Citizens Board of Governors Meeting Summary
Jan 28, 2008
The Citizens Property Insurance Corporation (â€œCitizensâ€) Board of Governors (â€œBoardâ€) held a meeting on Thursday, January 24, 2008. To view a copy of the Board meeting agenda, click here. For links to the complete Meeting Packet sections, click here.
Board Chairman Bruce Douglas called the meeting to order with members Andy Bennett, Richard DeChene, Carol Everhart, Gloria Fletcher, Earl Horton, Jr., Allan Katz and Jay Odom in attendance. Also in attendance from Citizens were President and CEO Scott Wallace, Executive Vice President of Operations David Emery, Chief Financial Officer Sharon Binnun, Information Technology Manager Curt Overpeck, General Counsel Perry Cone and Scott Johnson, Chair of Citizens’ Market Accountability Advisory Committee.
Chairman Douglas gave a summary of the Finance and Investment Committee meeting which took place on Wednesday, January 23. A motion was made and approved to expand the contract of Financial Advisor Raymond James and Co.Â to oversee Citizens’ finances and investments and addÂ additional compensationÂ of $10,000 per month. To view a summary of this meeting, click here.
Mr. Wallace gave the Presidentâ€™s report, which included the introduction of Eduardo Mareovich as Citizens’ new Senior Vice President of Claims. The motion to approve the hiring of Mr.Â MareovichÂ was passed.
Mr. Emery gave the Key Performance Metrics report, which indicated a 27 percent activity reduction in total policies from 2006-2007. As of the week prior to January 21, Citizens has 1,274,000 policies in force. Mr. Emery stated that the reduction was indicative of the stability of Florida-based insurance companies. To view the report, click here.
Citizens’ CFO Binnun then reviewed Citizensâ€™ Financial Statement for November, 2007 and presented detailed balance sheets showing that all business operations of Citizens was well within budget. To view the complete report, click here.
The Board resolved to merge its frozen and active employee retirement savings plans into one account, and to approve delegation of Citizensâ€™ Retirement Savings Plan’s administrative and investment duties to the President of Citizens.
Ms. Binnun was granted approval by the Board to conduct face-to-face interviews with potential reinsurance brokers Guy Carpenter and Benfield. To view a summary of the January 23 Finance and Investment Committee meeting, click here.
Actuarial and Underwriting Committee Chairman DeChene gave his Committee’s report. To view a summary of this meeting, click here.
The Board reviewed changes to eligibility requirements in order to address the negative effect of surplus lines carriers offering short-term property policies outside the hurricane season. It was determined that these policies have a negative effect both on the stateâ€™s property insurance market and Florida residents when they are canceled after hurricane season. Such cancellations lead to a reduced premium base, and thus, the financial model used to provide wind coverage to Floridians during hurricane season does not work.
The Board felt that allowing Citizensâ€™ exposure to remain unchanged while its written premiums are greatly reduced was a great disservice to the residents of Florida.Â Therefore, Citizens has submitted filings with the Florida Office of Insurance Regulation (“OIR”) that propose changes to Citizens’ eligibility and cancellation rules in an attempt to mitigate the negative impact of these short-term policies. To view a detailed copy of these changes, click here.
The Board also approved the Actuarial Committee’s recommendation to change Citizens’ rating algorithms from an additive to a multiplicative structure. This change will allow Citizens to develop a more efficient final premium. To view a detailed explanation, click here. To view a summary of this meeting, click here.
An update of Citizens’ Personal and Commercial Lines Underwriting Devisions past and future initiatives was also given. To view detailed outlines, see sections 6D, Da, Db, Dc, E, Ea, Eb and Ec of the Meeting Packet.
Mr. Overpeck then gave the Board a recap of Citizensâ€™ Information Technology (“IT”) accomplishments for 2007 and updates on current projects. IT accomplishments included transition of the ePAS personal lines system from an outside vendor to Citizensâ€™, thus saving the company a projected $5 million this year; the transition of wind-only policies from the Wind System to ePAS; an agency link for the commercial-residential system, and a current Request for Proposal (“RFP”) designed to obtain professional services to assist Citizens in making long-term systems decisions. To view a complete list of IT accomplishments and projects, see Meeting Packet sections 7B, C and D.
Mr. Johnson gave an update report on the Market Accountability Advisory Committeeâ€™s (â€œMAACâ€) meeting ofÂ Wednesday, January 23. Personal-residential and commercial lines of business are up, mainly due to a drop in prices by Florida-based carriers. To view a summary of the January 23 meeting, click here.
Mr. Horton then gave a report recapping the Audit Committeeâ€™s meeting on Wednesday, January 23. The Board approved the Audit Committee’s recommendations regarding creation of the Office of the Internal Auditor (â€œOIAâ€) Charter. To view a summary of the meeting, click here.Â
General CounselÂ Cone then discussed whether general budget approval is sufficient to constitute the Board approval of contracts valued at $100,000 or more under Citizens’ governing statute, and whether the consent agenda processes can be streamlined or eliminated. The conclusion was that the consent agenda process provides the appropriate level of financial and managerial control. To view an outline of the consent agenda process, click here.
Mr. Cone also reported on Citizens’ policies with respect to minority vendors. Currently, because Citizens does not track which vendors are minority-owned, no reliable information on its use of minority vendors is available. While Citizens has a policy statement encouraging minority vendors, it does not actively solicit or show them preference. Mr. Cone recommended an action plan based on the State of Floridaâ€™s policy that would pattern the definition of â€œminority business enterpriseâ€ (â€œMBEâ€) after the one used in the Department of Management Services (“DMS”) procurement. This policy would use the list of MBEâ€™s certified by DMS and other state and local agencies and provide for Citizens to actively solicit and provide opportunities for those certified. To view the MBE proposal summary, click here.
Concern was raised that an MBE plan based on the State’s is not aggressive enough. Another suggestion offered a plan patterned on one that uses a points system to certify an MBE at each contract bid instead of a general pre-approved list. The City of Tallahassee’s MBE plan was used as an example of this more aggressive approach. It was agreed by Mr. Cone and the Board that a plan based on this more aggressive approach would be brought before the Board at its next meeting for approval.
Mr. Odom gave a summary of the Depopulation Committeeâ€™s most recent meeting that included discussion of an amended Depopulation plan filed with the OIR, and process changes to Florida law that allow policyholders to remain insured through Citizens. The Board approved the proposed Commercial Residential Non-Bonus Plan detailed at the last meeting. To view a summary of the Depopulation meeting, click here.
Should you have any questions or comments, please do not hesitate to contact this office.