THE CAPITAL, TALLAHASSEE, June 14, 2012 -
Citizens Property Insurance Corp. board members on Wednesday tapped a private sector CEO to lead the state-backed insurer as it tries to relinquish its role as the state's largest property insurer.
Following a national search and a day after the top five candidates were interviewed by a presidential search committee, the full board unanimously chose Barry Gilway, president and CEO of Mattei Insurance Services, a Seattle based commercial insurance company, to take over Citizens, which now handles nearly 1.5 million policies and faces more than $500 billion in potential risk.
Gilway was chosen over Glenn Pomeroy, the CEO of the California Earthquake Authority, which handles 823,000 policies paying $592 million in premiums in the earthquake prone state. Pomeroy has been in that position since 2008. Pomeroy, the brother of former Congressman Earl Pomeroy, is also a former president of the National Association of Insurance Commissioners.
Interim president Tom Grady, who has run Citizens since Scott Wallace resigned in March, was not among the final slate of candidates. A motion to include the former state House member from the group to be considered by the full board failed to gain support of the search committee, with Citizens Chairman Carlos Lacasa saying he wanted to limit the list to the top two finalists, who stood out from the pack.
During an hour-long interview, Gilway told board members his experience with the insurance industry as well as downsizing provided a skill set that fits with Citizens' declared mission to reduce its ranks and turn over customers to private insurers.
During his career, Gilway oversaw the restructuring of Zurich North American/Canada operations, a remedial effort that required reducing company expenses and included a staff reduction from 2,500 employees to 1,500 employees.
Pomeroy, in contrast, had much more public service experience, including stints as a North Dakota Insurance Commissioner and state representative.
Gilway and Pomeroy were chosen earlier Wednesday from a pool of five finalists interviewed Tuesday by a search committee following a national search conducted by executive search firm Heidrick and Struggles.
Gilway's private sector background during retrenching times appeared to impress several board members, who pointed to Citizens' goal of reducing its policy count and turning over more customers to private insurers.
Board member Don Glisson said all candidates brought experience in handling risk, but Gilway's private sector resume, which included both building companies and shrinking them, was "unique."
"What struck me about Mr. Gilway was Mr. Gilway has gone through many instances where he probably had to pay significant consequences if he were to mishandle risk," Glisson said. "There is fundamental difference between handling risk in the public sector and handling risk in the public sector."
"For me, Barry's experience in the industry on the private side brings an immeasurable contribution to our efforts to depopulate," said Citizens' Chairman Carlos Lacasa said. "..To me, that was the single most important factor."
Saying he was unable to give detailed responses over what specific actions he would recommend, Gilway said he supports the general concept of increasing Citizens' rates on new policies above a statutory 10 percent premium cap now in place on existing policies.
The board's interest in raising rates has raised concerns among some legislators and state leaders, who worry those new policyholders will find it increasingly difficult to live on the coast.
Gilway said to raise rates to actuarially sound levels too rapidly would destroy the construction and real estate sectors of Florida's economy. That said, the rates have to go up.
"No company will come into the marketplace unless they have some level of comfort that they can earn a reasonable return on capital for their investors," Gilway said. "…The attraction has to be rates and getting appropriate rates to a level, frankly, where we can attract private industry."
On reinsurance, Gilway said the state has to look more closely at the global reinsurance market to transfer more its risk to a larger pool of investors.
"There is an incredible amount of talent in the industry relative to reinsurance," Gilway said.
Players in the property insurance market were cordial Wednesday following Gilway's approval.
“We are hopeful that Mr. Gilway will work with consumer advocates to implement balanced, responsible policies and shun the political motivations that have threatened both policyholders and our delicate housing recovery,” said Sean Shaw, a former Florida insurance consumer advocate whose law firm now represents homeowners in disputes. “We are ready to sit down and finally have the adult conversation that Floridians deserve.”