Make us your home page
Instagram

State report faults Citizens Insurance for wasteful ways

TALLAHASSEE — State regulators have knocked Citizens Property Insurance Corp. for unnecessary travel costs, failing to negotiate on multimillion-dollar vendor contracts and spending more than $10,000 a month on vacant office space.

The state Office of Insurance Regulation's "market conduct examination" — which reviewed Citizens' operations for the last two years — offers fresh evidence of institutional problems at the mammoth state-run insurer.

According to the report, Citizens has mostly followed its policies, but in some cases those policies were too lax, leading to expensive repercussions.

The report found that Citizens "does not appear to place any emphasis on price negotiation, instead relying on best and final offer" from its private contractors, who collect one-fifth of the $2 billion in annual premiums paid by policyholders.

Citizens is pushing back against the findings, arguing that it follows state law and has rigorous policies to get the best services at a competitive price.

"In situations not covered by (state law), Citizens conducts competitive solicitations using the same style of processes as state agencies (i.e., Invitations to Bid, Requests for Procurement and Invitations to Negotiate)," said spokeswoman Christine Ashburn in an email. Ashburn said Citizens president Barry Gilway has asked the state insurance commissioner to amend the report.

OIR also criticized Citizens for expensive travel and meals that surpassed federal and state guidelines for acceptable expenses. That finding comes on the heels of a Herald/Times investigation and a chief inspector general report highlighting lavish spending by executives, including $600-a-night hotel stays in Bermuda.

At the same time, Citizens has been squeezing homeowners by slashing coverage and raising rates, claiming that it does not have enough money to pay for a major hurricane strike.

"I really don't get why they don't have enough money," said Gina Guilford of Miami, whose homeowner's insurance premium doubled last year. "Their rates have been rising steadily and there has been no major hurricane in years. Mismanagement is my guess. Why should any of us have to pay for a government-run insurance agency's inability to manage funds and their employees?"

After media reports and the state's chief inspector general documented Citizens' corporate expenses, the company announced new policies to crack down on spending abuses.

Still, the OIR report fuels criticism of Citizens and could hamper the efforts of some lawmakers who are determined to pass major insurance reforms this year to help the state-run insurer raise its rates faster.

"This report further highlights the operational deficiencies, blatant disregard for state policies and lack of oversight and fiduciary responsibilities by Citizens Property Insurance," said Rep. Frank Artiles, R-Miami.

Artiles has been critical of Citizens' aggressive push to shrink its rolls and has been part of a coalition of South Florida Republicans and statewide Democrats voting against cost-hiking insurance legislation.

As Citizens seeks to shed many of its 1.3 million policies, it has been bogged down by a series of corporate scandals. Last year, Gov. Rick Scott twice called on his inspector general to investigate Citizens after the Times/Herald reported on lavish travel spending and allegations of corporate misconduct. The company's Office of Corporate Integrity was disbanded after it uncovered evidence of waste at the company, including hundreds of thousands of dollars in severance packages paid to executives who resigned amid scandal.

A separate 2012 audit found that Citizens had inadvertently given away $2.5 million to another insurance company. The money has since been recouped.

The OIR report also found that Citizens spends nearly $8 million each year to lease office space for its 1,200 employees, including $10,894 per month for "unoccupied" office in Tallahassee. Ashburn said the company is trying to either sublease the space or negotiate an early buyout to "reduce the overall expense."

The OIR findings weren't all bad: The report found that Citizens did an adequate job of processing claims, monitoring its investment portfolio and managing depopulation (reducing number of policyholders).

Toluse Olorunnipa can be reached at tolorunnipa@MiamiHerald.com or on Twitter at @ToluseO.

State report faults Citizens Insurance for wasteful ways 02/04/13 [Last modified: Monday, February 4, 2013 10:01pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Richard Corcoran takes aim at public financing of campaigns

    State Roundup

    TALLAHASSEE — House Speaker Richard Corcoran, R-Land O'Lakes, may not be running for governor — not yet anyway — but his latest idea will get the attention of those who are.

    House Speaker Richard Corcoran, R- Land O' Lakes, is proposing an end to public financing of campaigns. [SCOTT KEELER | Tampa Bay Times]
  2. Related Group breaks ground on complex at old Tampa Tribune site

    Real Estate

    TAMPA — When Miami developer Jorge Perez first eyed a 4.2-acre tract on the west bank of the Hillsborough River two years ago, people asked him if he wouldn't prefer to build on the opposite side closer to the downtown core.

    No way.

    From left, Related Group executive associate Arturo Penaa, Jorge Perez, center, founder and CEO of the Related Group, Mayor Bob Buckhorn and Steve Patterson, the President of Related Development dig their shovels  during the groundbreaking ceremony of the 400 unit Riverwalk Manor apartment complex on site of the old Tampa Tribune building on Wednesday. [OCTAVIO JONES | Times]
  3. Eat 3-course meals for $35 at these 100 restaurants for Orlando's Magical Dining Month

    Food & Dining

    In the early 1900s, hotels offered "table d'hote" or "prix fixe" menus as a form of loss leader. Hotels didn't necessarily make money on these lower-priced, multi-course meals, often served at communal tables, but they made up for it on the booze. Prohibition may have contributed to a gradual shift toward a la carte …

    Bulla Gastrobar serves a variety of Spanish and Portuguese dishes.
  4. Plant City farmer hopes robot pickers can save strawberry industry from shrinking labor force

    Agriculture

    PLANT CITY — If current trends continue, the region's status as a major strawberry producer will depend in large part on what happens in Mexico.

    Strawberry pickers work during the daytime, when fruit is more likely to bruise. Machine pickers can work at night. The owner of Wish Farms in Plant City is developing automated pickers and hopes to see them at work on a widespread basis in five years. [Times file]
  5. Lightning GM Steve Yzerman sells house for $3 million to new player

    Real Estate

    TAMPA — Tampa Bay Lightning General Manager Steve Yzerman's multi-million Davis Islands home is staying in the Lightning family. Yzerman sold his 6,265-square-foot house Monday to new defenseman Dan Girardi for $3 million.

    The Davis Islands home of Tampa Bay Lightning General Manager Steve Yzerman sold for $3 million Monday to Lightning defenseman Dan Girardi. | [Courtesy of Hi Res Media]