SUMMARY/MINUTES OF THE BOARD OF GOVERNORS MEETING Thursday, April 26, 2012

Transcription

1 CITIZENS PROPERTY INSURANCE CORPORATION SUMMARY/MINUTES OF THE BOARD OF GOVERNORS MEETING Thursday, The Board of Governors (Board) of Citizens Property Insurance Corporation (Citizens) convened at the Tampa Marriott Airport Hotel in Tampa, FL on Thursday, at 9:00 a.m. (EDT). The following members of the Board were present: Carlos Lacasa, Chairman Nancy Baily, Vice Chairperson Carol Everhart Chris Gartner Don Glisson Tom Lynch John Rollins John Wortman The following Citizens staff members were present: Tom Grady Sharon Binnun Susanne Murphy Yong Gilroy Curt Overpeck Dan Sumner Kelly Booten Barbara Walker John Fox Jacob Prewitt Christine Turner Ashburn The following Citizens staff members were present telephonically: March Fisher Tony Conticello The following people were present: Mike Fasano Gino Casanova John Forney Belinda Miller Nan Brunson Kevin Trope Florida Senate Senator Mike Fasano s Office Raymond James Office of Insurance Regulation MacNeill Group MacNeill Group

2 Kapil Bhatia Raymond James Nathaniel Johnson JP Morgan Jeff H Brian S Florida Banks David Abrams Jefferies Junious Brown Nabors Giblin and Nickerson J.W. Howard Morgan Stanley Coleman Cordell Bank of America/Merrill Lynch Matt Williams Bank of America/Merrill Lynch Dave Newel FAIA Phil Zelman PIA of Florida Duane Draper Bryant Miller Olive Sam Queirolo Bryant Miller Olive Doug Draper RBC Capital Markets Albert del Castillo Squire Sanders Dempsey Vladamir Mouz Regions Bank G.J. Hernandez Clifton Larson Allen LLP Scott Fost Guy Carpenter Jeremy Ginter Willis Re Ken Vincent Willis Re Jeff Eisler FIU Greg Rokey Watson Realty Corp/Florida Realtors L. Stefano Towers Watson Nadine Mentor Ramirez and Co. Cynthia Heltcher Alley Rehbaum and Capes Adam Sabest Alley Rehbaun and Capes Nancy Stewart FMO Richard Torra Mark Weinburg Citi Amy Lettelleir Loop Capital Rick D Paul Davis Restoration Ken Carman All Claims Insurance Repairs, Inc. Henry Reyes JP Morgan Tom Gallagher Lisa Miller George Smith Bryant Miller Olive Call Meeting to Order Chairperson Carlos Lacasa called to order the Board of Governors meeting. Roll of the committee was taken. Chairperson Lacasa, Nancy Baily, Carol Everhart, Chris Gardner, Don Glisson, Tom Lynch, John Rollins, and John Wortmam were present. Chairman Lacasa introduced the new Board member, Don Glisson. Mr. Glisson will take Nancy Baily s place on the Consumer Services Committee. Chairman Lacas also appointed Mr. Citizens Property Insurance Corporation Board of Governors 2

