In a unanimous vote Wednesday, Tom Grady, who advocated a controversial agenda of risk reduction and rate increases during his short run as head of Citizens Property Insurance in Florida, will be replaced by Barry Gilway, an insurance industry veteran from Maryland.
The vote by Citizens’ board represents an affront to Governor Scott, who picked Grady to run the Office of Financial Regulation last year and counted him as an ally in the effort to shrink Citizens. As Citizens has advanced an aggressive campaign to raise rates and reduce coverage for homeowners, Grady expressed support for a controversial plan to uncap rates for new customers.
Citizens’ presidential search committee opted to pass over Grady, one of five candidates vying for the job of permanent president.
When John Wortman, a committee member and Scott-appointee, made a motion to revive Grady’s candidacy, Citizens’ board chairman Carlos Lacasa interjected, asserting that he was not one of the top candidates identified by a search firm. Grady, 54, from Naples, is a friend of Scott and has been a prominent fundraiser for the Republican Party.
Wortman’s motion failed, effectively killing Grady’s chances of leading Citizens long term.
“I think it says volumes about the board that they let the process work, without picking favorites,” said Lisa Miller, CEO of Lisa Miller & Associates and a former deputy insurance commissioner for Florida. “Tom [Grady] was super when he was there, but he couldn’t argue with the credentials that were required for the job.”
Sean Shaw, founder of the Policyholders of Florida, said Gilway’s hiring represents an opportunity to take some of the political influences out of Citizens.
“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,” Shaw said in a statement.
Gilway, 66, has more than 40 years of insurance industry experience, most recently with Seattle-based Mattei Insurance Services. Prior to that, he worked at Zurich North America, serving as an executive vice president at the global insurance firm.
In an interview with Citizens’ board, Gilway said his experience turning around Zurich’s Canadian subsidiaries — which had suffered from poor results and a negative public image — would be useful at Florida’s state-run insurer.
“One of the reasons you should consider me, is, frankly, I’ve done this before,” Gilway said, adding that he went on a two-year “apology tour” to rebuild the company’s image.
During the public interview, Gilway acknowledged that reforming Citizens would be the most difficult undertaking of his career.
Citizens was created to be the insurer of last resort, but is currently Florida’s largest property insurer, with more than 1.4 million policies.
In the last several months, its board has sought creative ways to reduce in size and raise premiums beyond the 10-percent rate cap established by the Legislature.
Gilway spoke cautiously when asked about his thoughts on insurance rates.
“Rates are not adequate within [certain] counties,” he said, before acknowledging that “if rates were taken to full adequacy in those counties, it has the potential of completely destroying both home building and retail sales.”
He said he was in favor of a “mechanism” that would lead to higher rates over time.
On July 16, Citizens will hold a public workshop in Miami to discuss, among other things, a plan to remove the 10-percent cap on rate increases for new customers.
Gilway’s starting date and compensation terms have not yet been finalized.