Rick Scott to name Jimmy Patronis CFO on Monday

Tampa Bay Times

Florida Gov. Rick Scott is turning to a long-time political ally and former north Florida legislator to take over one of the top elected jobs in state government.

Scott on Monday will announce he’s appointing Republican Jimmy Patronis to replace Jeff Atwater as chief financial officer. Atwater, who was first elected to the post in 2010, is resigning from the job before his term is over to become a vice president at Florida Atlantic University. Patronis, who helped his family run a well-known restaurant in Panama City, currently sits on the state panel that regulates utilities. He was a member of the Florida Legislature for eight years before Scott appointed him to the Public Service Commission.

“As a small business owner, Jimmy has been a successful job creator and has helped grow Panama City’s economy,” Scott said in a statement Sunday. “I know that he will bring his wealth of private sector experience with him to Tallahassee.”

By turning to Patronis, Scott tapped someone who is expected to be a strong supporter of the governor. Patronis, 45, backed Scott during his initial run for governor seven years ago when many in the GOP establishment were supporting then-Attorney General Bill McCollum in the primary.

Patronis in a statement said he was “honored” by the appointment.

“As Florida’s next CFO, I want Florida to be the place where government does its job fairly and predictably so workers can find great jobs at great businesses,” Patronis said.

This is one of the most high-profile appointments Scott has had since he first took office in 2011. It’s rare for a sitting governor to have a chance to appoint someone to one of Florida’s three elected Cabinet positions. The other Cabinet posts are attorney general and agriculture commissioner.

Several names have been floated with the chief financial officer position since Atwater announced he was leaving. Jacksonville Mayor Lenny Curry was seen as a top candidate, but he decided against seeking the job. Joe Gruters, a state legislator from Sarasota who helped run President Donald Trump’s campaign in Florida, also told the governor he was interested.

A big question is whether Patronis will be able to run for the job in 2018 with no other Republican opposition. Former State Sen. Jeremy Ring, a former executive at Yahoo and a Democrat, has already started running for the job.

Scott is announcing the appointment at Captain Anderson’s, the restaurant run by the Patronis family for 50 years. Patronis will be officially sworn into the job on Friday. Florida’s chief financial officer is elected statewide and is a member of the state Cabinet that oversees several key agencies.

The chief financial officer, who is also the state fire marshal, plays a key role in helping regulate the financial and insurance industries and also functions as the state’s treasurer. The job pays nearly $129,000 a year.

Atwater, a former banker who had been president of the Florida Senate prior to his election as chief financial officer, usually worked in tandem with Scott. But the two clashed last year over who should become the state’s insurance commissioner. Under state law, both must agree on the appointment.

Citizens Insurance seeks more post-storm adjuster commitments

Sun Sentinel

Disappointed with the turnout of independent insurance adjusters before Hurricane Matthew last October and to a new contract solicitation this month, Citizens Property Insurance Corp. is trying again to secure the number of adjusters it believes it will need after the next hurricane strikes.

The state-run “insurer of last resort,” which has 223,000 policies in Broward, Palm Beach and Miami-Dade counties, sent out another solicitation on Wednesday in hopes of increasing the number of adjusters available for damage assessments after hurricanes or other catastrophes.

The company realized last fall that it had a problem.

As Hurricane Matthew approached South Florida last October, Citizens turned to four firms that were contracted to provide 2,441 adjusters on demand. Estimating Matthew would generate 75,000 damage claims, Citizens asked the companies to deploy 624 adjusters but got just 279.

As it turned out, Matthew largely spared South Florida. Later, Jay Adams, Citizens’ chief claims officer, acknowledged the adjuster shortfall would have caused the company serious problems if 75,000 claims came in as expected.

Citizens terminated its contracts with the four adjuster firms and in April solicited new contracts, hoping to secure commitments for 1,500 adjusters. Instead, it got commitments from 12 companies for 496 adjusters, forcing the company to develop a strategy to deploy its entire adjuster force in case of a catastrophe. Before contracts with the 12 new firms take effect Aug. 1, Citizens will have get through the next five weeks of the hurricane season relying on four firms that remain active under a 2015 contract.

