Before a full month could pass for Barry Gilway in his new position as the CEO of Citizens Property Insurance, Mr. Gilway says that his plans of taking the state-backed insurance provider and making it smaller are proving to be more challenging than anything he took on in his previous positions. During a recent meeting with the media in Tallahassee he said that he needs more time before he can offer Citizens any specifics. But, he was able to speak more on Citizens’ challenges as well as their greatest opportunities.When Citizens brought in Mattei’s former CEO as their own, it was largely due to his ability to not only run a large company but also reduce a company’s size so that it’s no longer overextending itself. There is much hope that Gilway will be able to bring to Citizens effective solutions that will help them to become a size that is much more manageable.
In a statement about Citizens, Gilway commented that “rates clearly are the 1,000lb alligator in the room. At some point, we have to address rates,” which is what’s needed to make Citizens’ prices more like those of private companies. In addition to working on rates, Gilway said they are working on ways to bring to Florida more private insurers. This would give Florida insureds more options and could possibly allow for the removal of 450,000 to 500,000 policyholders from Citizens. But, Gilway thinks it could be a few years before that could be a reality.
A big problem with the plans is Citizens’ main reason for existing: to be a last resort for insureds. No stranger to this fact Gilway said “it does no good in moving business out of Citizens if our policyholders don’t have quality insurers to take over that risk.”
On Monday, July 16, the board of directors held a meeting to discuss where Citizens may be going in regard to its size, coverages offered and prices. This was to be a preview of the meeting held this past Friday, July 27, where policy changes and possible rate increases could be recommended. In speaking about Friday’s meeting Gilway said “we certainly have specific recommendations in terms of coverage changes we believe we should make, rate adjustments we believe we should make and the impact of those decisions.”
Whatever decisions are made and finalized, they will affect the 1.4 million insureds that Citizens is responsible for. Currently as it stands today, Citizens is only able to handle a hurricane once every 25 years, according to Gilway. Last year’s premiums brought in $3.1 billion, their reserves are at a total of $6 billion and there is an amount of $13.5 billion set aside for paying funds that arise from claims. Paying claims, especially those that arise from hurricanes, can be rather costly. The down side is that, the more hurricanes we have, the more claims there are and Citizens is only equipped to handle so much. Not to mention, included in the latter amount of money are funds that would most likely be reimbursed by inflicting fees on their many insureds.
Gilway has been meeting with Florida state legislators and members of the Cabinet. What he wants to do is to talk about Citizens with those that have not kept their opposition to the corporation a secret. Some of those individuals are Senator Mike Fasano, a Republican from New Port Richey, and Senator Anitere Flores, also Republican, from Miami. The more people he speaks with, the more thoughts and ideas that can be brought forward.
In the end, Gilway wants to get Citizens to a point where they have “a basic product that provides the coverage required by statute and that provides the coverage that the secondary mortgage market feels is essential.”
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