Who would want the job?
That’s the question that pops into the mind of any knowledgeable reader of
Florida home insurance news. Who would want to become president of Citizens
Property Insurance Corp. at a time when one good hurricane could scuttle it
like an unmoored sailboat in the Port of Miami. Yet, the board of governors had
multiple applicants!
Winning the job—though
how much of a prize it is can be debated—was Barry J. Gilway, a veteran
insurance company executive who has shown an ability to turn around struggling
companies. That’s good, because Citizens is struggling. Designed to be an
insurer of last resort, the state agency has become an only resort for suddenly
vulnerable homeowners.
After the disastrous
2004 hurricane season, a combination of regulatory changes and new wariness of
insurers made Florida home insurance news of the worst kind: rising premiums,
and homeowners unable to protect their largest property investment. Some
insurers left the state. Others eliminated riskier properties. All raised
rates. And Citizens took on a new role.
So Gilway has the fun
job of leading the board to a place it must go but is reluctant to enter: a
land of higher rates and fewer policyholders. If its rates go up too fast—right
now a legislated cap of 10 percent is in effect—it threatens to stall
homebuilding and other economic activity. If the rates aren’t raised, however,
a good hurricane will render Citizens claims unpayable.
A concurrent assignment
for the new president is to “depopulate” the Citizens list of policyholders.
That will be a tricky task because it entails discouraging some policyholders
from continuing their Citizens policies at the same time it encourages private
sector insurers to take on more of Citizens’ homeowners. Gilway seems suited to
make the crossover appeal.
Gilway has big-company
executive experience, so Citizens’ $170 million administrative budget shouldn’t
be daunting to him. What will be a challenge is to bring the budget in line
with the policy book, shrinking both to manageable proportions. If he succeeds
in this, Gilway’s name will be prominently and flatteringly voiced in Florida
home insurance news.
