Citizens Audit Committee Meeting Report: October 22
Oct 23, 2008
On Wednesday, October 22, 2008, Citizens Property Insurance Corporation (“Citizens”) Audit Committee (“Committee”) held a meeting to receive updates from Citizens’ Office of the Internal Auditor (“OIA”), Chief Financial Officer, and external auditor. To view the complete agenda, click here.
The meeting was called to order by Chairman James Malone, with a quorum of Committee members in attendance. Also in attendance were Citizens’ Chief Financial Officer (“CFO”) Sharon Binnun, and representatives from Carr, Riggs & Ingram, Citizens’ external auditor.
Committee member Joyce Bellows, Citizens’ Chief of Internal Audit, gave the 2008 OIA Status Update, Audit Status Plan, Audit and Management Advisory Services Reports and the Audit Committee Checklist.
Since the Committee’s last meeting, the OIA has hired an audit manager for its Jacksonville office, completed staff training on OIA methodology, instituted an automated paperless system, and completed the following audits:
- Validation of the Independent Adjuster Request for Proposal (“RFP”)
- Review of Underwriting Quality Assurance Programs
- Review of Shared Services and Claims Quality Assurance Programs
- Review of the 2008 Catastrophe Mock Exercise and Plan
- Review of claims handling, as requested by the Citizens Claims Handling Task Force
The Audit Status Plan for 2008 has been accepted and is currently being implemented. The projected audit coverage for 2008 is approximately 20 percent of the entire company. At its last meeting, the Committee voted to defer of 22 medium-risk audit projects to 2009, so that other, higher risk projects may be completed on target. The following audit projects are currently being conducted:
- Information Security
- Agent Services
- Payment Services
- Data Management
As of June 30, 2008, Citizens had eight open items to be audited, three of which are from the external auditor from its 2007 External Audit Report. The OIA expects to close four items by the end of the year.
As part of the Management Advisory Services Report, and at the request of Citizens’ former Board Chairman, the OIA conducted an investigation into scoring methodologies used while considering the RFP for an Independent Adjuster. As a result of this investigation, the RFP has been refined and re-issued.
The OIA also has investigated Citizens’ Quality Assurance Program. The OIA completed its review of the Underwriting and Claims Departments and recommends that management continue to build quality assurance plans in both departments. The OIA also has requested that management consider a centralized Quality Assurance Program to promote company-wide efficiency.
The 2008 Catastrophe Mock Exercise and Plan were reviewed and found to have no major faults. As such, the OIA recommends that management continue to refine the 2008 Catastrophe Plan and continue to develop a company-wide business continuity program to be enacted in the event of a large catastrophe.
Claims-handling practices for re-opened Hurricane Wilma claims also were reviewed. Concern had been raised at previous Committee meetings about the possibility of fraudulent claims and differences in claims handling between 2005 and today.
Based on its review, the OIA found no evidence of impropriety in the new and re-opened 2005 Hurricane Wilma claims.
Ms. Binnun presented the CFO Update to Committee members. According to Ms. Binnun, Citizens has adopted a financial plan that includes a strong liquidity base. This plan has benefitted Citizens in the current financial market, and its balance sheet remains strong even though it has had a significant reduction in premium dollars due to depopulation, and has seen an increase in non-catastrophe claims during 2008.
Representatives from Carr, Riggs & Ingram gave a brief External Auditor Update.
The meeting was then adjourned.
Should you have any questions or comments, please do not hesitate to contact Colodny Fass.
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