3 Glisson to be a part of the Claims Committee and the Information Systems Advisory Committee (ISAC). Carol Everhart made the motion to nominate Nancy Baily as Vice Chairperson of the Board of Governors. Chris Gardner seconded the motion. All were in favor. Motion carried. 1. Chairman s Update Chairman Lacasa briefed the Board on the reinsurance travels to Bermuda and London. He imparted to the Board that the primary concerns of the reinsurers has been about Citizens operation, the quality of underwriting, the quality of infrastructure to handle massive amount of claims after an event, and the quality of the data to underwrite. However, he feels that Citizens has arrived and he thanked all parties involved with making the reinsurance meetings happen. 2. Approval of Prior Meetings Minutes A motion was made and seconded to approve the February 23, 2012 minutes. All were in favor of John Rollin s recommended change to replace the word breach with reach on page 24 and to replace the word county with accounting on page 28. Motion carried. A motion was made and seconded to approve the March 5, 2012 minutes. The motion was seconded. All were in favor. Motion carried. A motion was made and seconded to approve the March 12, 2012 minutes. The motion was seconded. All were in favor. Motion carried. 3. President Search Committee Update Chairman Lacasa reported a status update on the search for a president. He noted that Hedrick and Struggles raised the question about the compensation structure: They want to know if our compensation structure included the possibility of a base pay and a bonus as you would typically see in a private company. Chairman Lacasa explained that Citizens did not have a bonus structure at this time but is open minded about exploring how to compensate executives. He noted that Vice Chair Baily volunteered to head a project to review how Citizens compensates executives and benefits. Vice Chair Baily added that the project extends beyond executives: We are looking at all employees health benefits, base salaries, and merit increase potential. It s a broad project looking at everything.. 4. President s Report Tom Grady began the President s Report stating that the Board tasked him to return to the Board four to six weeks after his appointment as interim president to discuss his assessment of the Florida insurance and Citizens landscape. He observed the importance of staff to have a clear sense of direction and that the Board has begun this task: You ve been clear that the Citizens Property Insurance Corporation Board of Governors 3

4 agenda includes shrinking Citizens and shrinking the exposure to the state. He noted that there are vacancies in the company and yet there is a desire to shrink financial risks. He stated that trends developed that caused the private sector to be very wary of doing business in Florida (which makes depopulation difficult). Mr. Grady observed that that the statute requires that there be an insuring an orderly market for property insurance, yet Citizens already has 50% of the market share in many counties. Trends show that Citizens will continue to grow, which indicated to Mr. Grady that the market is not orderly. Mr. Grady remarked that Citizens insurance is supposed to be affordable by law, yet, while the housing prices have decreased, insurance prices still increase. Mr. Grady noted the discrepancies between the longer waiting period to retrieve correct premiums from policyholders were not supposed to receive Wind Mitigation Credits originally and the shorter waiting period to provide correct credits to those are supposed to receive credits. Mr. Grady discussed the discrepancies between Citizen s 10% glide path and the Office of Insurance Regulation s (OIR) 10% glide path: As a residual market, we re handicapped. He observed that the poorest in Florida are subsidizing the wealthiest in Florida with regard to insurance. He noted his surprise that there is a financial loss without any major catastrophic (CAT) storms in the Personal Lines Account (PLA): There is a $450 million loss contributable to sinkhole activity. Mr. Grady discussed that the IT Department needs a third party monitor in the Core Process. Guidewire and Capp Gemini are doing their parts as vendors but that they need oversight. He noted that staff is feeling stressed because they are being pulled in different directions with implementing Core and running daily operations. Mr. Grady then moved into a discussion about where Citizens needs to go, and he concurred with the Board s view which is that Citizens needs to shrink in order to shrink risk. He stated that he believed the new mission is to insure the home or business when no one else will, meaning that Citizens needs to be the residual market and the insurer of last resort rather than as the first choice Legislative Report Christine Turner Ashburn updated the Board on the results of the 2012 Legislative Session. House Bill 1127 (HB 1127) by Representative Ben Albritton was a bill that Citizens supported; it is a bill that eliminated eliminating the regular assessment for the PLA and Commercial Lines Account (CLA) and reducing the regular assessment in the Coastal Account from 6:5 to 2%. House Bill 1101 (HB 1101) requires Citizens to offer HO8 and to work on classification of the recent Actual Cash Value (ACV) relating to alternative methods for determining a replacement cost when Citizens writes new business. With regard to assessments, John Rollins expressed his gratitude that Ms. Turner Ashburn, staff and elected officials in finding a win wind solution to duce the barriers to new capital and the stress to consumers immediately after a hurricane. Mr. Rollins did inquire about HB 1101, which deals with replacement cost valuation issues: The only concern I have with the statute is that it seems to require Citizens to use the lowest value on a list of three. Ms. Turner Ashburn responded that the intention of this law is not to preclude an agent and a homeowner to select one of the higher values. The goal is to make sure Citizens is aware that if a homeowner and an agent come back with a lower value as long as it is done within the Citizens Property Insurance Corporation Board of Governors 4

