 |
YELLOW SHEET Office of the State Auditor of Missouri |
April 19, 2001
Report No. 2001-35
The following problems
were discovered as a result of an audit conducted by our office of the
Petroleum Storage Tank Insurance Fund.
The Petroleum Storage Tank Insurance Fund had a negative
unreserved fund balance of over $40 million as of June 30, 2000.� Financial projections indicate revenues will
not be sufficient to cover clean up costs at all contaminated sites through
December 31, 2003, which is the expiration date of the fund.
Although the fund had a cash balance exceeding $46
million at June 30, 2000, the fund also had claim reserves exceeding $85
million.� Financial projections indicate
cleanup costs will significantly exceed revenues due to known locations
currently undergoing cleanup and potential new cleanup sites.�
To
ensure the greatest benefit to the state of Missouri regarding the cleanup of
contaminated sites, the auditor recommends the Board consider the following
alternatives:
The
program currently has a deductible (the owner�s share of cleanup costs) of only
$10,000 and the coverage limit for each incident is $1 million.� The audit said the deductible may be too low
and the coverage limit may be too high.�
The Board could potentially save $15.5 million if it would increase the
deductible.� In addition, the Board
could have saved $6.8 million on claims incurred if the coverage limit had been
$350,000.
The Board did not present an annual report on the
availability and affordability of private insurance to the General Assembly as
required by law.
The Board did not conduct timely review of claim activity
to ensure claim files and related reserves are accurate and up to date.
The purpose of the fund is to pay for the cleanup of contamination caused by petroleum spills.� There are various administrative costs involved in carrying out these duties.� Administrative costs of nearly 20 percent or more may be excessive when compared with other states that have similar programs.
