounting firm based in Edmond, Okla.