Citizens Property Insurance execs push for 'kinder, gentler' and smaller company

Published Feb. 19, 2014

In less than two years, Citizens Property Insurance has dropped its policy count by a half-million, pushing the state-run insurer of last resort below 1 million policies for the first time since 2006.

Barry Gilway, Citizens president and chief executive, isn't satisfied.

He wants to get rid of another 300,000 policies over the next three years, by pushing more consumers back into private coverage and by keeping them out of Citizens in the first place through a new clearinghouse. The clearinghouse forces insurance agents to shop around new policies instead of putting them into Citizens by rote.

The smaller Citizens gets, the less risk there is of everyone in the state getting assessed to pay claims from a storm that Citizens can't handle. Possible assessments from a 1-in-100 year storm have already been cut from nearly $12 billion to $3.8 billion, Gilway said.

While shrinking, the insurer is simultaneously trying to improve its image, damaged by a rigorous years-long campaign of cutting coverage, raising rates and challenging customer discounts.

"We want to be a kinder, gentler Citizens with the consumer," said Citizens board chairman Chris Gardner, who joined Gilway in a visit with the Tampa Bay Times editorial board Tuesday.

Gilway was hired to overhaul Citizens two years ago. Spurred by negative press coverage over executive spending and travel, he established new ethics and spending policies and hired an internal inspector general this year.

Another consumer-friendly initiative: Citizens is providing one of the few options to homeowners unable to find sinkhole coverage. With standard homeowners policies now only covering catastrophic ground collapse, Citizens offers an endorsement on its policies for sinkhole coverage to homes that pass inspections.

For the sinkhole alley counties of Pasco and Hernando, that's particularly important. The average Citizens sinkhole premium is $2,194 in Pasco and $2,024 in Hernando, far more than anywhere else in the state but still a bargain compared with the risk, Gilway said.

After battling sinkhole attorneys for years, Citizens has shifted strategies toward settling. For the first time, Gilway said, Citizens is agreeing to accept decisions coming out of arbitration, to pay for fixes on any home that suffers subsequent damage after an engineer-approved repair, and to let homeowners keep their right to sue later.

Among other topics, Gilway:

• predicted more private carriers will offer cheaper flood insurance, giving options to rate hikes being imposed by the National Flood Insurance Program.

• estimated about 70 percent of property owners will be covered by a Florida-based private insurer by the end of the year, up from less than a third four years ago.

Homeowners have fretted about being pushed to untested Florida carriers who came into existence after the storms of 2004-05. Gilway expressed confidence in the financial strength of the companies, which are approved by the Florida Office of Insurance Regulation. But he also acknowledged concern about how some of the fledgling insurers will handle the next major hurricane.

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"I do worry about it," he said.