In August, a story in the Miami Herald and the Tampa Bay Times documented a pattern of lavish executive spending by Citizens’ executives, who regularly roomed at luxury hotels and dined on gourmet meals while pushing for painful insurance rate increases.
The story chronicled $600-per-night hotel stays, first-class flights to Bermuda and improper use of the company credit card for alcohol and haircuts.
After the story ran, Gov. Rick Scott said he was “concerned,” and asked his chief Inspector General to investigate. Citizens has since overhauled its executive travel policy, but it also approved large raises for some of the same executives involved in the opulence.
The skyrocketing complaints of corruption and misuse of funds come as Citizens’ cash-on-hand has reached record highs. The company has more than $6.2 billion in the bank, part of a $15-billion portfolio built up during a lengthy hurricane-free streak.
Good governance groups say that large amount of money, absent the necessary safeguards, is ripe ground for fraud and abuse.
“Gov. Scott was right to have his chief inspector general scrutinize Citizens’ travel expenses for waste and abuse,” said Dan Krassner, director of Integrity Florida, a good governance group. “Floridians should be concerned about these firings in the middle of an inspector general’s investigation… Were these ethics and fraud investigators let go because they were doing their jobs too well?”
Citizens is currently planning to lend out as much as $350 million of its surplus to private insurance companies that agree to take over some of its 1.4 million policies.
The hastily approved loan program was advocated for by an insurance lobbyist and did not undergo the traditional vetting process in the Florida Legislature.
The incoming Speaker of the Florida House, Rep. Will Weatherford, R-Wesley Chapel, and incoming President of the Senate, Sen. Don Gaetz, R-Niceville, both said Citizens should halt the program and submit it to lawmakers for further vetting.
“My concerns involve serious questions regarding the process by which the proposed program was approved, the sufficiency of the information and analysis on which the approval was based, and uncertainties regarding the Board’s legal authority to adopt and implement the program,” Weatherford wrote in a letter to Citizens’ board chairman.
Other legislators have been even harsher in their language, calling the $350 million program a fraudulent and illegal “sweetheart deal” for the insurance industry. Citizens has defended the program amidst growing pressure, but also agreed to have a third-party financial institution review the $350 million loan.
Former Chief Administration Officer Susanne Murphy — who questioned Citizens’ authority to enact the loan program in July — resigned abruptly in August.
She was the senior executive responsible for overseeing Citizens’ human resources and corporate integrity initiatives. She has not been replaced.
Toluse Olorunnipa can be reached at tolorunnipa@MiamiHerald.com or on Twitter at @ToluseO.