NU Online News Service,  Jan. 23, 11:49 p.m.EST

The insurance industry in Florida has a new ally as it pushesfor reforms to Citizens Property Insurance Corp.: the man whohelped launch the last-resort insurer.

Tom Gallagher, the state's first chief financial offer, hasjoined the law firm Colodny, Fass, Talenfeld, Karlinsky & Abateas a consultant in its governmental consulting andinsurance-regulatory practice.

Gallagher is a former member of the state House ofRepresentatives. He served as insurance commissioner from 1989 to1995 and again from 2001 to 2003, when he was elected Florida'sCFO.

But another of Gallagher's career accomplishments may be themost valuable to the insurance industry as it wrangles withlawmakers this legislative session to reform the state-run,over-exposed property insurer, Citizens Property InsuranceCorp.

"It was my idea to start Citizens," says Gallagher, who admitsCitizens—which has grown to become the largest property insurer inthe state despite its intention as a last-resort option—is "analbatross over every [Florida] resident."

"It's become a disaster," Gallagher continues on Citizens. "Itwas never supposed to be the cheapest in the market. That was thefurthest thing from my mind."

Due to past rate freezes on Citizens, its policy countballooned. An effort to get private, mostly domestic start-upinsurers to depopulate Citizens was initially a success butpolicies have returned. Citizens remains a competitor of theprivate market. A bill to allow surplus-lines carriers to take outCitizens policies is currently under consideration.

"[Citizens] was created with good intentions before beingmorphed into what it is now by the wrong leadership," Gallaghersays. "The easy thing to do was freeze rates and look like a hero.But it was totally irresponsible."

The former insurance commissioner is optimistic current leadersare willing to listen, but solutions won't come easy, he says.

Other than reforms to Citizens, insurers are looking to fix anauto-insurance system the industry says is plagued by fraud.Florida's no-fault personal injury protection (PIP) insurance lawspromote gaming of the system, they say.

Gallagher sees a potential obstacle on the path of insurancereform: insurers versus insurers.

"There are two big issues: one is homeowners and the other isauto," he explains. "Some companies do both, but a ton does one orthe other. They aren't together on any singular priority and theyaren't going to be."

Furthermore, when it comes to PIP reform, there is no industryagreement. Some want to repair it, while others want to do awaywith it and start anew.

"Everyone agrees it's broken, but there's no consensus,"Gallagher says.

These inter-industry dilemmas need to be worked out, he adds, ifinsurers are to accomplish any real reform this legislativesession, especially when battling lobbyists for trial attorneys andmedical providers.