The new solicitation, sent to 11,000 firms across the U.S., again seeks 1,500 adjusters, Citizens spokesman Michael Peltier said. The deadline to respond is July 13, and a Citizens evaluation committee is scheduled to meet Aug. 2 to select firms to recommend for contracts.

Citizens’ Board of Governors would have to approve contracts, possibly in a conference call, before any new adjusters could be deployed, Peltier said.

Having a sufficient number of adjusters is a vital component of an insurer’s ability to respond to policyholders. After Hurricane Wilma caused widespread damage in 2005, Citizens deployed nearly 2,000 adjusters to assess more than 123,000 claims over the following month, according to a published report. Still, customers filed hundreds of complaints about delays getting adjusters to their properties.

During Tuesday’s Board of Governors meeting, Adams said he planned to ask adjustment firms why they failed to bid on the April contract.

One of Adams’ staff members reached out to several adjusters by phone, Peltier said.

“One recurring theme is that vendors are concerned that they cannot meet the minimum commitment during a [catastrophe event]” and did not want to be subject to fines by Citizens, Peltier said. “This again points to a shortage of [catastrophe] adjusters in the workplace.”

Amid nearly a decade without a hurricane making landfall in Florida, the number of state-certified independent adjusters declined from 29,022 in 2011 to 11,948 currently, according to state data.

Another issue is that national adjustment firms that bid on catastrophe contracts also want to be assigned enough day-to-day, non-catastrophe claims to justify keeping a core number of adjusters in the state, he said.

But because Citizens claims counts have declined as two-thirds of the company’s policies were absorbed by private-market insurers over the past five years, adjuster firms know Citizens cannot feed them enough day-to-day work to justify committing to Citizens’ desired numbers of catastrophe adjusters, Peltier said.

Don’t delay any longer in cracking down on insurance abuse

Orlando Sentinel

When board members of the state’s largest property insurer unanimously endorsed a proposed set of premium hikes for 2018 averaging 5.3 percent at a meeting this week in Maitland, they could have been forgiven for adding, “We told you so.”

Citizens Property Insurance Corp., the insurer of last resort in Florida, began warning legislators at least a couple of years ago that escalating abuse of a state law on insurance reimbursements would push up its costs and force it to increase its rates. Citizens pumped up the volume on those warnings before this year’s legislative session. Still, House and Senate members failed to agree on a fix.

“We’re not sitting back and saying, ‘Hey, we’ll wait … and maybe we can get something done from a legislative standpoint next year,’” Citizens President and CEO Barry Gilway said. “We can’t wait.”

The law at issue allows policyholders seeking home repairs to assign the right to collect reimbursement from their insurers to the contractors they hire. There are good intentions behind this system, known as assignment of benefits: to help homeowners get repairs done faster and spare them out-of-pocket costs. But some contractors — especially those in South Florida handling claims for water damage from leaking pipes or appliances — have been hiring lawyers and suing insurers if their claims are rejected or reduced. State figures show the number of AOB lawsuits skyrocketed from 405 in 2006 to more than 28,000 in 2016.

Gilway told the Miami Herald that it costs Citizens five times as much to settle a claim through litigation, and half the company’s water claims in South Florida are now litigated. AOB lawsuits have driven the price of an average Citizens’ multi-peril homeowner policy from $367 in 2011 to a projected $2,083 this year, according to the company.

Citizens policyholders in Central Florida might question whether they have a dog in this fight. The company’s rate proposal for multi-peril homeowner policies in Orange County calls for a decrease of 3.2 percent. Seminole would see a drop of 7.7 percent; Lake, a decrease of 6.1 percent; and Osceola, a dip of 0.8 percent.

But Citizens leaders warn that AOB abuse has been spreading from South Florida into the Tampa and Orlando areas. So Miami-Dade’s misery could turn into Orange’s ordeal in the future with more delay from the Legislature.

As the largest property insurer in Florida, Citizens is a bellwether for the industry in the state. Earlier this year, an Ohio firm that rates the financial health of insurance companies announced it would downgrade at least 10 other property insurers in Florida because of their losses from nonweather-related water-damage claims.

