SCIF audit is finally released

By CMTA Staff

Capitol Update, Dec. 14, 2007 Share this on FacebookTweet thisEmail this to a friend

This week RSM McGladrey, a business accounting and consulting firm hired by the California Department of Insurance (CDI) to audit the operation of the State of California Insurance Fund (SCIF), released their findings.  The audit focused on the organization, management and financing of the program.  Their report resulted in 110 recommendations.

SCIF has already provided a full response with a status of their progress.  Newly appointed State Fund President Janet Frank, made the following statement:  
We appreciate the California Department of Insurance’s review of State Fund operations and welcome their comments and recommendations. Thanks in large part to the leadership and tenacity of our Board of Directors, change has been underway at State Fund for more than a year. In fact State Fund has already accomplished or begun to implement most of the recommendations in CDI’s report.

The outcome of this audit will certainly result in new legislative and regulatory proposals that will attempt to strengthen SCIF management procedures as well as provide more transparency. Both Governor Arnold Schwarzenegger and Insurance Commissioner Steve Poizner have committed to improving the management of SCIF and minimizing conflict of interest scenarios.

SCIF is also undergoing a joint criminal investigation by state insurance investigators, the California Highway Patrol and the San Francisco District Attorney's Office.

The audit and criminal investigations began in November 2006 after two SCIF directors resigned amidst accusations of conflict of interest.  Frank DelRe, an appointee of former Gov. Gray Davis, and Kent Dagg, a Schwarzenegger appointee, were executives with companies that received about $25 million in administrative fees from SCIF in 2005 while serving as SCIF directors.

An executive summary of the report and the recommendations can be found at www.scif.com

Capitol updates archive 989898989