Florida Citizens CEO Gilway Addresses Criticism, Touts Progress

And just recently, Gov. Rick Scott told executives at Citizens they should give back their "outrageous" pay raises.

Gilway, on the job eight months, says the expenses and travel guidelines at Citizens are now "tighter than a drum." He's made adjustments since he took the helm and more were made in light of the recent research.

"We take this seriously," he says. "These are public funds. We've tightened our belts around here."

State-backed Citizens has put limits on lodging costs, and out-of-state travel requires written pre-approval from the president or his designee. In-state travel also needs to get approval.

The 66-year-old, who has held positions such as president and CEO of Zurich North America and CEO of Maryland Casualty Group, defends the expense of some trips, especially one in which its CFO went to London.

"That trip saved us $49 million," Gilway says. The outcome of the trip was that Citizens raised $750 million of hurricane protection in the catastrophe bond market rather than buy coverage from traditional reinsurance.

Of compensation, Gilway says his outlook is simple: A study the insurer commissioned found, "The higher up you get [in job position], the further we are from parity in the private market."

Gilways says Citizens has lost three top executives in the last three months, including its head of underwriting and its head of claims.

"We can't compete [with pay]," says Gilway. "We're looking for a new head underwriter and it's been tough. We can't afford to lose any more good people, and we have plenty making 60 percent of what they should be making."

Some recent pay increases were balanced by taking down some benefits, Gilway explains.

The CEO of the troubled, last-resort insurer says the press does not recognize Citizens' accomplishments.

"The only way I maintain my sanity sometimes is to look at what we've accomplished," he says. "We've done some very good things."

Citizens has steadily reduced its policy count under Gilway. The state-run insurer was never meant to be the state's leading property insurer but it holds that title and has been making every effort to depopulate its policies to the private marketplace.

At the midpoint of 2012, Citizens had about 1.5 million policies. The count stands at below 1.3 million and it should drop again—possibly to below 1.2 million by the end of 2013—once policies from the Weston Insurance deal are removed.

Weston is slated to take about $30 billion in exposure from Citizens. It has been approved to take out a total of 31,000 wind-only policies from Citizens—about 15 percent of its coastal-account exposure.

The agreement is the first of its kind in that it includes commercial wind-only policies and includes a quota-share reinsurance agreement.

"This is a type of deal we do not anticipate to just approve to Weston," Gilway states.  

Other than depopulation efforts, Gilway says Citizens has put in new claims programs, stepped up litigation management, and increased the number of independent adjusters under contract.

Looking ahead, Gilway sees promise in the upcoming Legislative Session. A sweeping property insurance reform bill has already been introduced, which includes a proposal to create a clearinghouse with the intent to keep policies in the private market.

The clearinghouse would allow new and renewed policies to be shopped to private insurers before landing at Citizens. A comparative rate analysis would be generated.

"We think it's a positive for all involved," Gilway explains. "It creates a marketplace for consumers, gives agents more opportunities and establishes another distribution avenue for insurance companies."