Board member Charlie Lydecker also voted against the planned rate increase. Earlier Wednesday, Lydecker questioned the wisdom of keeping up with a voluntary market that has recently seen large profits for a few carriers and hefty compensation packages for some executives.
“When I see … somebody take a salary at one of the carriers of $50 million, that says to me, for the first time, because we’ve been in crisis mode, that maybe we’re not thinking about this right,” said Lydecker, CEO of Foundation Risk Partners, an insurance brokerage and consulting firm.
Lydecker was apparently referring to recent revelations that Tampa-based Slide Insurance Co., which went public on the Nasdaq stock exchange last week, had paid founder and CEO Bruce Lucas more than $21 million last year in salary, bonuses and stock awards. Slide paid Lucas’ wife, the chief operating officer, another $16.5 million.
By statute, Citizens is rather unique among state-created wind pools and insurers of last resort. It is required to aim for rates that are actuarially sound but also non-competitive – or higher than what the voluntary market offers. But that has proved impossible, given the statutory glidepath that caps annual rate increases. On top of that, Florida’s Office of Insurance Regulation earlier this year shot down a maximum-allowed average rate increase and landed on less than 9%.
All of that has meant that in some parts of the state Citizens’ rates remain as much as 30% lower than what private carriers offer, officials said.
Lydecker argued it is perhaps time for a new model if the Florida market, just a few years past a full-blown crisis and multiple carrier insolvencies, can now afford to pay massive compensation amounts to executives.
“When someone can take $50 million out, there’s something else going on there,” Lydecker said. “Why are we, as a taxpayer-supported entity, playing that game?”
Either the state is not defining “actuarially sound” correctly, or “we’re playing a fool’s game of trying to be a true market of last resort,” he said. It may be time to have a conversation with state regulators about the Citizens’ model and statutory constraints, he added.
Citizens CEO Tim Cerio said at the meeting that Lydecker raised valid concerns.
“One of the things the commissioner and OIR have been focused on is the disparity and making sure that, what does that non-competitive piece mean? Is it higher than it should it because of all the other things going on in the market?” Cerio said.
Board member Jamie Shelton suggested meetings with lawmakers and regulators to discuss a new path forward for the insurer. Spottswood agreed.
Other highlights from Wednesday’s board and committee meetings include:
- Citizens has indeed continued to depopulate, thanks to a steady diet of takeouts and new players in the Florida market. Since the beginning of 2024, the state Office of Insurance Regulation has approved some 2.2 million takeout offers, and more than 1 million letters have been sent to policyholders. Policyholders have accepted about 678,000 takeout offers.