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. Target says customers want it to pause the Christmas creep

    Retail

    NEW YORK — Target says customers want it to pause the "Christmas creep." It says it wants to be more in tune with customers' mindset, so it plans to ease in holiday promotions this year while better recognizing Thanksgiving.

     Target says customers want it to pause the "Christmas creep." It says it wants to be more in tune with customers' mindset, so it plans to ease in holiday promotions this year while better recognizing Thanksgiving. This is Target's new store in Manhattan's Herald Square that opened last week. 
[Kavita Kumar/Minneapolis Star Tribune/TNS]
  2. Tampa's Walter Investment Management restructuring, could file for bankruptcy

    Corporate

    TAMPA — Tampa-based Walter Investment Management Corp. is restructuring to cut down some of the mortgage firm's $700 million debt, Walter announced Friday night. The firm, according to its investor relations page, focuses on subprime and "other credit-challenged" mortgages.

    Walter Investment Management is restructuring to reduce its $700 million debt, the company announced late Friday. Pictured is Anthony Renzi. CEO. | [Courtesy of LinkedIn]
  3. Carrollwood fitness center employs scientific protocol to help clients

    Business

    In 2005, Al Roach and Virginia Phillips, husband and wife, opened 20 Minutes to Fitness in Lakewood Ranch, and last month they opened the doors to their new location in Carrollwood.

    Preston Fisher, a personal fitness coach at 20 Minutes To Fitness, stands with an iPad while general manager/owner Angela Begin conducts an equipment demonstration. The iPad is used to track each client's information and progress. I also included one shot of just the equipment. The center recently opened in Carrollwood. Photo by Danielle Hauser.
  4. Olive Tree branches out to Wesley Chapel

    Business

    WESLEY CHAPEL — When it came time to open a second location of The Olive Tree, owners John and Donna Woelfel, decided that Wesley Chapel was the perfect place.

    The Olive Tree expands its offerings of "ultra premium?€ extra virgin olive oils (EVOO) to a second location in Wesley Chapel. Photo by Danielle Hauser.
  5. Massachusetts firm buys Tampa's Element apartment tower

    Real Estate

    TAMPA — Downtown Tampa's Element apartment tower sold this week to a Massachusetts-based real estate investment company that plans to upgrade the skyscraper's amenities and operate it long-term as a rental community.

    The Element apartment high-rise at 808 N Franklin St. in downtown Tampa has been sold to a Northland Investment Corp., a Massachusetts-based real estate investment company. JIM DAMASKE  |  Times