After a series of corporate scandals, Citizens Property Insurance Corp. is hoping to conduct itself less like a high-flying private insurance firm and more
like a government agency.
Blasted by regulators, investigators and lawmakers
for lavish spending on travel and meals and poorly negotiated contracts,
Citizens has agreed to remake parts of its operation using government as a model.
The state-run insurer of 1.3 million policyholders
announced Friday that it will begin to implement procurement policies and
travel guidelines that mirror those used by other state agencies. The Office of
Insurance Regulation rapped Citizens last month for de-emphasizing price
negotiation as it gave out $604 million in contracts to private companies. As a quasi-governmental entity, Citizens has operated under separate rules from most of Florida's government.
Also on Friday, Gov. Rick Scott’s chief inspector general released a final report on the
company’s spending on travel and meals. As part of the report, Citizens agreed
to adopt travel policies that “more closely mirror” those that govern state
is aggressively looking for ways to tighten its financial belt,” said Citizens
President/CEO and Executive Director Barry
Gilway, in a statement.
Citizens has long insisted that it is not a
government agency and should not be held to state limits on travel and food
spending. Auditors have questioned Citizens’ rationale for this position since 2006, but
the company ignored those concerns. Last year, the Herald/Times documented how Citizens’ loosely defined travel
policies have allowed executives to charge the company hundreds of thousands of
dollars for luxury hotel stays, limousine rides and expensive dinners.
As late as December, Citizens executives were
arguing that the company—which received $715 million from taxpayers, has the
ability to levy “hurricane taxes,” and claims governmental immunity in court—was
not bound to rules governing state agencies. After Scott’s inspector general
drafted a scathing report, Citizens agreed to follow the state’s travel rules,
which would ban many of the luxurious expenses company execs have become
Some of the expenses flagged by reporters and
- More than $1,000 for a limousine ride and personal
chauffeurs/car service for Citizens’ interim president and CFO.
-$236 for six-hour “day-use” of a hotel in Zurich,
Switzerland, for the company CFO.
-$454,000 for “car expenses” between January and August
-$539 per night hotel stay in New York for top officials
The company offered explanations for many of the expenditures in a response to the inspector general report but agreed that stricter policies were necessary.
Meanwhile, the company has pushed to raise rates on
homeowners and slash their coverage.
Citizens has also faced scrutiny over allegations of
misconduct among its top executives, some of who later resigned and got large
stories about Citizens move to fire four investigators who were looking into
the allegations, Scott called on his inspector to probe the company again.
That probe is ongoing, but some lawmakers are already
pushing for more scrutiny.
Bills filed in the Legislature and backed by Scott would
define Citizens as a state agency for the purposes of having an independent
Inspector General. Citizens is supporting the proposal.
“According to reports in The Miami Herald late last year, an
internal audit brought to light issues at this company charged with being stewards
of public funds,” said David Richardson,
D-Miami Beach. “The firing of four auditors who
were responsible for reporting these indiscretions and completely disbanding
the Office of Corporate Integrity has led me to believe that officials at
Citizens may think they can operate without accountability, which I find