MEM Co. audit
Mon February 27, 2012
Missouri audit criticizes state-created insurance company
A report by the Missouri auditor finds that a state-created insurance company has built a competitive advantage by claiming to be a public corporation but operating as a private entity.
State Auditor Tom Schweich says Missouri Employers Mutual Insurance Co.’s federal tax-exempt status has saved it about $50 million since it was created in 1993. At the same time, it pays large amounts of money for salaries and executive perks. Schweich says lawmakers need to clarify if it's appropriate for the company to continue as a public corporation.
"It is sort of a situation of having your cake and eating it, too, but it’s not illegal as long as the legislature wants that and we think it’s important for the legislature to really take a hard look at this. Obviously, competitors to MEM say it’s not necessary," Schweich said. "They (MEM) say they’re still fulfilling a very important purpose by insuring small companies and that’s not for auditors to decide."
MEM denies that it’s a public entity subject to Missouri's open-records-and-meetings law or the state auditor's office. The company said in a written statement that it voluntarily agreed to a one-time review by the auditor's office to "clearly demonstrate that the company has proper internal controls in place."
Missouri Employers Mutual hearing