Maryland insurance executive tapped to head Citizens Property Insurance Corporation
June 13th, 2012
The following article was published in The Florida Current on June 13, 2012:
By Gray Rohrer
Citizens Property Insurance Corp. board members voted unanimously Wednesday to name Barry Gilway, a Maryland-based insurance executive, the new president of the state-run insurer.
Gilway is the CEO of Mattei Insurance Services. Board members said his private sector experience in the industry made him the best candidate for the post, beating out California Earthquake Authority CEO Glenn Pomeroy.
Specifically, Gilway's 15 years as an executive with the Zurich North America financial services firm and its subsidiaries -- including his efforts to downsize staff and reduce operating costs -- caught the eye of Citizens board members looking to shrink their exposure and risk.
"Barry's experience on the private side brings a good deal of support to our efforts to depopulate," Citizens Chairman Carlos Lacasa said.
Gilway and Pomeroy were the two candidates, out of five finalists, recommended to the board by a presidential selection committee. Interim president Tom Grady, a former state representative and neighbor to Gov. Rick Scott, was among the finalists but was not recommended by the committee for the final round of interviews.
Citizens contracted with the talent search firm Heidrick & Struggles for $116,667 plus expenses to conduct the search for a president after Scott Wallace announced his resignation in January. Wallace didn't officially leave until April, when Grady took over on an interim basis.
Although Gilway's start date isn't known, he will take over at Citizens during a political fight over the company's rates. The Citizens board will meet July 16 to develop plans to break a 10 percent cap on annual rate increases for new customers that was put in place by the Legislature in 2009. Republican lawmakers in Tampa and Miami who voted for the cap say the plan is contrary to the intent of the law.
For his part, Gilway said Citizens rates need to be "adequate" in the large population centers of Miami-Dade, Broward, Palm Beach, Hillsborough and Pinellas counties, but any increases must take economic factors into account.
"I am absolutely sure that rates are not adequate in those counties," Gilway said.
On the other hand, he said, "If rates were moved to complete adequacy, it has the terrible potential of absolutely destroying both home building and retail sales."
Scott and several lawmakers are concerned Citizens would have to rely on assessments to private companies' policies in the wake of a catastrophic storm. Citizens board members were urged by Scott last year to take administrative steps to reduce their policy count, which now stands at 1.43 million policies.
Board members responded, reducing or eliminating coverage for pool screens and patios and carports, even though Citizens is in the strongest financial position in its 10-year history.
With its surplus ($6 billion), available pre-event liquidity ($5.1 billion), private reinsurance ($1.5 billion) and state-backed Florida Hurricane Catastrophe Fund reinsurance ($6.9 billion), Citizens has the ability to cover up to $19.5 billion worth of claims. Florida's probable maximum loss -- the metric used by insurance companies to determine their likely maximum risk in a single year -- is $21 billion. A storm that would cause that much damage would likely bankrupt many of the small private insurers that are supposed to take over Citizens policies.
View the original article here: http://www.thefloridacurrent.com/article.cfm?id=28088429