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Citizens' approves $210 million outsourcing contract, cites no savings

[Latest update from Citizens' board meeting today in Miami]

Citizens Property Insurance approved a $210 million, seven-year contract Monday for seven outsourcing firms to do what its staff and one outsourcing firm currently does, but did not announce any plans to cut staff.

The size of the contract—and the fact that it was not accompanied by any spending cuts—raised some eyebrows among board members. Currently, Citizens pays only one outsourcing firm, and the costs are significantly less than the $30 million annual contract it just appoved.

“You’re paying $15 million today and you’re going to go to $30 million, and you’re not going (to cut employment) costs?” asked board member Tom Lynch.

Citizens Chief Insurance Officer, Yong Gilroy, said staff levels might be reduced, sometime later.

The $209 million outsourcing contract is the most recent example of questionable spending by Citizens as it pushes to raise rates further after six years of no hurricanes.

On Thursday, Citizens began considering proposals to pay private insurers hundreds of millions of dollars to take over its policies.

Last month, it came to light that Citizens’ interim president, Tom Grady, spent more than $10,000 in two months travelling to Bermuda and other locations with his Citizens credit card.

The $209.9 million contract would benefit the following companies: 

Bankers Insurance Group, Inc,  MacNeill Group, Inc, US Assure, Inc , Blue Cod Technologies, Inc, Kelly Services, Inc, Xerox State and Local Solutions, Inc, Interactive Technologies, Inc, TPUSA, Inc.

Meanwhile, Citizens is pushing to raise insurance premiums by more than $250 million for its 1.4 million policyholders. It is also reducing coverage. 

“There’s always a difference between wants and needs,” said board member Don Glisson, when he heard of the $209.9 million contract. “Is it going to save us money? It’s a big number.”

The board approved the contract unanimously.