5 acceptable practices of the statute that we cannot deny that lower value as long as it meets these standards. 6. CFO s Report Chris Gardner made motion that the Board adopts the Bond Resolution that is outlined in the materials and to approve the action item with regard to the pre event financing vendors. By the adoption of the Bond Resolution, it delegates authority to the Chairman to move forward with the team, myself, and General Counsel to bring a transaction to market and to price it. The day of the pricing of the Bonds, there would be a Board call in terms of pricing of the bonds and the terms of the maturities. This Bond Resolution is for the PLA/CLA 2012A Bonds. John Wortman seconded the motion. Chairman Lacasa, Vice Chair Baily, Carol Everhart, Chris Gardner, Don Glisson, Tom Lynch, John Rollins, and John Wortman voted for the motion. Motion carried. Tom Lynch made the motion to approve the list of vendors that would be part of the Bond Resolution transaction. The motion was seconded. All were in favor. Motion carried. Chairman Lacasa requested that Sharon Binnun address the net income after all of the risk is transferred. Ms. Binnun responded that after the risk transfer, Citizens is estimated to end up with about $224.5 million of net income. John Wortman suggested that when the budget is revised, staff needs to provide a budget with no storm, a moderate storm, and a large storm. Ms. Binnun reviewed the financial statements. Surplus grew by $450 million to about $5.6 billion. 94% of the assets are cash and invested assets. Citizens does not need new liquidity in the Coastal Account due to relative stability. Citizens does need liquidity in the PLA and Commercial Lines Account (CLA) due to growth in the PLA. Ms. Binnun also explained that while policy count has increased by 43%, Citizens headcount grew only 10%. Outsourcing has helped with the workload. Mr. Rollins inquired about whether the surplus will continue to grow. Ms. Binnun explained that in the PLA, there has been a loss of $19 million, mostly due to sinkhole losses. If the peril sinkhole was not covered by Citizens, net income would have been $457 million. Mr. Rollins expressed his concern that the surplus is used to protect policyholders and yet the surplus in the PLA is decreasing. Ms. Binnun then went into a presentation of the revised operating budget as requested by Mr. Grady. The revised budget considered a reduction in the policy count and exposure based on several assumptions that Ms. Binnun explained. In this revised budget, the policies in force (PIF) go down by 678,000 policies. The CLA would reduce by 50%. The multi peril personal residential policies in the Coastal Account would go down by 15%. The sinkhole region policies in the PLA would go down 60%. Non Coastal Accounts residential multi peril accounts would go down by 445,000 policies. Mobile home policies would also decrease by 11,000 Citizens Property Insurance Corporation Board of Governors 5

