Fla. Citizens Picks Odd Moment to Sack ‘Integrity’ Office

By Christian Cámara | Right Street Blog | October 24, 2012
Despite headlines being dominated by the ever-tightening presidential election, Citizens Property Insurance Corp. continues to make news in Florida.  Last week, Citizens announced that it was eliminating its so-called “Corporate Integrity Office,” which serves as a kind of inspector general’s office within the state-run insurer to investigate claims of misuse of funds, employee sexual harassment and other charges of corruption.  Four jobs were terminated with the closing of the office.

The announcement’s timing was curious, in that Citizens has been receiving some bad press lately over travel expenditures by executives and for more aggressively verifying that mitigation discounts are properly applied, causing many policyholders to lose their discounts.  According to Citizens, the elimination of the office comes as part of a larger internal reorganization, which included a recommendation by the chief of internal audit, with the approval of the Citizens audit committee to hire a group of qualified forensic accountants specifically experienced in tackling fraud and abuse within companies like Citizens.  Hiring this new team of accountants while retaining the Office of Corporate Integrity would have needlessly duplicated efforts and been redundant, according to Citizens.

Nevertheless, the decision to eliminate the office was quickly denounced by regular critics of Citizens, including former Florida Insurance Consumer Advocate Sean Shaw, who now heads a trial lawyer-backed consumer group and state Sen. Mike Fasano, R-New Port Richey.  Both sent a letter urging Florida Gov. Rick Scott to investigate the decision.  Scott has indicated that he is open to an investigation, but is holding off on calling one until after the results of a separate investigation into Citizens’ corporate spending are released.

This week, Citizens Chief Executive Officer Barry Gilway defended eliminating the office as part of a broader refocus on forensic fraud, but lamented the way in which the firings were handled. Gilway has indicated that he is open to having the governor’s inspector general look into the issue.  Chief Financial Officer Jeff Atwater also called the firings “inappropriate,” specifically saying that Citizens should have held off in eliminating the office until after the forensic accountants were hired.

It appears that no further investigation will be launched until after the Inspector General’s Office releases its findings related to the corporate spending issue.

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