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Exodus of Citizens executives to companies with contracts raises questions

In the past three years, at least three senior executives at Citizens Property Insurance who were in charge of multimillion-dollar contracts awarded to private companies went to work months later for those same companies.

Florida’s ethics laws ban state employees from going to work for a company for two years if their duties for the state job involved a contract related to that company. But Citizens, the state-run insurer of last resort, reads the statute more narrowly. Its executives say no one has done anything wrong.

Critics, however, say the situation is evidence of a revolving-door mentality at the public company that handles millions of dollars in contracts each year, and add that it raises serious questions about the fiscal management of the company, whose claims will be paid by taxpayers if Citizens runs out of money after a storm.

“Every dollar you don’t spend is a dollar that goes to pay somebody’s claim,” said Sean Shaw, the former Florida Insurance Consumer Advocate from 2008-10. “They should have a moral compass that says, ‘This is taxpayer money. We are going to be as careful as we should with our own pocketbook.’ ”

The head of the Florida Senate Banking and Insurance Committee, Sen. David Simmons, is calling for the ethics law to be tightened relating to Citizens’ contracts and has ordered Senate staff members to draft legislation to do that.

The exodus of senior staff members from Citizens — the state’s largest insurer — to companies hired to handle Citizens claims or provide services includes:

• Yong Gilroy, former chief insurance officer at Citizens, who while working for the state signed two five-year contracts in 2013 with Bankers Insurance Group — one for $209 million divided among five companies to provide telephone and other communication services after a major storm, and another for $9.1 million for temporary staffing services. In January 2014 Gilroy went to work for Bankers Financial Services, a subsidiary of Bankers Insurance.

• Lance Malcolm, former vice president of claims at Citizens, who in May 2013 supervised and presented to the Citizens board the renewal of a contract with Crawford & Co. worth $8 million for adjuster services. In September 2013, he was hired by the company.

• Eric Ordway, former head of claims at Citizens, who supervised an $8 million contract under an emergency exemption in 2010 to hire BrightClaim for claims management, oversight and supervisory services for large policy holders. The contract was effective through June 2013. Ordway was hired by BrightServ, a subsidiary of BrightClaim, in January 2013.

The Herald/Times asked Citizens and its general counsel, Dan Sumner, to review each of these circumstances, and in each case Citizens concluded the employee broke no ethics laws. More here.

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