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In the face of criticism, the top executive of Florida’s state-backed property insurer acknowledge his decision to close the insurer’s office in charge of corporate oversight before having its replacement in place was ill-advised.

Citizens Property Insurance Corp. executives recently decided to disband its office of corporate integrity and terminate its four employees as part of a plan to revamp the insurer’s handling of employee conduct issues and internal fraud and abuse.

Florida Governor Rick Scott, however, quickly criticized the move, noting that the insurer is still being investigated by Florida’s Chief Inspector General based on charges that executives overspent thousands of dollars on travel and related expenses and for the widespread use of corporate credit cards.

“As you know, I recently asked Florida’s Chief Inspector General to review travel expenditures to ensure that they are essential to business operations,” said Scott in a letter to Citizens President Barry Gilway. “Your decision to disband the office of corporate integrity while this investigation remains ongoing is troubling.”

Gilway said that steps have been put in place so there would be no lapse of oversight as the insurer realigns its supervision of corporate activities. However, he acknowledged that Scott’s concerns have merit.

“In retrospect, my decision on the timing of these changes, particularly given the audit that is currently underway by his Inspector General, would have been revised,” said Gilway.

Citizens has been under scrutiny for its expenses, under then President Tom Grady. Scott and other elected officials have called for an investigation into the insurer’s travel and other expenses.

Since Gilway took over, the insurer has since changed its travel expense policy and discontinued the use of corporate credit cards.

In response to the concerns of officials and as a means to improve Citizens’ overall corporate oversight, executives decided to disband the office of corporate integrity and divide its responsibilities so that employee conduct problems would be handled through its employee relations office.

To oversee corporate expenditures and investigate any incidents of fraud and abuse, the committee also called for the insurer to hire four forensic accountants who will be housed in the office internal audit.

Scott, however, said the decision to let the four employees in the office of corporate integrity go before those forensic specialists were hired was premature.

“An effective compliance system cannot be achieved without an adequate number of independent, highly trained professionals,” Scott said in a letter. “To ensure that all necessary safeguards are in place, I urge you to use greater caution with future modifications affecting internal investigations, audits and compliance.”

Topics Florida Carriers