No Staff Cuts Yet As Citizens Insurance Sheds Policies

October 1, 2015

Efforts to move policies from Citizens Property Insurance into the private market could eventually lead to the state-backed insurer trimming staff.

President and CEO Barry Gilway told Citizens board members Wednesday that if the number of polices drops far below 450,000 — the number projected for the end of 2016 — lower revenue will also necessitate a change in the insurer’s administrative “model.”

But that won’t be the case when a budget for the coming year is presented in December, he said.

The company, which has been able to amass a financial surplus as Florida has not felt a direct hit from a hurricane in nearly a decade, employs about 1,100 people, and Gilway said that number will hold when the budget is released.

“You won’t see a proposed significant drop in employee count, simply because in the claims areas, as an example, we actually need to add staff to do a more effective job in the water-damage arena,” Gilway said.

When Gilway requested the Office of Insurance Regulation approve a rate hike for Citizens policyholders in August, he pointed to a “disturbing” rise in water-damage claims in South Florida as a key factor in the need for the increase.

However, Gilway said the overall number of Citizens employees shouldn’t grow as the company is able to reduce in other areas through attrition.

“We all know the balance, we have to run an efficient organization,” Gilway said. “But we also have to be in a position that we can scale rapidly in the case of a single event, multiple events, and frankly a change in reinsurance pricing.”

Spokesman Michael Peltier noted after the meeting that while Citizens hasn’t changed its core staff, the company has been able save millions of dollars the past couple of years by reducing about 900 “contingency” positions, which are people hired as freelancers from other companies.

“We’re at this point based upon where we have been in the past 18 months,” Peltier said.

The current low cost for reinsurance — insurance for insurance companies — has been a large driver in allowing private insurance firms to grow and pick up policies from Citizens, including some coastal accounts that present more risk from storms.

Citizens has reduced its number of policies from a high of 1.5 million in 2012, when Gov. Rick Scott pushed to scale back the agency by moving more homeowners into private coverage, to now around 586,000.

Gilway said the company could be in the low-500,000 range by the end of this year, even though reductions through what is known as the private-insurer “takeout” process have seemingly slowed this year.

So far this year, of the 713,336 Citizens policies made available through the process, 141,680 policies have been moved into private hands.

A reason for the overall low turnover is that private insurers typically select the least-risky policies to remove from Citizens. Also, policyholders are allowed to reject takeout offers.

Still, more polices are expected to shift later this year. The Office of Insurance Regulation has approved more than 460,000 polices for separate “takeouts” planned for mid-October and mid-November.

by Jim Turner, The News Service of Florida

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Written by William Reynolds · Filed Under News