Heritage has maintained that this was an “automated” message in response to Corley, and OIR general counsel Belinda Miller said she did not believe it violated the consent order’s ban on communicating with policyholders prior to approval of the takeout. Miller did not comment on the agent communication.
Fasano’s letter blasts the $52 million cash deal as a “blatant case of corporate welfare” and points out that Heritage’s CEO has run companies with several insurance violations in the past. Those violations include “failure to pay claim timely,” using unlicensed insurance professionals and making “misleading” advertisements.
“Do we really want an insurance executive whose takeout company has been fined for using unlicensed agents?” Fasano wrote.
Heritage said the CEO, Richard Widdicombe, resigned from People’s Trust Insurance in 2009 after noticing a slew of violations, and helped state regulators to investigate. The company was fined $150,000 and suspended by OIR.
Heritage’s lobbyist is Tom Gallagher, a former head of OIR who helped create Citizens.
Fasano and Weatherford are not the only Republicans criticizing Citizens over the deal.
Rep. Frank Artiles, R-Miami, called it a “get rich” scheme and Scott’s chief of staff called the Citizens’ board “tone-deaf.”
Democrats also chimed in. Former state Senator Dan Gelber, D-Miami Beach, on Friday called on Scott to return the $110,000 donation, saying “the whole thing smells.”
The chairman of the Republican Party of Florida accused Gelber of attacking Scott on behalf of former Gov. Charlie Crist, a potential Scott opponent in 2014.
Scott’s office did not say whether the governor would return the contributions from Heritage, only maintaining that there had been no pay-to-play.
Citizens president Barry Gilway has stood by the company’s decision to transfer $52 million to the nine-month-old Heritage. He said it’s part of Citizens’ efforts to reduce its liability and transfer risk back to the private market. In exchange for the payment, Heritage will take over as many as 60,000 policies and provide retroactive “reinsurance” for any policies that have claims between Jan. 1 and June 28.
“This is a great opportunity to place another 60,000 policies into the hands of one of the most well-capitalized companies in the Florida marketplace,” said Gilway. “I think the logic behind this agreement is compelling.”
Last year, Weatherford chided Citizens for attempting to loan out up to $250 million from its cash surplus to smaller private insurance companies. Citizens eventually abandoned the loan effort, but later decided to go ahead with plans to pay takeout companies in cash.
Now, Weatherford is calling on the chair of the Regulatory Affairs Committee to conduct a review of Citizens’ bylaws.
The review is needed, he said, because “there is a growing concern about their lack of understanding that Citizens has a greater responsibility to the public.”