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 employees.
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“Citizens 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 accustomed to.
Some of the expenses flagged by reporters and inspectors include:
- 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 2012.
-$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 severance packages.
After Herald/Times 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 appalling.”