6 policies. These are very optimistic assumptions that this would happen in the next 18 months. Chairman Lacasa inquired about the purpose of the budget revision and the impact it would have on the financing. Ms. Binnun responded that she does not think that changing the budget would have an adverse impact on Citizens financing. Chris Gardner commented that a budget is a predicting tool and that it needs to focus on building a capable infrastructure that supports the growth that Citizens finds itself in despite the desire to shrink: We haven t had a storm in a couple years, and we need to make sure that as we grow that our resources can sustain our day to day operations as we as CAT situations. Tom Lynch commented that Citizens needs to work with the legislature, OIR, etc. much closer in trying to get what needs to be accomplished. Vice Chair Baily observed that the budget information helps with potential targets; however, she recommended to keep the current budget that reflected the assumptions from October. Mr. Rollins wondered if it is possible to take advantage of the work that s already been done to adopt something that represents baselines based on the knowns. Ms. Binnun suggested that staff could complete the June 30 th financials and then provide a package to the Board that includes a projection for the year. Chairman Lacasa agreed. Mr. Lynch requested that information be provided if the PIF count went down by 5% and then 10%. He also requested to see what would happen if Citizens went back to writing wind only. Ms. Binnun reported on an emergency procurement related to services associated with a wind mitigation study. The study will be for both commercial and personal residential at the same time. Results are expected to come in before the July rate filing. The cost of the procurement is under $50,000 and it is with AIR. Ms. Everhart expressed that the study needs to be done and that it might help with depopulation. Mr. Lynch stated his concern that emergency procurements tends to get Citizens in trouble. Chairman Lacasa stated that he did approve this emergency procurement. 7. Chief of Internal Audit s Report A motion was made and John Wortman seconded the motion to ratify Joe Martin as the Chief of Internal Audit. All were in favor. Motion carried. [Tom Lynch departed the meeting for a flight. Board took a break.] John Fox updated the Board on the April 25 th Audit Committee Meeting. The Office of Internal Audit (OIA) provided an update on key activities, including closed audits, current audits, analytics on the re inspection project, the Audit Dashboard, and the Core audit. Chairman Lacasa asked if there were any red flags that the Board needed to be concerned about, and Mr. Fox responded no. 8. Chief Insurance Officer s Report a. Actuarial and Underwriting Committee (A&U) Report Citizens Property Insurance Corporation Board of Governors 6

7 Mr. Gilroy presented an update on the April 12 th A&U Meeting, which included discussion on a phase in approach for the Re Underwriting Program for Hillsborough County, Hernando County, Pasco County, and Pinellas County. There will be the implementation of the H08 policy with ACV which will be effective January 1, Staff also proposed increasing the minimum deductible for all of the personal multi peril policies. Mr. Wortman stated that the Board might want to consider implementing actuarially sound rates for new business and the glide path for renewal business. He also thought that there might be some sort of compromise between the actuarially sound need and the glide path. Dan Sumner reported on Ms. Everhart s and Mr. Lynch s Form 8A expressing their voting conflict. Mr. Sumner did not read Mr. Lynch s Form 8A, since he had to leave the meeting. Mr. Sumner did read Ms. Everhart s recusal: I, Carol Everhart, hereby disclose on 4/26/2012 a measure will come before my agency which will inure to my special private gain or loss. On the issue of uncapping Citizens rates, due to higher rates on new business placed with Citizens, as I am a licensed agent who derives my livelihood on commissions, I wish to recuse myself from this vote. 1 Vice Chair Baily made the motion to approve the A&U s recommendation to implement the H08 policy with Actual Cost Value (ACV) which will be effective January 1, Carol Everhart seconded the motion. All were in favor. Motion carried. John Wortman made the motion to increase the minimum deductible for all perils of the personal lines multi peril policies. Vice Chair Baily seconded the motion. be. The Board discussed the issue of not knowing what the actual deductible increases will John Wortman made the motion to authorize staff to look at increasing the minimum deductibles for all perils of the personal lines multi peril policies and to bring it back before the A&U and Board. Vice Chair Baily seconded the motion. All were in favor. Motion carried. John Wortman made the motion to authorize staff to look at charging up to actuarially sound rates to new business and to do an analysis considering the H08 and possible coverage alternatives for commercial lines. The motion was seconded. Chairman Lacasa read from a letter from the Chief Financial Officer of the state Jeff Atwater regarding the above said motion: While I understand and support the efforts to facilitate the depopulation of Citizens and a return to a competitive private marketplace for Floridians, the removal of the cap for new business is beyond the scope of legislative intent. As the President of the Senate during the debate and deliberation of the cap, it was not contemplated that the statute would be interpreted to employ selective application that would result in two sets of rates being applied to the policyholders of Citizens. I would urge the Board to carefully consider the policy implications of the decision before moving forward. 1 Form 8A attached for both Governors Carol Everhart and Tom Lynch. Citizens Property Insurance Corporation Board of Governors 7

