TALLAHASSEE -- A startup insurance company with ties to current and former top politicians could receive up to $52 million from Citizens Property Insurance Corp., after the board voted 3-2 Wednesday to approve a “unique” and “outside-the-box” deal.
Heritage Property and Casualty Company, which opened for business nine months ago and contributed $110,000 to Gov. Rick Scott’s campaign in March, will begin sending “takeout” letters to tens of thousands of homeowners this week. It could receive a multimillion-dollar cash windfall within months.
Scott’s office distanced itself from the proposal Wednesday, blasting Citizens and saying any assertion that the governor influenced the deal for his political contributor was “outrageous.”
“As we have said before, Citizens appears to be tone-deaf in earning public confidence,” Scott’s chief of staff, Adam Hollingsworth said in a statement. “Citizens needs to review their own process for taking up risk takeout agreements to ensure that all decisions are fully, publicly vetted with enough time for board members to review the material and make the best decision possible for the taxpayers of Florida who support Citizens.”
The board at Citizens approved the deal despite concerns that the proposal was unveiled less than a week ago and that the St. Petersburg company’s president, Richard Widdicombe, has a track record of fines and violations from insurance regulators. Two of the companies run by Widdicombe racked up hundreds of violations and thousands of dollars in fines for breaking insurance rules.
The violations from Office of Insurance Regulation include “failure to pay claim timely,” using “unlicensed insurance adjusters” and making “misleading” advertisements. One company run by Widdicombe, was suspended and fined $150,000 for using unlicensed officials to sell insurance policies over the phone and sending repairmen to fix damages rather than paying for claims.
A spokesperson for Heritage said Widdicombe resigned after the misconduct took place and helped regulators to investigate. Violations at another company took place before Widdicombe became president, the spokesperson said.
Heritage’s lobbyist, Tom Gallagher, is a former Insurance Commissioner and an unsuccessful gubernatorial candidate who helped create Citizens. The firm he works for is run by Citizens’ former general counsel, and has received between $60,000 and $110,000 in recent months to lobby the government on behalf of Heritage. The startup insurer also donated $30,000 to the Republican Party of Florida in October, two months after launching.
“Sadly, Tallahassee is for sale,” Rep. Mike Fasano, R-New Port Richey, tweeted about the $52 million deal.
Gallagher said his former role as insurance commissioner and architect of Citizens had no bearing on the insurance regulators who approved the deal, some of whom previously worked under Gallagher.
“I have no sway over them,” he said, pointing out that he left his government post in 2007. “They’re going to do what they think is right. What I have is knowledge of how the system works and how to do things the right way.”
While Scott blasted the board, Citizens has said several times that it is following Scott’s 2011 mandate that the company downsize quickly and aggressively. John Wortman, a board member appointed by Scott, made a motion to approve the deal and was one of three members voting in support.