The head of Florida Citizens Property InsuranceCorp. says the state-run insurer is well on its way to becoming thetrue market of last resort for the Sunshine State.

"We've never been in better shape," says Citizens CEO BarryGilway. "I think the numbers speak for themselves."

About a year ago Gilway took the helm of the troubled insurer,which was bursting at the seams with too much exposure and too muchchaos within—misappropriations and employees basically runningamok.  

"I was told one thing: "Get this company smaller,'" Gilway tellsNU. "I wanted to do it in a way that was beneficial topolicyholders."

And by "policyholders," Gilway refers to insureds at Citizensand elsewhere, because everyone is exposed to assessments ifCitizens can't pay claims.

Gilway's ideas aren't without controversy—and some initialattempts to dissuade property owners from joining Citizens haven'tworked as well as anyone would like. Citizens routinely findsitself in Florida headlines and the tone is often unfavorable. Butunder Gilway's leadership, Citizens' policy count has shrunk—in amore permanent way than previous efforts to depopulate the insurer,he says—and one of his ideas adopted into law could have an evenmore dramatic effect.

With about 1.26 million policies, Citizens remains the largestprovider of property insurance in Florida—a designation it wasnever intended to hold.

Citizens hasn't stopped traditional depopulation efforts by"take-out" companies but after the pace slowed, Gilway and his teamlooked to other means—inking more complex deals with Weston and Heritage insurance companies to remove more exposure from thebooks.

"We've tried to think outside the box but ithas been difficult to get others to understand the issues, and thefacts and figures," Gilway says, while simultaneously concedingsome of the blame for not communicating well enough with stateleaders.

Gilway wrote a letter to the state Board of Governorsguaranteeing better communication and tighter policies at Citizensto rein in spending.

"Any concept outside the standard depopulation program will bepresented in public, where anyone can vet the agreement," he saysof the future. "We will communicate during the process."

Still, the CEO asserts Citizens "took no shortcuts," and "didn'trush" any recent deals meant to get policies back into the privatemarket.

When scheduled take-outs are completed by the end of the summer,Citizens could be 430,000 policies lighter. The insurer's probablemaximum loss for a 1-in-100-year storm dropped 15 percent to $19.9billion over the last year.

Most importantly, for all Floridians, the potential emergencyassessment to be levied on all policyholders is now $3.8billion—down dramatically from $7.3 billion a year ago.

And looking ahead, Gilway says the best may still be coming. Aspart of SB 1770, signed late May into law by Gov. Rick Scott, aclearinghouse will be established with the intent to reduce thenumber of policies even further by assuring risk gets shopped inthe private market before finding a home in the market of lastresort.The clearinghouse allows new and renewed policies to beoffered to private insurers before landing at Citizens. Acomparative rate analysis will be generated.

"It's a win-win-win," Gilway says, referring to the expectationof Citizens losing policies, property owners obtaining bettercoverage in the private markets, and agents scoring greaterdistribution.

"It will be a complex program to implement," he says, addingthat about 52 percent of Citizens' business comes from directwriters.

"At least a third of new business could be eliminated throughthis mechanism," he explains. "With renewals—we have 186,000 StateFarm policies (shed by the insurer in 2010 as part of a deal tostay in the state) and they will be shopped. I believe two-thirdscould land outside of Citizens."