TALLAHASSEE, Fla. -- Governor Rick Scott and state lawmakers are moving aggressively to try to stamp out the well-documented problems at Citizens Property Insurance Corp. and force it to operate more efficiently and professionally.
Gov. Scott has signed wide-ranging reform legislation for Citizens that aims to reduce the size of the company, decrease its exposure and follow stricter rules on spending.
The new law taking effect July 1 creates a so-called clearinghouse to divert policies from Citizens into the private market. It also bans coverage for new homes built on the coast and will limit coverage to homes worth $700,000 or less.
But, perhaps the most important part of the new law is the creation of an independent inspector general at the state-run insurer.
Citizens has struggled with a troubled culture in recent years with lavish spending on travel and meals, huge pay raises for executives, big severance deals, and hundreds of complaints about misconduct.
Dan Krassner of the government watchdog group Integrity Florida says the new inspector general will create more accountability at Citizens and hopefully save money.
"The inspector general is going to be hired by the governor and the Cabinet so they won't be able to be fired or hired by the team at Citizens. They're going to be more independent. They can look into reports of fraud, waste and abuse, even criminal conduct, misuse of funds and hopefully for us the ratepayers and taxpayers of Florida will see some cost-savings from this new role."
Krassner says Americans have recently gotten a clearer picture of the work of an inspector general from the IRS scandal. It was a U.S Treasury inspector general who discovered IRS offices were improperly targeting conservative nonprofit groups with audits.
Gov. Scott's own chief inspector general has investigated travel expenses at Citizens and concluded they were excessive compared to state rules.
Krassner believes there's a need for an internal watchdog inside Citizens.
He says one of the inspector's first priorities should be to examine a controversial new deal with Heritage Property and Casualty Company. Citizens is paying Heritage, a new St. Petersburg company only nine months old, $52 million to take over about 60,000 policies.
The deal also raises questions because Heritage just contributed more than $100,000 to Gov. Scott's re-election campaign this spring.
"That's the type of mega-deal that an inspector general should look at. There's been a lot of talk that companies that are getting millions of dollars from Citizens Insurance are politically connected companies and an inspector general can make sure that there's no wrongdoing in a major deal like that," said Krassner.
Citizens President and CEO Barry Gilway welcomes the new reforms. He says the company is working to meet timelines in the bill and planning to do a better job of communicating major initiatives.
Citizens Property Insurance Corp. is currently the largest property insurer in Florida with nearly 1.3 million policies.