By: Maria Mallory White
Barry Gilway knows many Floridians need - yet despise - the company he runs.
The state's insurer of last resort, overseeing 1.3 million policyholders, Citizens Property Insurance Corp. begins 2013 bruised and beleaguered after a year of outrage over rate increases, a home reinspection debacle and pullbacks on discounts for storm-readiness.
"We've got a lot of work to do in regaining public confidence," Citizens CEO and president Gilway told the Sun Sentinel this week as he laid out the company's top priorities for the new year.
Among them will be making sure Citizens is not introducing new coverage changes and programs that have a negative impact on consumers, Gilway said. It also includes undergoing a "comprehensive" retooling of the way the company communicates with consumers, legislators, agents, and the press.
"The key is going to be communication. It's not just what we do, man, it's how we do it," Gilway said. "Frankly, we want to stay off the front page. It's really hurting our ability to effectively serve our policyholders."
The mandate from state leaders to "depopulate," or shed policies in order to withstand the financial losses a major hurricane would bring, said Gilway, is still the company's primary marching order going into 2013 - and also what got it into trouble last year.
"Citizens has been very, very aggressive in taking actions that have attempted to reduce customers," he said. "We have made many changes to reduce coverages, all of which have met with negative reactions from members of the public."
Headlines relentlessly documented Citizens' missteps and miscalculations as it tried to juggle the political mandate and market pressure to shrink while the any-time-now massive hurricane expectation continued. Citizens touted a $350 million loan program to entice private companies to take a projected 300,000 policies off its books. Gilway later pulled the much-maligned program off the table.
When Gilway shuttered the company's Office of Corporate Integrity, many cried "foul," including Gov. Rick Scott, who called for an investigation by his auditor general. Gilway blasted media coverage he said often rushed to judgment, sometimes reporting unsubstantiated claims.
"A lot of people will assign Citizens as being this demonic creature," said Robin Westcott, Insurance Consumer Advocate. "But I think the problem is how do they manage the growth to 1.4 million in policy owners, and then they're told not only do you need to close the gate, but you need to corral the horses before you close the gate. How do you do that?"
Lenore Wachtel, for one, doesn't think you can. She would like Citizens to go away. Permanently.
"I want to get rid of Citizens," said Wachtel, of Boca Raton. "The system is bad. I think we need a national disaster insurance because it is true: If we have a major hurricane, Citizens cannot cover it, and Florida cannot cover it. It will kill us."
Created by the State of Florida in the aftermath of Hurricane Andrew, Citizens was chartered to provide affordable coverage for Floridians who lived in areas that potentially would be hardest hit by hurricanes and, as a result, either couldn't afford or couldn't secure coverage from private carriers. When its significantly cheaper premiums produced a burgeoning policy base, Citizens saw its rolls jump to more than 1.5 million.
"You can't have both: Citizens is either a market of last resort or it's competitive [on premiums]," Westcott said. "We were trying to straddle the fence. And that doesn't work."
Private companies can simply eschew the risky equation dictated by hurricane-prone Florida, but state-backed Citizens must find a way to arrive at the right policy base, fair premiums and effective customer service. And because Floridians are responsible for covering any losses, the stakes - economically and politically - are even higher for the company to get it right.
After investing six months of dogged pursuit to get a representative from the state to show up and field questions and concerns about Citizens, Wachtel, a Federation of Boca Raton Homeowner Associations board member, has seen friends and neighbors dropped by Citizens.
For Wachtel and many of the 100 others who showed up that December evening, 2012 was rough as they, and policyholders across the state, were subjected to higher insurance bills, company-mandated home re-inspections and new $1 million coverage limits on homes insured by Citizens.
Citizens ended 2012 with 1,314,000 policies, Gilway said, and is aiming in 2013 to get below 1.2 million policies. "The overall objective for everyone is that we shrink. I think the issue is not only how we do it, but how rapidly we do it," Gilway said.
They include launching new technology to provide agents with bids from private companies willing to take on Citizens customers and communicating more effectively with clients.
Further, for 2013, Gilway is exploring a new "clearinghouse" program as a way to match private insurance companies and Citizens policyholders currently paying premiums close to or on par with market rates. The proposed technology-based system would provide consumers' agents premium quotes and coverage comparisons for three or four insurers.
Gilway said Citizens has been shopping the clearinghouse concept with legislators, and he is hoping for a fall roll out. "Third quarter is aggressive, but Chairman [Carlos] Lacasa is very positive, as is every legislator we have talked to. There's a lot of excitement about potential," he said. In preparation, Gilways said his team is meeting Jan. 14 with a number of domestic insurers to discuss the clearinghouse and get their feedback, and he said Citizens will consult with agents and consumer groups as well.
"The devil's in the details," he said. "We have to make sure the final product meets everyone's needs."
Anne Geggis contributed to this report.