8 Chairman Lacasa noted that the same thoughts were expressed in the letter from the Office of Insurance Advocates. Mr. Rollins stated that it will take all constituents (e.g., legislature, OIR, the press, etc.) and Citizens to work together to get out of the insurance crisis and rebuild the safety net. Mr. Rollins noted that it was not long ago when private insurers competed aggressively but then Citizens became a mortal threat to that market and crowded out that market. Citizens has 159 rating territories. There is a rate need that exceeds the glide path based on last year s actuarial analysis. There is a rate need beyond the 10% glide path in about 98 of those territories. Another 50 or so are near an actuarial level now. Mr. Rollins also noted that whatever Citizens decides with its rates that there are checks and balances built into the process to help ensure an appropriate rate. Senator Mike Fasano stated the following: Thank you for the opportunity to speak with you. I truly appreciate the time and job you have. I would ask that each and every one of you be an independently minded people. I understand the pressure, especially from Tallahassee and people who want to depopulate Citizens. In my opinion, the way it is being suggested today, it will have detrimental effect on our housing industry. To think that there would be uncapped rates for those who want to purchase a home or for someone who receives a nonrenewal notice from a private insurer and will now have to pay a higher rate through Citizens... now for some of those in Tallahassee who don t get it, Citizens is the only game in town for the 1.5 million policyholders. Do you think people are knocking on the door saying, Citizens, please take me! They re not. They are going into Citizens because they have no other choice. Mr. Rollins, we put a glide path in place. That was decided by the legislature because there were some in the legislature and some in other parts of the industry that said Citizens is not charging enough or the liability that Citizens has is too much. It was decided by the legislature and signed by the Governor that there would be a 10% glide path approved by the OIR. Now you re suggesting that the law that was passed did not take into account new business. I would suggest to you that your staff is wrong. In fact, the letter that Chairman Lacasa read is absolutely correct from CFO Atwater. The bottom line is that the intent of the legislation that we passed did take into account all policies. In fact, if your staff is now going to do a study, I would ask that they go back in time and get the verbatim. Look at what was talked about and debated on the House and Senate floors. Never once did it talk about new policies. This legislation that was passed and signed into law dealt with every policy new and existing ones. No where will you find in the verbatim, the debate, and the comments that someone suggested that this would only deal with existing policies. I have so much I d like to tell you today. My office has become the agent of last resort. We get a weekly average of a dozen plus s, letters, and calls from people throughout the state who are absolutely frustrated. They may read Citizens Property Insurance Corporation Board of Governors 8

9 articles and see on TV that there is a proposal in front of this Board to start uncapping rates for not just homebuyers but also for those who may get nonrenewal notices from private carriers. I ve got people in my district with homes who have valuations from Citizens that are three times higher than what they would dream to sell their homes for. You have a tough job. We would all love to see the depopulation of Citizens. But guess what? The private markets are not coming back into this area. They are not coming back! Do you know why they are not writing in Hernando and Pinellas Counties? Because of sinkhole claims! So, we changed the law. We now allow Citizens and the private companies to offer policies that offer full sinkhole coverage except for the catastrophic ground cover collapse. Over 70% of the policies in Hernando County do not have sinkhole coverage. Guess what? How many private companies said that they ll start taking policies? Zero! None! You can get all the rhetoric that you want in Tallahassee. But, guess what? The private companies are not coming back to some parts of this state. Study or no study, the bottom line is that if this is pushed and approved, you ll hurt our economy. Our housing industry in this state is already hurt. This will be a final nail in the housing industry. I have spoken to the housing market and to the agents. The agents and I don t always get along but the agents on this issue we do get along. I ve seen Ms. Everhart over there who had to relinquish herself from this vote. She understands it and so does every other agent and realtor in this state. This will have a detrimental effect in adding to the housing crisis we already have. Don t even consider a study. Allow the legislature to deal with it. They already have. I would ask you, please, leave the people alone who are struggling today. I understand you want to depopulate Citizens, but sometimes the way you go about it and doing away with certain coverage like carports for mobile homes and screened porches... yet, their premiums don t fall and their coverage does. People are frustrated, confused, and absolutely sick of what they continue to hear, see, and read in regard to what is next on the horizon for premium. I appreciate that you are looking at a study versus moving forward with it aggressively. Don t even deal with it. The legislature was adamant and clear that it takes into every account every policy. The move that the House wanted was a 20% increase. The Senate wanted a 10%. Many of us in the Senate would not agree to anything higher. There is your glide path. It s already in effect. No more increases, please. Leave them alone. John Rollins made an amendment to the above said motion that is on the table to do direct staff to do three things: to continue to study the actuarial analysis and the rate gaps both on an actuarially sound basis for new business and rates that would be limited by the glide path for renewal business and to develop rates for filing that would contain the actuarial indication of a sound rate in each territory and a lawful renewal by the glide path rate Citizens Property Insurance Corporation Board of Governors 9

