SHREVEPORT, La. – (KTAL/KMSS) On Monday, during a special meeting of Shreveport’s city council, District C councilman John Nickelson addressed an internal audit which shows the city is paying more for property insurance, but is getting significantly less coverage under its new policy.
Nickelson said if something would happen to the city’s assets, the city would have a catastrophic uncovered loss.
“i had a hard time sleeping this weekend, because i knew that if the weather was as bad as it was reported it might be, and a tornado came through our city, we could literally go bankrupt,” said Nickelson.
According to Mayor Adrian Perkins, Nickelson’s statements weren’t entirely wrong, but they weren’t entirely correct either.
“So that’s a misconception,” said Perkins, who spoke publicly on the issue for the first time to NBC 6’s Dan Jovic. “We actually have total coverage of all of our properties.”
According to city’s new policy with insurance giant AIG, brokered through Frost Insurance of Dallas and agent Roddrelle Syke, all of the city’s properties, which are valued at more than $815,000,000, are insured.
“There’s a confusion between our total insured property insurance and the single occurrence coverage,” said Mayor Perkins.
Single occurrence coverage applies when one incident, such as a hail storm or a flood, damages properties. It determines what can be claimed from that incident.
The mayor acknowledges Nickelson was correct in stating that number has been drastically reduced. But he claims there’s good reason.
“We were over insured before. We were at $815,000,000 of coverage before with our single occurrence,” said Perkins. “Since the early 2000’s we’ve only claimed about $800,000 dollars of that $815,000,000 that was available. And we’ve gone through the 2016 floods. So we were over insured.”
When asked by Jovic if the city was currently paying more money for less insurance the mayor said “Yes.” But he said there was a stipulation.
“It’s not due to a change of agent, which I’ve heard in the news. It’s actually due to the market,” said Perkins. “We got a letter from AIG, who our previous insurers used, about a month before our policy expired saying this bundle that we are offering, that was $500,000 before, is going to be $200,000 more dollars. And [AIG] is going to be reducing the coverage on that bundle.”
Multiple municipality insurance brokers NBC 6 News spoke with locally and across the country, who were unwilling to go on camera, back the mayor’s claims.
AIG as a whole is reducing its liability in the municipality insurance market.
“It wouldn’t have mattered whoever the insurance agent was,” said Perkins. “The city would have had to incur their cost anyway.”
According to the mayor the new agent of record, Frost Insurance, sought out around 20 companies to see if the city could get a better deal.
In the end AIG still offered the best terms.
“AIG still had the better deal, so we’re still using AIG for our coverage,” said Perkins. “[Frost Insurance] went with the best available coverage in the market. Which again makes sense. Our previous agent of record did the same thing with AIG.”
The mayor says Frost Insurance brokers only 12-percent of the insurance the city carries. The remaining 88-percent sits with Gallagher & Company and Risk Services.
Perkins said the move was to increase minority participation, at no perceived cost, in an area where the city had none.
“We did bring [Frost Insurance] in at a very small factor for the entire equation.”
NBC 6 reached out to both Gallagher & Company and Risk Services for comment this week. Neither would go on the record.
Multiple calls to Nickelson’s city council office and his law office went unreturned.