Louisiana P/C Self-Insurance Program Selects New Contractor

A new private contractor is being hired to oversee claims processing and loss prevention services for Louisiana’s self-insurance program.

The Office of Risk Management announced that Sedgwick Claims Management Services Inc. was awarded a three-year contract that begins July 1, with an option for a two-year renewal.

The cost of the work over five years will be $80 million.

Tennessee-based Sedgwick will take over the work from Mandeville-based F.A. Richard and Associates Inc., or FARA, whose $75 million contract ends June 30. FARA bid for the new contract, but wasn’t selected.

Gov. Bobby Jindal’s administration privatized its risk management division in June 2010.The state’s legislative auditor said Louisiana saved more than $10 million in the first two years of the privatization deal, rather than doing the work in-house. The administration projects $22 million saved by the end of FARA’s contract.

The risk management office is the state’s self-insurer, with agencies paying premiums for lines of insurance covering items such as medical malpractice, worker’s compensation cases, property damage and road hazards.

Four companies submitted bids for the contract. Sedgwick wasn’t the lowest bidder, according to the Jindal administration, but had the best score in the bid reviews.