Friday, May 4, 2012

Power, Politics and Citizens Board of Governors

Some time ago, Toluse Olorunnipa, writing for the Miami Herald, pointed to a lack of political will in the Florida legislature to make changes to Citizens’ policies given upcoming elections.
Yet, legislation that has already passed is open to ideological interpretation.  Political ideals can be passed through and implemented through the Board of Governors which has close ties to executive and legislative powers.  For example, in April, the Board considered raising rates for new policies inciting a debate as whether or not this is legal to do.  The Board Chairman, Carlos Lacasa, argued that  
In plain language, a new policy is not subject to the cap.
But the state's CFO, Jeff Atwater, countered
The removal of the cap for new business is beyond the scope of legislative intent.  
I would urge the board to carefully consider the policy implications.  
Senator Mike Fasano supported this counterargument stating,
The intent of the legislation we passed took into account all policies, all policies.
Nowhere will you find that someone suggested … that this would only deal with existing policies.
They would know, as Atwater introduced the Senate bill that created this cap in 2008.  The cap was voted for by Fasano, too (and Haridopolos).  In fact, in the predominately Republican Senate that year, the cap passed 32-7.

Atwater's advising could weigh heavy on Lacasa as Atwater originally appointed him to the position and the Board of governors is mandated to
serve at the pleasure of the appointing officer; and 
subject to removal at will by the officers who appointed them.   
But it is the House Speaker, Dean Cannon, who reappointed him and Cannon is up for reelection.

And while Lacasa wasn't in Congress at the time to vote for the cap, he was around, with the others mentioned above, to introduce and pass the bill that created Citizens.  Lacasa was appointed by Atwater because, as Atwater explained
He knows firsthand the original intent behind Citizens and can guide the board back to that intended purpose
Hence, one of the board members suggested (as reported by the Insurance Journal) that going for the rate hike on new policies is an effort to test "ambiguity in the law."  (Perhaps also political relationships amongst Cannon, Lacasa, and Atwater?)

The Board did back away from this proposal (for now) with the resolution to study the matter further and to decrease Citizens total policies just shy of half by 2014.  This is a grand goal established for a recently passed law to depopulate Citizens (627.3511). Although the grandness of the goal does not appear to be actually in the law.  The statute puts in place a depopulation program that will pay private insurers $100 per residential property they accept so long as they accept at least 25,000 (a minimum of $2.5 million).

The Board of Governors as of today....
Appointed by the Governor Rick Scott (R)
  • John Rollins (here and here too)  served as vice president at AIR Worldwide.  Mr. Rollins was chief actuary at Citizens Property Insurance Corporation, the Florida residual market property insurer, and before that at Florida Farm Bureau Insurance Companies.
  • John Wortman  he served as chief executive officer of Louisiana Citizens Property Insurance Corporation from 2007 to 2010, during which he lead a depopulation program.  According the the Louisiana Dept. of Insurance, 
As evidence of the reforms implemented under Wortman's leadership, the bond market responded last year to an offering of $300 million of auction rate bonds that enabled Citizens to save approximately $15 million per year as a result of that refinancing. During the crisis facing Citizens as a result of a class-action lawsuit filed in Jefferson Parish, Wortman was able to access a bond that allowed Citizens to pursue its pending appeal largely due to his reputation earned over a 40 year career in the insurance industry. The offer to write that bond was communicated to Citizens from Warren Buffet's Berkshire Hathaway Company by Mr. Ajit Jain, who is Mr. Buffett's right hand man, and knew Wortman from their years working in the insurance industry. 
Appointed by the Chief Financial Officer Jeff Atwater (R) 
  • Don Glisson, Jr. is the Chairman and Chief Executive Officer of Triad Financial Services, the second largest provider of manufactured housing loans in the USA, trailing only Berkshire Hathaway Finance. Triad’s wholly owned subsidiary, CIS Financial, located in Hamilton, AL, is a full service mortgage banking company specializing in real estate secured transactions in the manufactured housing and site built industries. CIS is an issuer of GNMA securities and services FHA and conventional mortgage loans. Don is currently the Vice Chairman of the Manufactured Housing Institute (MHI). In October of 2012 Don will become the Chairman of MHI for a two year term. A member of the Board of Governors of Florida State University, College of Business.
  • Nancy Baily, former president  of Travelers of Florida, the second largest U.S. property and casualty insurer. Baily, who runs a non-profit in Tampa that helps Lou Gehrig's Disease patients, is the former chair of the Florida Insurance Council, an insurance industry trade group.
Appointed by the Speaker of the House Dean Cannon (R)
  • Chris Gardner, a shareholder with Kuykendall Gardner, an insurance broker and consultant in Winter Park. He has been in the insurance business for 18 years
  • Carlos Lacasa, a former state legislator who is vice president and general counsel of Managed Care of North America. A Miami native. Lacasa was re-appointed by Cannon (originally appointed by Atwater).  
Appointed by the President of the Senate Mike Haridopolos (R)
  • Carol Everhart, vice president of insurance services at BB&T in Tampa.
  • Tom Lynch, president of Plastridge Insurance agency in Delray Beach.


  1. Good luck with your dissertation. This is a very complex issue because of the need to balance classic insurance operations concepts with the political, social, and economic realities of the state.

    Carlos A. Lacasa

    1. Thank you for the luck and thanks for visiting! The complexity is what makes it so interesting =)

  2. T. Nusbaum Dec 9th, 2012 10:18am

    I see Republican appointed Republican business leaders on the Citizens Board and no representation by the people who are being insured.

    Therefore, isn't this Republican biased Board NOT a representative body.


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