Florida Audit Says Citizens’ Travel Expenses Excessive; Governor Orders Reform

January 18, 2013

A review by Florida’s chief inspector general contends that employees at the state-created Citizens Property Insurance racked up excessive travel expenses over an eight-month period.

Florida Gov. Rick Scott ordered a review of expenses at the insurer following a report by The Miami Herald and Tampa Bay Times that detailed how top officials stayed at luxury hotels and ate at expensive restaurants.

The review says that while most travel expenses met Citizens written guidelines, they are excessive by state standards. Chief Inspector General Melinda Miguel recommended Citizens be required to follow the same laws that state employees follow.

In a statement, Scott said he agreed with his inspector general and said the insurer was in “urgent need” of reforms.

“A company this large, supported by hard-working Florida families, must be held to the highest standards of integrity,” Scott said.

Citizens is Florida’s largest property insurer and has 1.31 million policyholders, including many people who live in the state’s coastal areas. Citizens finances have come under scrutiny because the insurer has been pushing to raise its rates and change its coverage in order to lessen its exposure in the event of a major hurricane. State lawmakers this year may pass legislation that allows Citizens to raise its rates 13 percent a year — an increase from the current 10 percent cap.

The chief inspector general found that Citizens employees — as well as members of the board that governs the insurer — racked up $1.3 million worth of travel expenses between Jan. 1 and August 31, 2012. This included nearly $442,000 on hotels and $454,000 on car expenses.

The review found that top company officials stayed at hotels at rates higher than those that would be paid by normal state employees, including hotel expenses in Bermuda and Switzerland. Citizens’ chief financial officer, for example, upgraded her hotel in Bermuda from $459 a night to $633 a night. Sharon Binnun also spent nearly $1,300 on a two-night stay in London.

The review also found more than 50 instances where senior managers were reimbursed for meals in their own hometowns. It also noted that former Citizens President Tom Grady took a limousine from his house to the airport.

Barry Gilway, a private sector executive who became president of the insurer after Grady left in 2012, has defended some of the employes and their expenses while also changing its travel expense policy and discontinuing the use of corporate credit cards.

The insurer has 20 working days to respond to the Jan. 15 report. A spokeswoman for Citizens said the insurer is reviewing it. But Citizens this past fall took steps to tighten its travel expenses including putting a cap on hotel and meal expenses. But the review notes that the cap is not in place for members of the board that oversees Citizens.

Top lawyers for Citizens, however, did argue in December that Citizens is not a state agency and it is “unlikely” that state lawmakers intended for the company to follow the same travel expense laws state employees must follow.

Scott in his own statement recommended that the insurer prohibit board members from international travel and the company limit the number of employees at board meetings. He also wants Citizens to hire its own inspector general to review complaints.

Topics Florida Carriers Legislation

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