Scott Signs Citizens Insurance Bill Amid Continued Controversy

May 30, 2013

Gov. Rick Scott on Wednesday signed a plan to make changes at Citizens Property Insurance Corp., as officials from the state-backed insurer continued trying to defuse a controversy about a deal to shift policies to a private company.

Scott quickly signed the measure (SB 1770), which legislative leaders sent to his desk Tuesday. It includes a series of steps aimed at reducing the number of homeowners getting coverage from Citizens, such as setting up what is described as a “clearinghouse” where private insurers could intercept policies that otherwise would wind up with Citizens.

The governor, in a statement issued by his office, also pointed to part of the bill that will lead to Scott and Cabinet members appointing an inspector general for Citizens. That move came after reports last year about what Scott described as “egregious” travel expenses among some Citizens officials and the shutdown of an internal compliance office.

“This legislation will bring much needed reforms to better protect the taxpayers who support Citizens Property Insurance,” Scott said in the statement.

The announcement of the bill-signing came as a Citizens committee discussed efforts to try to steer policies into the private insurance market — and a controversial deal approved last week that could funnel up to $52 million to St. Petersburg-based Heritage Property and Casualty Insurance, which would take out as many as 60,000 policies from Citizens.

The deal has been criticized by people such as House Speaker Will Weatherford, R-Wesley Chapel, who issued a statement Friday raising concerns about the payments and a lack of notice about the deal, saying it was “hastily pushed through.” Scott on Wednesday also objected to the way Citizens made the decision, calling for at least seven days notice of such issues.

Citizens President and Chief Executive Officer Barry Gilway agreed with Scott that the state-backed insurer needs to do a better job of communicating about major initiatives, though he said staff members in the past have struggled with how early to present information about potential deals. Also, Citizens officials said they were trying to get the Heritage deal finished quickly so the company could take over policies before the main part of hurricane season.

But Jeff Grady, president of the Florida Association of Insurance Agents, said a lack of information can cause problems with the appearance of such deals.

“There is a point in time in that process to advise — at least advise,” said Grady, who serves as a technical adviser to the Citizens committee that met Wednesday, known as the Depopulation Committee.

During the meeting, Gilway and Citizens Chief Financial Officer Sharon Binnun focused on the insurer’s broader efforts to reduce its number of policies.

As of April 30, Citizens had nearly 1.3 million policies — making it the state’s largest property insurer — but Gilway said it could have had about 1.8 million if Citizens hadn’t aggressively worked to move policies into the private market. Insurance-industry officials and many state leaders have long argued that the large concentration of policies in Citizens would pose a huge financial risk if a major hurricane hits.

Gilway said Citizens should work with private companies so they can remove the best policies, ultimately leaving Citizens as the so-called insurer of last resort for homes that cannot get coverage elsewhere. But Gilway took issue with questions about whether private insurers should be able to “cherry pick” the best Citizens policies.

“My answer to that is absolutely — the companies should be cherry-picking,” Gilway said.

The bill signed Wednesday by Scott includes steps to try to move policies and risks away from Citizens. Along with creating the clearinghouse, for example, it would prevent Citizens from covering new homes in high-risk, environmentally sensitive coastal areas.

By The News Service of Florida

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Written by William Reynolds · Filed Under News