10 (just as they do now with the understanding of the possibly that there is a filing rates for new business is distinct). to conduct an ongoing study of the feasibility internally of installing distinct rate schedules for new and renewal business, which would include the impact on IT, Underwriting, and Consumer Services. to engage the OIR early on this issue along with legislatures and staff in discussions to illicit their specifics regarding their stance and guidance regarding this issue. John Wortman seconded the motion. Vice Chair Baily requested for Mr. Sumner to provide a legal interpretation of the legislation s intent regarding the glide path for new business and renewal business. The Board deliberated on the interpretation. Carol Everhart recused herself from the vote. 2 Motion carried. All were in favor of the motion. Chairman Lacasa asked that the staff look at the opt out provision of the law. A motion was made to approve staff s implementation of the Re Underwriting Program for sinkhole coverage, starting with Hillsborough County and phasing in the other counties. The motion was seconded. All were in favor. Motion carried. Carol Everhart made the motion to approve the A&U s recommendation of the revision to the prior Special Class Item position and authorization of staff to file appropriate rule changes with OIR. John Wortman seconded the motion. All were in favor. Motion carried. John Worman made the motion to approve the action item for amendment of the Xactware Solutions, Inc. Agreement for Replacement Cost Estimating Software. Carol Everhart seconded the motion. All were in favor of the motion. Motion carried. b. Claims Committee Report Vice Chair Baily briefed the Board on the Sinkhole Summit to look into solutions for solving the sinkhole issues. The two day summit included defense counsel firms, agents, Citizens staff members, engineers, independent adjusting (IA) firms, and her. There will be additional summits that are more specific to particular sinkhole needs. Chairman Lacasa asked about the forecast to come to the Board with some distinct potential resolutions. Mr. Gilroy responded that it is an ongoing discussion, but the Board can expect some future discussion somewhere between 90 to 120 days. Chairman Lacasa expressed the extreme importance to stop the bleeding with sinkholes. 2 See attached Form 8A. Citizens Property Insurance Corporation Board of Governors 10

