This fire hydrant in Mandan ruptured in 2023, flooding residential property down a hillside below the hydrant. (Courtesy of Marc Montplaisir via the North Dakota Monitor)
(Jeff Beach – North Dakota Monitor) – The insurance provider for cities and other local governments across North Dakota routinely denies claims from state residents without providing an explanation, according to an audit report presented to legislators last week.
Several legislators who heard the report on the North Dakota Insurance Reserve Fund were appalled by the report and the treatment of people who said they were harmed by incidents such as water main breaks and vehicle accidents.
“This is government at its worst,” Rep. Austen Schauer, R-West Fargo, told Keith Pic, CEO of the nonprofit insurance provider.
The North Dakota Insurance Reserve Fund was created to serve local governments, such as cities, counties and park, fire and school districts. A state law put the company under the authority of the state Insurance Department on July 1, 2023.
Pic took questions and criticisms from members of the interim Legislative Audit and Fiscal Review Committee on Tuesday after the report.
Rep. Mike Nathe, R-Bismarck, said the agency seemed to have little oversight, poor customer service and there “doesn’t seem to be much common sense,” about how it investigates and approves or denies claims.
Deputy Insurance Commissioner John Arnold presented the report that covered a review period of Feb. 1, 2019, through Jan. 31, 2024, examining a sample of 299 of the fund’s claims.
The report says claims lacked documentation such as damage estimates, photographs and police reports to support the conclusions reached by the company. In some files, there was no documentation reflecting any form of investigation.
Overall during the period, in third party claims —involving a person or business that is not a member of the insurance fund — 71.5% were closed without payment.
Pic, who has been with the insurer since 2012 and became CEO in July, after the examination period, pushed back against some of the findings in the report.
Pic told the committee that when a claim is made, it is up to the claimant to prove that the government body covered by the fund is at fault.
He also said there could be documentation added to claim files but that it would become very redundant for the claims adjuster.
Nathe took issue with that response.
“The customer service is extremely poor,” Nathe said. “You’re not informing the claimant at all and it’s just enraging people and then we hear about it.”
Pic said there also may be claims paid without a police report, calling it “a matter of efficiency.”
Marc Montplaisir of Mandan told legislators his story of his property and that of neighbors being flooded by a broken fire hydrant. Their claims have been denied by the insurance fund.
He thanked the legislators for listening to the report and encouraged them to dig deeper into the issues at the insurer. But he said the discussion, “made my blood boil even more.”
The report made recommendations to improve the insurance fund, including creating a checklist for adjusters, creating a policy for handling claims and having a supervisor review claim files before they are closed.
Nathe and committee chair Emily O’Brien, R-Grand Forks, said the Legislature may need to provide more oversight. State law does provide some financial reporting requirements for a self-insurance provider such as the North Dakota Insurance Reserve Fund.
Schauer called the insurance provider “nearly criminal” and said the insurance fund should be dissolved.
Rep. Scott Wagner, R-Fargo, a former Cass County commissioner who was a board member for the insurance fund, expressed some concerns about the lack of documentation but also some support for what the insurance provider has done for local governments, which includes things such as safety training and advice on avoiding claims.
“Overall, I think your organization has done an excellent job over the years,” Wagner said.
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