Citizens Board of Governors Meeting Report–August 7

On Thursday, August 7, 2008, Citizens Property Insurance Corporation (“Citizens”) held a Board of Governors (“Board”) meeting in Tampa, FL. 

To view the complete agenda, click here. 

Recently-appointed Citizens Board Chairman James R. Malone stated that he was enthusiastic about serving in his new capacity.  Mr. Malone has been the CEO of several large companies and, most recently, was the founder of Qorval LLC, an investment banking firm. 

The Board determined it would hold meetings every other month unless circumstances dictate otherwise. 

Scott Wallace provided the President’s report, after which the Board ratified the hiring of Yong Gilroy as Citizens’ Senior Vice President of Claims.  Mr. Gilroy will be based in Jacksonville, FL. 

Mr. Wallace reported that he is developing a long-term strategic plan, which will be formalized in an annual report.  He also discussed the Citizens Mission Review Task Force established by Senate Bill 2860 that was passed during Florida’s 2008 Regular Legislative Session, and noted that the purpose of the Task Force is to return Citizens back to its former status as Florida’s insurer of last resort.

Susanne Murphy, Citizens’ Executive Vice President of Corporate Operations, discussed initiatives to update Citizens’ wind-only policies.  She stated that no policies will be cancelled, but that all policyholders will be required to reapply for coverage.  Citizens will engage in a marketing campaign, which will include holding workshops and public service announcements to inform policyholders about the changes.  It also will send letters to policyholders prior to their policy expiration at the following intervals: 180 days, 120 days and 60 days.

The Board approved the Consent Agenda in total.  The items discussed included:

• 2008A HRA Bonds – Board Resolution and First Amendment to the Sixth Supplemental Indenture

Citizens has concluded that the Sixth Supplemental Indenture for the High-Risk Account Senior Secured Bonds, Series 2008A (“Series 2008A Bonds”) includes a “Sinking Fund” provision.  Series 2008A Bonds are split into two series; the longer-term Series 2008A-1 Bonds and shorter-term 2008A-2 Bonds that mature on June 1, 2009 (“Short-Term Bonds”).  Citizens further has determined that the “Sinking Fund” provision for the Short-Term Bonds is not in Citizens’ best interest for liquidity purposes, inasmuch as the Short-Term Bonds mature within one-year, and the “Sinking Fund” provision requires 1/11th of the principal of the Short-Term Bond proceeds to be set aside each month and dedicated for repayment.

This principal repayment significantly would impede Citizens’ ability to utilize the Short-Term Bond proceeds as intended for payment of potential claims.  The Board resolution approved removal of the “Sinking Fund” provisions.

• First Notice of Loss (“FNOL”) Call Center Services

After recent internal reviews, it was determined that Citizens needs to have a contingent FNOL call center vendor in place for the current hurricane season.

A contract with Interactive Response Technologies, Inc. will provide back-up policyholder call center services for Citizens’ current FNOL vendor, Lynx.

• Property Adjusting Services

Approval was given for contract extensions to be executed with NCA Group, York and Lozano for property claims investigations and related adjusting services.  Citizens is planning to re-issue a formal competitive solicitation in the Fall of 2008 for future property and liability adjusting services.

• Liability Adjusting Services

A contract extension to be executed with Specialty Group for liability claims investigations and related adjusting services was approved.

• Sinkhole Adjusting Services

A contract extension to be executed with ROL Insurance Consulting (“ROL”) was approved. ROL provides Citizens with sinkhole claims investigations and related adjusting services.  Citizens is planning to re-issue a formal competitive solicitation in the Fall of 2008.

• Commercial Non-Residential Product Revision

A revised estimated implementation cost was approved for the new Commercial Non-Residential Product by Computer Sciences Corporation (“CSC”).

In March 2008, Citizens’ Board of Governors approved a Consent Agenda for enhancing the existing CSC platform to include the program development for processing mid-size non-residential commercial property accounts.  At that time, it was estimated the implementation cost would be between $90,000 and $120,000.

The March 2008 estimate was provided by CSC based upon the high-level system specification document at that time. Since then, a full requirements analysis has uncovered that, although the rating is the same for the wind area and inland policies, there are reporting requirements for these two lines that need to be captured separately.

Citizens and CSC have agreed that the appropriate solution is to modify the structure of the POINT System. However, this modification will increase the estimated implementation cost to approximately $185,000; representing an increase of approximately $65,000.

The meeting was then adjourned.

 

If you should have any questions or comments, please do not hesitate to contact Colodny Fass.  

 

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