11 A motion was made and seconded to approve the award to Acuity Management Solution as the Litigation Management Software provider and to authorize staff to make an appropriate or necessary action consistent with this action item. All were in favor. Motion carried. Vice Chair Baily mentioned that Lori Sanders was recognized by the Property Loss Research Bureaus at the 2012 annual conference as one of three recipients of Outstanding Claims Professionals of the Year. 9. Chief Administration Officer s Report Chairman Lacasa announced that Brian Squire, Chairman of the MAAC, has requested that the MAAC report be postponed to the next meeting given the time constraints. a. Consumer Services Committee Update Ms. Everhart provided a succinct report on the latest Consumer Services Committee Meeting. She emphasized the importance of the consumer and that the focus should be on the consumer. b. Depopulation Committee Update At the request of Mr. Gardner, Susanne Murphy provided a Depopulation Committee update. There will be a Depopulation Summit on June 1 st at the Grand Hyatt in Tampa from 9:00 to 1:00. All are invited. Mr. Wortman will be the facilitator. Vice Chair Baily made the motion to approve applying the elimination of the ceding commission payments retroactively to any assumption occurring during the Fourth Quarter of 2011 and forward. The motion was seconded. All were in favor. Motion carried. John Wortman made the motion to approve the Procurement Summary for Co Sourcing of Internal Audit Services. Carol Everhart seconded the motion. All were in favor. Motion carried. 10. Chief Information Officer s Report a. Information Systems Advisory Committee (ISAC) Report Mr. Rollins and Curt Overpeck provided an update on the April 7 th ISAC Meeting. Mr. Overpeck made a special note that while there was a recent survey of employees that raised the issue that a high percentage of IT employees were indifferent, his staff are highly engaged IT employees that demonstrate their commitment day in and day out. John Rollins made the motion to approve the Commercial Lines Multi Peril Policy System contract with Commercial Science Corporation (CSC). The motion was seconded. All were in favor. Motion carried. Citizens Property Insurance Corporation Board of Governors 11

12 John Rollins made the motion to approve the Technology Infrastructure (Hardware, Software and Services) consent agenda and to authorize staff to take appropriate actions required to purchase the requested goods and services for the total estimated amounts listed in the consent agenda. The estimated amounts by vendor are included to provide context as to the planned level of vendor goods and services to be procured. Amounts may vary, or alternate vendors who offer the same goods and services may be substituted, based upon the vendor offerings, performance, and cost. Carol Everhart seconded the motion. All were in favor of the motion. Motion carried. Kelly Booten provided an update on the Core and Guidewire implementation. The implementation is on target; however, staff is poised to review the timeline again to see if any adjustments need to be made. Ms. Booten highlighted that the implementation needs to reflect not only current business but what Citizens wants to do in the future. One of the emerging issues that staff has is the non Core impact and the resources required to do the non Core work on top of the work for Core: We have to adjust our schedule and come back with new timeline....i would have to say that the IT augmentation is solvable. What I find harder to solve is the business users that are critical to the decision making process and the product analysis and development that are necessary with the institutional knowledge of our products and with what we want to do. 11. Procurement Index Chairman Lacasa stated, I need a motion to extend the meeting. How long do we need on the appeal? Ms. Murphy stated, I d like to point out that both Sharon and I have additional action items that have not been discussed that we need Board approval that are in tab ten of the binder. There is no committee structure for these items. These items are for my group. Janitorial Services is a contract for about $132,000 for us to provide janitorial services to two of our buildings in Jacksonville. We ask that you approve a contract with Advanced Technology Management for the 3.5 year term for this contract. Carol Everhart made the motion to approve the expenditures for the award of services for Advanced Technology Management for janitorial services as set forth in the action item, and to authorize staff to take any appropriate or necessary action consistent with this action item. Motion was seconded. All were in favor. Motion carried. Ms. Murphy continued, the next item is Agent/Broker Services for Employee Benefits. This is a procurement to secure an agent of record to employee and execute a service for our employee benefits. The process was an issuance for a request for proposals (RFP), and we received a very robust response. This is an interesting procurement because for the first time we asked the respondents to provide both a commissioned based fee structure and a flat fee. Citizens Property Insurance Corporation Board of Governors 12

