Sunday, January 21, 2018
Editorials

Rein in Citizens' big spenders

The hypocrisy of top officials at Florida's Citizens Property Insurance Corp. spending lavishly on expensive hotels and meals, and adding superfluous staff, while seeking big rate increases, is evident to everyone but themselves. The state's insurer of last resort claims it needs higher rates in case a major storm hits the state. But even as Citizens poor-mouths in public, current and former senior executives showed little personal concern for the bottom line. New president Barry Gilway needs to send the message to his staff: This is no way to do business.

By combing through hundreds of expense reports from the last three years, a team of writers from the Tampa Bay Times and Miami Herald found executives at the state-run insurance company were living the high life on the company's dime. Chief financial officer Sharon Binnun spent at least $70,000 on travel from January 2011 to June 2012. During trips to Manhattan, Binnun stayed at hotels that cost up to $500 per night. In an April business trip to Bermuda, she upgraded to "gold" status at the Fairmont Hamilton Princess, bringing the cost of her room to $633 per night.

Former Citizens president Scott Wallace, general counsel Dan Sumner and board chairman Carlos Lacasa indulged in meals that often cost three times the limit put on rank-and-file staff. Wallace flew first-class to London for a meeting with insurers. Travel costs for Citizens — a government corporation run by a board appointed by Gov. Rick Scott and other state leaders — are projected to more than double this year, from $1.5 million to $3.4 million.

Tom Grady, the former interim president, was so profligate with his travel expenses that he racked up $13,000 in just three months on the job. But Grady's biggest boondoggle was the hiring of 30-year-old Jacob Pewitt as his "special assistant" at $50,000 a year — a position seemingly created for Pewitt that went away when Grady did.

Meanwhile, Citizens management has doggedly tried to work around the Legislature's annual 10 percent cap on rate hikes. It has reinspected thousands of Florida homes, looking for any reason to eliminate mitigation discounts that homeowners get for hardening their homes against a storm. It sought to spike the cost of sinkhole coverage and flirted with trying to get around the rate hike cap for new policyholders. All because it claims the $6.2 billion it has in reserves is insufficient.

Gilway needs to change the culture to better reflect Citizens' governmental status and financial concerns. He says that while all expenses will be reviewed, travel is worth it for the resultant business rewards and it is just a fraction of a $2 billion annual budget. He sounds tone deaf. The issue isn't that Citizens executives travel for their jobs, it's the style of travel to which they feel they are entitled, particularly as the company demands higher premiums from struggling homeowners. It looks bad, because it is bad.

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