Test: Citizens Property Insurance Corporation Audit Committee Meeting Report: March 17

The Citizens Property Insurance Corporation (“Citizens”) Audit Committee (“Committee”) met on March 17, 2010 to receive updates from the Office of the Internal Auditor, Chief Financial Officer and an external auditor.  To view a copy of the meeting agenda and a draft copy of minutes for the December 10, 2009 meeting, click here.

Office of Internal Audit

Chief of Internal Audit Joyce Bellows presented the Office of Internal Audit (“OIA”) update, which stated that the OIA is on schedule to complete the 2009 Audit Plan with the final report to be issued by the end of the first quarter.

The update stated that the OIA is continuing to make progress in developing a sustainable internal audit department for Citizens. The OIA has completed the OIA Standard Operating Procedure Handbook and Corporate Internal Audit Policy. The internal audit policy has been approved through the corporate approval process and was presented to the Audit Committee for review.

Ms. Bellows also reported that a request for proposal for independent review of the Quality Assurance Review has been submitted to four independent firms and that a final report is expected to be issued to the Committee in August.

Updated Charters for the OIA and the Committee were submitted for Committee approval.  Ms. Bellows reported that the only significant change to the Committee Charter was the addition of a section on Risk Management and that there were only minor revisions to the OIA Charter.

The Committee voted unanimously to approve both Charters.

Ms. Bellows also presented the OIA Annual Report, which is required by law and is also to be presented to the Citizens’ Board of Governors, Citizens’ Executive Director, the members of the Financial Services Commission, the President of the Senate and the Speaker of the House of Representatives.

The report concluded that Citizens management has made progress in managing growth and changes to build the needed infrastructure and operational processes to support the corporation.  However, development of the appropriate level of infrastructure is ongoing with a significant number of projects and operational changes in various stages of completion to ensure Citizens has the ability to continue to support its policyholders and catastrophe readiness.

Also, the report noted that since the OIA was not fully staffed the majority of the year and a considerable amount of its resources were used to build the department, the audit coverage that was completed in 2009 does not allow for a complete evaluation of the effectiveness of Citizens’ internal controls at this time.

The results of the audits and reviews performed during the year are summarized in the report but were not discussed in any detail. 

TellCitizens

The report also contained an update on the TellCitizens Reporting Program, a system for internal complaints that includes a toll-free hotline and a Web site.  TellCitizens is operated by an independent company that does not trace telephone calls or web reports, ensuring anonymity for complainants who choose not to provide their name and contact information.

The Office of Corporate Compliance, established in 2008, administers the TellCitizens program and investigates the complaints it receives.  No specific information was presented on the number, nature or outcome of complaints.  The report states that TellCitizens started in June of 2008 and it is too soon to provide a good data analysis.

2009 Financial Statement

Chief Financial Officer Sharon Binnun presented the unaudited financial report for the year ending December 31, 2009.  She said that the financial statement was being audited by an independent auditor and an audited statement should be available by mid April.

As a result of the efforts to depopulate Citizens, the number of policies is down 20 percent to 1.1 million and premiums collected are down 21 percent to $2.2 million. Net income was $792 million.  Citizens has a $4 billion surplus on hand to pay claims and another $8.2 billion invested in short-term securities if needed.

The Committee’s independent auditor reported that an audited financial statement will be completed by April 15.

Risk Management

Staff also told the Committee that scoring and mapping was underway for a Risk Management update requested by the Committee.

To view the meeting materials, click here.   (Note, the materials are posted under the listing of the Board of Governors March 18 meeting with the materials from other committee meetings.)

 

Should you have any questions or comments, please contact Colodny Fass.

 

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