13 The recommended vendor with the highest score also had the best price for the serviced which will save us over $500,000 over the course of the contract, which begins in January. The vendor is Wells Fargo Insurance Services USA, Inc., which is our current broker of record. The current contract will continue in effect until January. It will be on the current commission agreement, and then in January, the new agreement will begin the flat fee services. The total contract amount for both types of services is a little over $700,000. A motion was made and seconded to approve the recommended award and resulting contract for the 2012 Agent/Broker Services for Employee Benefits to Wells Fargo Insurance Services USA, Inc. as set forth in the action item, and to authorize staff to take any appropriate or necessary action consistent with this action item. Ms. Everhart asked, for the fee rate, is that just for the health benefits or is it for all of the benefits? Ms. Murphy responded, everything. Vice Chair Baily, they will be beneficial in helping you evaluate the current benefits program. A vote was taken on the motion. All were in favor. Motion carried. Ms. Murphy continued, the next item is software for performance for recruitment management. This is a contract for about $410,000 estimated for the proposed contract term of three years with two on year renewal options for Taleo. The services that we need under this contract are to manage the performance evaluations that we perform on our employees using this software and to manage the applicants who apply to Citizens. The process involved an ITN that allowed respondents to give us one service or both services. A motion was made and seconded to approve the requested Taleo contract as set forth in the action item, and to authorize staff to take any appropriate or necessary action consistent with this action item. All were in favor. Motion carried. Ms. Murphy continued, the final one is for security guard services to add additional coverage at buildings in Tallahassee and Jacksonville. The recommended vendor is Giddens Security Corporation. We already have an ITN for this and we need to add the two sites to this existing contract. In the future, we ll try to make certain our contracts contemplate this so we don t have to come back to you. A motion was made and seconded to approve the additional cost associated with these new sites per the contract and ITN No to Giddens Security Corporation as set forth in this action item and to authorize staff to take any appropriate or necessary action consistent with this action item. All were in favor. Motion carried. Ms. Binnun stated, you ll find a tab for custodial banking. A motion was made and seconded to approve the six month extension C# to Bank of New York Mellon as set forth in this action item and to authorize staff to take any Citizens Property Insurance Corporation Board of Governors 13

14 appropriate or necessary action consistent with this action item. All were in favor. Motion carried. A motion as made and seconded to extend the meeting to 1:30 p.m. All were in favor. Motion carried. Appeal Dan Sumner presented the appeal by All Claims Insurance Repairs, Inc. (All Claims). The appeal deadline was January 5, All Claims submitted an appeal on February 15, 2012 that is 62 days after the rendering of the Board s decision. It is staff s assertion that this appeal is very untimely. It is staff s recommendation that the appeal be denied due to untimeliness. As always with untimeliness, staff looked at the information provided by the appellant All Claims, and it found no reason why the Plan of Operation (Plan) should be not be invoked. Kenneth Carman from All Claims stated that it was not specified how the appeal should be formed. He requested for information on the scoring but did not receive that information in time: It was never sent until February; therefore, we never had a basis to which to make the appeal. My reasoning behind why we should make this appeal, even though it s late, is that it s a catch 22. Citizens didn t give us the information so we couldn t appeal. The Board requested that Mr. Sumner find on the website the process of appeal. [5 minute break] Mr. Sumner read the appeal process that is presented on the website as well as what is stated in Section 25 in the Plan. After much deliberation, the Board members agreed that there are ambiguities in the process; however, many of the Board members indicated that the appeal may be denied from a procedural perspective. Chairman Lacasa gave Mr. Carman the floor for closing remarks. Mr. Carman stated that he understood that Citizens has to follow the law, but he expressed that it is difficult to make an appeal if he does not have the proper information to know if he even wants to make that appeal: It s my contention that Citizens actually made a mistake because I don t think we would have received these results if we hadn t made a second request in February... I would say that in any contractual matter, when a person who has written a contract and makes the requirements unclear and makes it impossible for you to fulfill those requirements and then doesn t do their part, then the other person should be given the benefit of the doubt.. Vice Chair Baily made the motion to find that the notice of appeal by All Claims Insurance Repairs, Inc. was not timely filed, and therefore the appeal, cannot go forward. John Wortman seconded the motion. Chairman Lacasa, Vice Chair Baily, John Rollins, John Wortman agreed to the motion. Carol Everhart and Don Glisson voted no on the motion. Motion carried. The Board requested that staff quickly work on clarifying the process for future procurements. Citizens Property Insurance Corporation Board of Governors 14

15 New Business [meeting adjourned] Citizens Property Insurance Corporation Board of Governors 15