Citizens Chief Has Parting Thoughts

Jul 31, 2008

The Ledger--July 30, 2008


Bruce Douglas steps down today as chairman of Citizens Property Insurance Corp.’s board after reversing the misfortunes of the largest state-backed homeowners insurance company in the United States. His replacement, James Malone, was named last week. Douglas, 73, talked to the Times about his six-year tenure at Citizens, his misgivings with Tallahassee politicians and what lies ahead for the company’s 1.2 million policyholders.

Q. It’s often said that the root of the Florida insurance problem is that rates were too low to begin with. Do you agree?

A. Rates have been subsidized since Hurricane Andrew. So when we got storms in 2004-05, people paying a $600 premium faced a $2,000 premium and they went ballistic. But $600 wasn’t even close to a realistic rate.

Q. Citizens was taking a lot of heat from the media when you arrived, including charges of mismanagement and woeful claims handling. How did you handle that?

A. A lot of the criticism was deserved. But there were legislators saying Citizens was a disaster, beating on us without gaining the facts. In the six years I was there, only a handful of legislators ever sat down with us and asked what we needed. (Florida CFO) Alex Sink was the first Cabinet member who visited with me.

Between 2002 and 2005, no effort was made to build the organization to handle claims of any magnitude. Then in late July of 2004, four storms hit and we had no claims adjusters locked up. Five people were supervising hundreds of thousands of claims. We now have 68 supervisors and contracts with 5,000 adjusters.

Q. Sink and others have said Florida is better off with dozens of smaller, newer companies taking a fraction of the risk, rather than a few big companies taking most of it. Do you agree?

A. I think it makes all the sense in the world, provided the smaller companies have been through the oversight to make sure they’re well capitalized.

Q. Where do you see Citizens in five or 10 years?

A. In business, that’s for sure. The high-risk account has the same 400,000 policyholders as 12 years ago because no (private companies) have been forced to take them out. It would not surprise me if we hung in at a million policyholders five years from now.