Regulators critical of procurement, travel policies in Citizens Property Insurance review

Feb 1, 2013

The following article was published in The Florida Current on February 1, 2013:

Regulators critical of procurement, travel policies in Citizens’ review

By Gray Rohrer

A review of state-run Citizens Property Insurance Corp.’s operations and finances was released Friday, criticizing its policies for vendor contracts and travel spending.

The report states that Citizens does not sufficiently negotiate contract prices with vendors. Citizens had 485 active vendor contracts worth more than $604 million as of June 2012, according to the report, and 20 cents out of every dollar of collected premium goes to vendors.

“Review of procurement process indicates that while Citizens appears to follow its procurement procedure policies, it does not appear to place any emphasis on price negotiation, instead relying on best and final offer,” the report from the Office of Insurance Regulation states.

The report recommends Citizens follow state policies for contracts and negotiate with vendors for the lowest price. A further review of Citizens’ procurement methods is already underway. Citizens spokeswoman Christine Ashburn defended the company’s procurement practice asking for a vendor’s “best and final offer” is in keeping with state contracting policies, and they take into consideration vendor qualifications and service quality, not just the lowest bid.

Citzens’ travel spending policies were described as “deficient” in the report. Citizens board members have already voted to implement a more strict travel reimbursement policy, largely in response to the furor over a Miami Herald article in August detailing lavish spending on overseas hotel stays and meals by Citizens executives.

Citizens is also spending $10,894 per month for the remainder of 2013 for vacant office space in Tallahassee. Citizens moved its offices to the Killearn area, but its old space in the Monroe Park Tower offices in downtown Tallahassee remain vacant because the insurer has failed to sublease the space. Ashburn said the offices are still used as auxiliary space. In total, Citizens spends $7.9 million per year to rent offices in Tallahassee, Jacksonville and Tampa.

Rep. Frank Artiles, R-Miami, who called for a more robust examination of Citizens’ operations and finances last year when it was considering a controversial loan incentive program, was not pleased with the results of the report.

“This report further highlights the operational deficiencies, blatant disregard for state policies and lack of oversight and fiduciary responsibilities by Citizens Property Insurance. Wasting $8 million a year in leased office space, failing to award contracts to the lowest bidders, and running up the corporate credit card proves that Citizens must clean house first before passing the bill on to Floridians,” Artiles stated in an email. 

Related Research: Sept. 24, 2012 OIR Target Mar