Scott: Citizens needs to watch costs
By JIM TURNER
NEWS SERVICE FLORIDA
Gov. Rick Scott isn’t convinced that Citizens Property Insurance Corp. should have rebuffed his request for an international travel ban, even if the overseas trips were part of a $3.2 billion deal that saved the state-backed insurer $233 million.
At the request of Scott, Citizens President and CEO Barry Gilway appeared before the state Cabinet on Tuesday to explain $48,006 spent on trips that involved Gilway, Citizens Chairman Chris Gardner and three others during the first four months of the year. The four trips were to Bermuda, London and Zurich, the heart of the reinsurance industry.
“Citizens has done a good job of downsizing, but they have to watch how they spend their money,” Scott told reporters after the Cabinet meeting. Scott added he wasn’t convinced that he is wrong for calling on Citizens to change its policy so it prohibits international travel by board members.
Attorney General Pam Bondi also scoffed at the combined cost of the trips, noting $48,000 “is more than my lawyers make, starting lawyers, in an entire year.”
Gilway said it was important to have Gardner — appointed chairman last August by state Chief Financial Officer Jeff Atwater — appear face-to-face with people involved in the reinsurance deal. Only Gardner could give assurances that that the board would approve any deal reached, Gilway said.
“This is a high-stakes game, we were going to the market and asking for $3.2 billion worth of capital, and we needed every single advantage we could,” Gilway said. Reinsurance is a type of backup coverage that helps insurers pay claims after disasters such as hurricanes.
One of the more contentious points has focused on Gardner being approved to spend two nights in a $425-per night resort in Bermuda in April, which exceeded Citizens’ $373-per night cap on Bermuda travel.
Gilway said he approved the higher rate, based on U.S. State Department travel guidelines for foreign travel, as Gardner was added late to the trip.
When it was later determined that federal guidelines do not offer the flexibility needed to cover the higher rate, Gardner paid the difference, Gilway said. The discussion at Tuesday’s Cabinet meeting came after The Palm Beach Post reported on Gardner’s Bermuda trip.
Atwater defended Gardner as being all business and said if a hurricane hit Florida, the state-backed insurer would have been soundly, and justly, criticized if it failed to close on the reinsurance deal because of a ban on travel.
The result of the trips is that Citizens paid $233 million less for the risk transfer package than it did the prior year.
As of June 30, Citizens had 933,422 policies.
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