Florida’s Citizens Property Insurance Policy Count Likely to Decrease to 900,000 by 2014, CEO Gilway Tells Board Today

Sep 20, 2013


Florida’s Citizens Property Insurance Corporation (“Citizens”) Board of Governors (“Board”) met today, September 20, 2013, in Jacksonville, Florida.  Board Chairman Chris Gardner called the meeting to order. 

Citizens President and CEO Barry Gilway commented on Citizens depopulation issues, noting that Citizens now has 1.2 million policies and requests to depopulate 600,000 policies.  This includes the 390,000 takeouts recently approved by the Florida Office of Insurance Regulation. 

The News Service of Florida reported that “seven or eight” companies are expected to request takeouts of an additional 200,000 policies later this year.   

Mr. Gilway said he anticipates that once all the takeouts are finalized, Citizens’ policy count will realistically be close to 900,000.

He also discussed a recent organizational review of the State-run insurer conducted by KPMG that found Citizens’ expense ratios to be far below those of private sector insurers and other residual carriers, but noted Citizens’ operating efficiencies still could be further improved upon.  Commissioned earlier this year, the KPMG review was based on hundreds of hours of interviews with managers and individual business units about Citizens’ claims, underwriting, information technology and other sectors.

Citizens’ combined gross expenses are below those of other Florida carriers, residual market carriers and large national carriers, Mr. Gilway said, but savings of $10 to $14 million a year could be realized by rebalancing Citizens’ use of outside vendors and performing more core functions internally, such as claims and underwriting duties, according to KPMG.   Citizens currently outsources more than 90 percent of its claims handling responsibilities.  

Citizens will continue rely heavily on outside vendors for claims and underwriting duties, but Mr. Gilway said there is an opportunity to further reduce costs by shifting core functions from vendors to in-house staff. 

The review also recommended that Citizens should evaluate and probably consolidate its locations.  The organization’s high employee turnover rate was also noted.  The report recommended a realignment of key management structures to streamline operations and improve oversight in certain areas.

Citizens’ new senior executive team was ratified by the Board:

  • Randy Wipf, who was hired as Vice President of Underwriting;
  • Jennifer Montero, who has been promoted to Chief Financial Officer;
  • Steve Bitar, who has promoted to Vice President of Consumer and Agent Services;
  • Jay Adams, who has been promoted to Vice President of Claims;
  • Christine Ashburn, who has been promoted to serve as Vice President of Communications (Legislative and External Affairs);
  • John Rollins, a former Board member, will serve as Chief Risk Officer; and
  • Kelly Booten, who will serve as Systems and Operations Officer.

Acting in her new role as Citizens’ Chief Financial Officer, Ms. Montero presented the financial report, noting that, as of June 30, 2013, Citizens has $6.8 billion in surplus and $18.5 billion in claims-paying capacity. 

An update was given on the implementation of Citizens’ new clearinghouse.   A questionnaire assessing insurer readiness was released to over 30 carriers on September 13.  This included a participation agreement; an insurer readiness questionnaire and a sample limited servicing agreement.  Underwriting criteria and data elements required for binding were also requested from insurers.   Criteria for scoring the questionnaire have not yet been defined.

Citizens’ Claims Committee reported that first notice of loss claims received through June 30, 2013 were down 29.6 percent from 2012.  Sinkhole claims also have decreased 58 percent from the same time period last year.

Citizens’ General Counsel Dan Sumner presented proposed revisions to Citizens’ Plan of Operation that conform it to current law, either by clarifying existing provisions or adding a control function to them.  The Board approved the revisions, which will be forwarded to the Florida Financial Services Commission for final approval.

Mr. Sumner outlined an amended procedure for meetings, hearings and workshops as prescribed by SB 50, which was enacted in 2013.  He also explained SB 1770’s revisions to Citizens’ procurement procedure protests, which would apply to the purchase of commodities and contractual services beginning on October 1, 2013.  The Board approved all revisions presented.

Ms. Ashburn provided a brief update of Citizens’ ongoing policyholder assessment awareness campaign.  According to recent results, policyholder awareness of assessments has increased by 20 percent.

Citizens’ Vice President of Human Resources Charles Johnson received approval of his request for a contract for executive and professional recruitment services.    Also approved was Citizens’ 2014 employee health benefit plan.

In other business, the purchase of investment portfolio accounting software and bond underwriter services was approved by the Board, which also authorized a measure to revamp another aspect of Citizens’ expense policy by replacing the use of corporate credit cards with purchasing cards–commonly called “P-cards.” The change will bring Citizens in line with numerous state agencies and provide additional expense oversight, inasmuch as the cards can be programmed to allow only specific categories of purchases such as fuel and lodging.  Under the program, Citizens will receive rebates of approximately $560,000 over the life of the P-card contract.

The Board also approved new policies to require a seven-day notice before a Citizens’ Board or committee meeting is held, and to add a public comment period on all issues requiring a Board vote.

To access all materials from today’s Board meeting, click here.


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