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Gov. Rick Scott signs Citizens reform bill, then blasts insurer

Gov. Rick Scott pointed out the “fraud, waste and abuse” at Florida’s largest insurer after approving a reform bill.

Associated Press

Gov. Rick Scott pointed out the “fraud, waste and abuse” at Florida’s largest insurer after approving a reform bill.

TALLAHASSEE — Florida Gov. Rick Scott wasted no time signing a bill to reform Citizens Property Insurance Corp., which has seen a whirlwind of criticism since it approved a special $52 million deal for an upstart company with ties to top politicians last week.

Scott signed SB 1770 on Wednesday, one day after the reform proposal reached his desk. The bill creates a "clearinghouse" to direct policies out of Citizens and into the private market, and includes several reforms that address controversies and scandals that have taken place at Citizens.

In a sharply worded missive, Scott focused mainly on those scandals, using words like "outrageous," "egregious," and "fraud, waste and abuse."

The bill creates an inspector general at Citizens, something Scott has called for since media reports documented the company's missteps, which include: lavish travel expenses for executives, huge salary hikes, large severance packages for disgraced employees, overpriced contracts, mishandled investigations and the abrupt dismissal of corporate investigators who uncovered misconduct.

"This new inspector general will be accountable to the Cabinet and will not be an entity Citizens can fire, as they did with their old compliance officers," Scott said in a statement. "A strong inspector general is needed to provide independent oversight at Citizens and to end the fraud, waste and abuse which has plagued Citizens for too long."

Scott also called on Citizens to change its policies after a controversial deal worth up to $52 million for Heritage Property and Casualty Company. Critics have blasted the quickly approved deal for the 9-month-old St. Petersburg company, which contributed $110,000 to Scott's re-election campaign in March.

Scott said the board should require at least seven days' notice before any board meetings. The Heritage deal was unveiled on a Friday, and voted out 3-2 the next Wednesday. Several board members complained there was not enough time to vet the proposal, a concern echoed by House Speaker Will Weatherford and Chief Financial Officer Jeff Atwater.

State guidelines direct agencies to publish their meeting agendas seven days in advance, Scott said.

Citizens has stood by the Heritage deal, saying that it was thoroughly vetted for several weeks and would significantly reduce the company's liability, which is backed by the state's consumers.

"The financials associated with this deal are significantly in our favor," Citizens president Barry Gilway said Wednesday.

Citizens has about 1.3 million policies and is the state's largest insurance company.

Under the clearinghouse, homeowners with Citizens who receive a comparable insurance rate from a private insurer will be forced into the private market.

The bill also prohibits Citizens from insuring newly built homes that are located right on the water, reduces the maximum home value for a Citizens policy to $700,000 over three years and requires Citizens to follow state guidelines on contracting.

SB 1770 passed with bipartisan support after Senate-backed language including large rate hikes was stripped out of the bill in the House.

"At the end of the day, Citizens' responsibility is to be the insurer of last resort," Gilway said in a statement. "By definition, we should be the company that is retaining the business that other companies are unwilling to (carry)."

Gov. Rick Scott signs Citizens reform bill, then blasts insurer 05/29/13 [Last modified: Wednesday, May 29, 2013 10:53pm]
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