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Smells like corruption

Lawmakers and the customers of state-run Citizens Property Insurance Co.- who pay soaring premiums - deserve some straight answers.

A Times Editorial
Published September 21, 2005

Florida's insurer of last resort already has two strikes against it. But its inept handling of hurricane claims last year and its soaring premiums now seem all too pedestrian. Citizens Property Insurance Co., set up after 1992's Hurricane Andrew to insure homeowners the private industry abandoned, is beginning to reek of corruption.

Three top executives at Citizens have quit in the face of business conflicts and explosive accusations, one of which state Chief Financial Officer Tom Gallagher contends is true: Citizens chief operating officer R. Paul Hulsebusch received a $28,095 "Big Dog" motorcycle from an insurance adjuster who was awarded state work.

The facts are far from clear at this point, but the smell is worse than the mold that is destroying some of the homes left for Citizens to insure. This is precisely the kind of revelation that could destroy Citizens, or at least undermine its financially precarious mission. People who are asked to pay double the premium, and lawmakers who are asked to answer for the increases, are not likely to be patient with the process when the word "bribe" can be used in more than a rhetorical context.

Gallagher, who used to appoint the entire Citizens board until the Legislature and governor this summer took some of that responsibility, promises his office will investigate the allegations. "Whether there were kickbacks involved and whether he was requesting kickbacks, that's to be determined," Gallagher says. "We're going to find out the whole story."

But financial and criminal investigations are only the beginning here. Citizens is a multibillion-dollar corporation, the second largest insurer in Florida. Yet its hiring practices sound like something out of Wally's Filling Station. Gallagher now says that Hulsebusch had previously sold a business to the same insurance adjuster, Rodney Harrell of Quantum Claims Services, accused of buying the motorcycle and that Harrell still owed Hulsebusch $100,000. How could Citizens executive director Bob Ricker not have known about that debt when he hired Hulsebusch? How could he have performed only cursory backgrounds, less than what the state requires of private insurers?

Hulsebusch also may have been working with two other agency colleagues, the chief financial officer and controller, to open their own company. The chief financial officer, Jessica Buss, reportedly disclosed her interest and resigned from Citizens on Aug. 12. But she apparently is still being paid as a consultant. Does that make her conflict any more tenable?

Lawmakers and the public deserve some thorough answers here, and Citizens has been less than forthcoming. The questions about how to shield homeowners from the loss of insurance in a high-risk, hurricane-prone market are difficult enough. But no government safety net will be secure, or acceptable, if there is cause to question its basic integrity.

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