The director for the Florida Association of Insurance Reform has come out in defense of the beleagured board at Citizens Property Insurance, after a prominent lawmaker called for mass-resignations last week.
Jay Neal, the FAIR director who has not always agreed with the actions of Citizens, said boardmembers should be allowed to keep their positions, despite a number of controversies around lavish executive spending and corporate integrity.
Neal said the board has its flaws, but mostly has fallen into trouble when it followed the advice of Citizens staff.
In a letter to the editor, Neal pointed out that board members volunteer their time and are not paid.
“Service on the Citizens Board is no cake walk,” he said. “An equivalent position in the private sector would provide a six figure compensation package. The Citizens Board members work for free.”
See Neal’s letter below
In the wake of a report from Governor Scott's Inspector General criticizing Citizen's travel expenses, some have called for the removal of the entire Citizens Property Insurance Corporation Board of Governors. This would be a huge mistake for Citizens policyholders and impede progress toward restoring Florida's private property insurance market. Whatever its size or future, while it exists, Citizens needs to be a good property insurance company, not a political football.
Service on the Citizens Board is no cake walk. An equivalent position in the private sector would provide a six figure compensation package. The Citizens Board members work for free. The considerable time these Board members are required to spend could be spent earning money in the private sector, meaning that in terms of opportunity costs, it actually costs them to serve. They do not serve to pad resumes. They have already reached the pinnacle of their professional lives.
Consider the two appointees of Governor Scott: John Wortman, now in retirement age, once presided over Louisiana's version of Citizens and offers decades of experience. John Rollins is a brilliant actuary, Duke University graduate, and a leading expert in his field. Although we have often disagreed on policy issues, I know them both to be conscientious and honorable public servants.
The other Board members are no less qualified, conscientious, or honorable in their service. That Florida taxpayers receive the benefit of their combined service for free is an exceptional value that should be preserved.
There are other challenges to service on the Citizen's Board. The eight members are appointed two each by four state officials--the Governor, CFO, Senate President, and House Speaker. As political appointees they are subject to Sunshine laws, meaning that they cannot talk company business to each other outside of public meetings. For a new Board, most appointed less than two years ago, this means that getting a grasp on the culture and operations of a large complex company requires time and a steep learning curve. It also means that staff has an advantage in what information they choose to share or withhold power that can be used to manipulate Board decisions. As a result, mistakes have been made. The Board harmed consumers by agreeing to staff proposals for reductions in coverage levels and to an ill-fated surplus notes program that was eventually abandoned. But other decisions have been both tough and prudent. Within the first year of their tenure, the majority of the Board realized that new leadership was needed. Just seven months ago, they appointed an outsider and seasoned industry veteran as CEO, Barry Gilway. He has no easy job. Reforming a large bureaucracy, like turning around an aircraft carrier, doesn't happen on a dime. The Board and Mr. Gilway have also now come to recognize that reducing policy coverage is not a solution for depopulation of policies, rejecting an unwise staff proposal to set a $15,000 sub limit for water damage. They immediately got it right when news of excessive travel expenses came to light in the press. Governor Carol Everhart presented a motion to conform Citizens travel policies to those followed by the rest of state government. Governor Don Glisson strongly advised abolishing company credit cards, which was promptly done.
We must also consider the cloud removal of this Board would cast over future Board recruitment. The best and brightest will simply decline to serve rather than risk public embarrassment in such a toxic political environment.
Individuals who violated policy should be disciplined, consistent with sound human resource practices and due process, not out of concern for how it will look in the newspapers. The problem for everyone else has already been solved.You can bet that all at Citizens will now think twice before every spending decision.
Florida Association for Insurance Reform