Politics

Rick Scott: Citizens Property Insurance Needs to Watch Costs

By: Jim Turner News Service of Florida | Posted: August 20, 2014 3:55 AM
Rick Scott

Rick Scott

Gov. Rick Scott isn't convinced that Citizens Property Insurance Corp. should have rebuffed his request for an international travel ban, even if the overseas trips were part of a $3.2 billion deal that saved the state-backed insurer $233 million.

At the request of Scott, Citizens President and CEO Barry Gilway appeared before the state Cabinet on Tuesday to explain $48,006 spent on trips that involved Gilway, Citizens Chairman Chris Gardner and three others during the first four months of the year.

The four trips were to Bermuda, London and Zurich, the heart of the reinsurance industry.

"Citizens has done a good job of downsizing, but they have to watch how they spend their money," Scott told reporters after the Cabinet meeting. "Our citizens are on the hook for Citizens insurance, so we have to make sure they watch how they spend their money."

Scott added he wasn't convinced that he is wrong for calling on Citizens to change its policy so it prohibits international travel by board members.

Attorney General Pam Bondi also scoffed at the combined cost of the trips, noting $48,000 "is more than my lawyers make, starting lawyers, in an entire year."

Gilway said it was important to have Gardner -- appointed chairman last August by state Chief Financial Officer Jeff Atwater -- appear face-to-face with people involved in the reinsurance deal. Only Gardner could give assurances that the board would approve any deal reached, Gilway said.

"This is a high-stakes game, we were going to the market and asking for $3.2 billion worth of capital, and we needed every single advantage we could," Gilway said. Reinsurance is a type of backup coverage that helps insurers pay claims after disasters such as hurricanes.

"I can make a commitment on management, but I cannot make a commitment on the part of the board. Chairman Gardner can," Gilway added.

However, one of the more contentious points has focused on Gardner being approved to spend two nights in a $425-per-night resort in Bermuda in April, which exceeded Citizens' $373-per-night cap on Bermuda travel.

Gilway said he approved the higher rate, based on U.S. State Department travel guidelines for foreign travel, as Gardner was added late to the trip.

When it was later determined that federal guidelines do not offer the flexibility needed to cover the higher rate, Gardner paid the difference, Gilway said. The discussion at Tuesday's Cabinet meeting came after The Palm Beach Post reported on Gardner's Bermuda trip.

Atwater defended Gardner as being all business and said if a hurricane hit Florida, the state-backed insurer would have been soundly, and justly, criticized if it failed to close on the reinsurance deal because of a ban on travel.

"Had these efforts over the last 24 months not taken place, and a hurricane event had taken place," Atwater said, "the Monday morning quarterbacking that would have occurred, that you missed out on transactions such as this, and instead left that burden on the back of hard-working Floridians to carry on their own, instead of dispersing it across the marketplace, we all would have been criticized."

The result of the trips is that Citizens paid $233 million less for the risk transfer package than it did the prior year.

Gilway said Citizens has shed the image that prevailed when he was brought on two years ago, a time when Citizens was criticized for having become a bloated agency with 1.5 million policyholders.

In March 2013, the Citizens board implemented new travel restrictions and rates for employees in an effort to improve the public perception of the company.

A state audit had found that between Jan. 1, 2012, and Aug. 31, 2012, Citizens compiled more than $1.3 million in travel-related expenses, of which $454,111 was related to auto travel, $163,625 for airfare and $441,746 for hotel accommodations. Another $138,320 was for meals and $107,751 was billed under room fees.

Gilway said a further audit has found that since the changes were put in place, expenses dropped 61 percent for executive travel. But he has defended some of the travel, noting that international trips sometimes come with high costs that are hard to avoid. When the travel rates first went into effect, they were not applied to board members. Gilway decided not to include the seven board members because they are not employees of the agency and are not paid for their work.

As of June 30, Citizens had 933,422 policies.


Tags: News, Politics

Comments (1)

OrlandoChris
3:28PM AUG 20TH 2014
I am very pleased that Adrian Wyllie will be a part of the debate. Floridians deserve to hear from all the candidates to be well informed. Adrian Wyllie deserves my vote and yours too. He is a honest average Floridian just as you and I , that is willing to stand up and do something for the interest of all of us here in Florida. The other candidates both Republican and Democrat are owned and controlled by special interest, like puppets and will lie to your face to gain your vote, then continue the same old agenda that we complain about year after year. Time to get off this merry-go-round, election after election, thinking it will be any different. Take a stand, vote for the candidate that loves this state and is willing to take time out of his life, effort and money to SERVE the people of Florida and stop voting for these 'paid for' career politicians that are only out for money and fame and have zero interest in us Floridians. Even if it's just for honesty alone, vote for Adrian Wyllie instead of the other two (Scott/Crist) which are proven liars. The choice is yours and yours alone, if you want the same old corruption and slap in the face, go ahead and vote for one of the two puppets (Scott/Crist) OR do what is right for our (yours and your children's) future and vote for Adrian Wyllie. Support him by donating to his campaign, spreading the word and contribute to the super brochure program which I think is very powerful. Visit his website today.!!

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