Higher property insurance costs will hurt the state’s economy, and push the cost of housing out of reach for more low- and moderate-income Floridians. It’s no wonder other state leaders are concerned.

Chief Financial Officer Jeff Atwater, who is leaving office at the end of the month, took time after his last Cabinet meeting to urge legislators to deal with AOB abuse. “We never want to harm any individual out there in getting the absolute quick and full coverage they deserve on a claim, but the majority of this right now is costing the honest Floridian tremendous pain,” Atwater said.

State Insurance Commissioner David Altmaier warned the Cabinet that growing AOB abuse would lead in a best-case scenario to higher insurance premiums, and in a worst-case scenario to insurers withdrawing from some parts of the state.

Citizens has asked Altmaier’s office to approve a series of changes in the company’s coverage rules to encourage policyholders to avoid litigation. But Gilway said the changes would only be “stopgap measures” until the Legislature acts.

During this year’s session, the House passed a bill to make it harder for policyholders to assign benefits and to limit lawyers’ fees. The Senate balked because the legislation didn’t include mandatory rate reductions for insurers, which is a reasonable expectation for a bill that would bring down their costs.

The two chambers could have bridged their differences, if only legislative leaders and Gov. Rick Scott had put the same priority in breaking this impasse as others, such as the one over spending on economic development and tourism marketing. Surely it would have been possible to pass a bill that targeted AOB abuse without unduly infringing on the rights of policyholders.

Instead, the cost of insurance for many Florida homeowners will climb again in 2018. Legislators have long since run out of good excuses for wasting another year.

Tom Grady asked Gov. Scott to take him off shortlist for Florida CFO

Naples Daily News

Tom Grady said he has asked Gov. Rick Scott to take him off the shortlist of three candidates to be appointed chief financial officer because he is having too much fun making money.

Grady said his financial consulting through Grady Law increased “dramatically” after Trump was elected in November.

He since has invested in money management company Naples Global Adviser and two Silicon Valley startups. The startups are an online human resources company called Rippling and a job-networking business called Door of Clubs. A Naples businessman and lawyer, Grady is a minority stakeholder in all of the enterprises.

Florida CFO Jeff Atwater plans to leave the position at the end of the month to take a job at Florida Atlantic University.

Grady said his uptick in business ventures were in part attributable to a better economic climate under Trump. He described Trump as less “punitive” with the financial industry than the Obama administration. The day after the election, Grady said, “animal spirits” were unleashed, referring to the economic term coined by John Maynard Keynes to describe the human emotion behind consumer confidence. The spirits “are creating all kinds of activity,” he said.

Trump campaigned on a promise to “dismantle” the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed after the economic recession to regulate banking practices.

In February, he signed two directives rolling back key financial regulations of the Obama years, including restrictions on Wall Street banks and on financial advisers who sell clients expensive financial products with higher commissions.

On June 13, the Department of the Treasury issued a detailed blueprint for proposed changes to Dodd-Frank. It included restructuring and weakening the Consumer Financial Protection Bureau, which helped re-examine Wall Street trading and mortgage rules.

John Tupps of the governor’s office said Grady was “strongly considered” for chief financial officer but didn’t comment on the other candidates.

“Tom has done a great job advocating for students on the Board of Education and he has been a great friend to the governor and first lady,” Tupps said. “The governor has not yet made a decision regarding the CFO.”

Scott appointed Grady to head Citizens Property Insurance in 2012.

In addition, Grady said he no longer is interested in running for CFO in 2018 or attorney general now that he is happy with his business prospects. He recently had flirted with running for both positions. He also vied for Florida Gulf Coast University’s president position earlier this year, but he was not among the finalists.

“So I’m creating jobs instead of taking jobs,” Grady said. “And I’m having fun.”

Grady is considering investing in Starsky Robotics, a startup that focuses on self-driving semi-trucks. A longtime advocate for Scott’s economic incentive program, Enterprise Florida, Grady said he would invest in the company if it would come to the state.

“Every time I go there, I say the tax rate in California is 15 percent. It’s zero in Florida. They’re not unaware, but they don’t think about it,” Grady said.