Special examination of Kentucky Employers’ Mutual Insurance Company details 10 findings
FRANKFORT, Ky. (April 16, 2019) – Today, Kentucky Auditor Mike Harmon announced the results of a special examination by his office of the Kentucky Employers’ Mutual Insurance (KEMI) Company. KEMI is the largest provider of workers’ compensation insurance in the Commonwealth, and is the state-created insurer of last resort for workers’ compensation.
Kentucky Auditor Mike Harmon
The examination identified issues including lapses in the reporting of personal service contracts, lack of policyholder representation on KEMI’s board, and areas for improvement in procurement, operations and policies. The problems found in the examination led to 10 findings in the report.
“One of the biggest concerns our auditors discovered relates to KEMI’s purchase of land for a new office location near I-75 and Newtown Pike in Lexington, in which a real estate broker was paid an additional $38,825 above the original agreement,” said Auditor Harmon. “This is just one of several issues identified among the 10 findings in our special examination of KEMI regarding accountability and transparency relating to expenditures.”
Auditor Harmon’s examination details how there is no clearly defined role or guidance for KEMI’s board and its six committees, confusion over the role of both the board and KEMI’s manager, which included the agency’s manager terminating its actuary without approval by the board. In addition, the report also details the following:
“KEMI has more than 23,000 members in all 120 counties, yet these policyholders have little to no say on their board,” Auditor Harmon said. “It’s why I’m recommending the General Assembly require that four of KEMI’s board be elected by policyholders, and increase their board membership by one. As for the remaining findings in our exam, it is my hope KEMI’s management and board will implement the recommendations in our report, which will improve transparency and oversight of their operations.”
The full report can be found on the auditor’s website.