Florida’s state-run Citizens Property Insurance Corp. announced earlier this week that Chief Financial Officer Sharron Binnun has resigned to take a job in the private sector. Her departure from Citizens is unfortunate, but ultimately unsurprising (more on that later).

During her six years as Citizens’ CFO, she conceived or supported several initiatives aimed at shoring-up the corporation’s finances and spreading its risk to the global capital and reinsurance markets, rather than relying on its authority to impose assessments (taxes) on essentially every Floridian to make up for the deficits it would inevitably incur after a sufficiently bad hurricane season.

The resistance many of her proposals encountered from some legislators and so-called “consumer advocates” meant some were never approved or adopted.  But those that were have yielded positive results for Citizens, and by extension, the state’s taxpayers.

These include brokering take-out agreements between Citizens, state regulators and private companies that over the past several years transferred more than 430,000 Citizens policies and their enormous risk from taxpayers onto the private market.  This has resulted in an overall estimated decrease of 47 percent in potential post-hurricane taxes.

Binnun has also been a strong advocate of private risk transfer as a means to strengthen Citizens’ finances and reduce the likelihood or severity of post-hurricane taxes.  From 2006 through 2010, Citizens’ sole source of reinsurance coverage was the Florida Hurricane Catastrophe Fund, another state-owned entity that also has the ability to impose taxes if it runs out of money.  In 2011, Citizens started to wean itself off the taxpayer-backed Cat Fund by purchasing similar coverage from the private reinsurance market. And last year, Binnun brokered the single largest catastrophe reinsurance bond issuance in history, raising Citizens’ profile as a player in global capital markets, and Binnun’s, as well.

But her impressive negotiations with the world’s leading reinsurance brokers came at a price.  Back home in Florida, Citizens was being lambasted in the media for excessive travel expenses.  The media seized on this, especially since the Citizens Board and staff were exploring ways to increase its rates to shore-up the organization’s finances and to accelerate the depopulation process.

It is a reality of the global reinsurance business that executives not infrequently need to travel to London, Zurich, and Bermuda to secure those contracts on the best possible terms. These trips helped Citizens to improve the costs of its protection, saving millions for its own policyholders, as well as the those of private carriers subject to its assessments. These facts have been under-reported, at best.

Binnun was dragged over the coals for spending $73 at dinner in London (which actually sounds like a deal, given the conversion rate); for a $100 hotel upgrade in Bermuda to include breakfast, access to the Internet and use of the office center (not the spa); and for choosing to arrive in Bermuda two days early rather than fly all the way back to Tallahassee from Europe, stay a day, and then fly to Bermuda in time for additional negotiations. Her chosen arrangement actually wound up saving money on airfare for needless, multi-leg flights.

But in politics, perception is reality. The narrative was easy to exploit, so the media and politicians did so relentlessly.  Opponents of Citizens reform used it to demagogue any attempts to raise Citizens’ artificially-suppressed rates. Politicians called for investigations. And so on.

So indeed, it is unsurprising that one of the world’s most coveted insurance executives would opt to transfer to the more lucrative and hassle-free private sector.  Luckily for Florida, she leaves Citizens Property Insurance Corp. substantially better off in just about every measurable way.

But the positive changes she instituted and the deals she negotiated won’t remain in effect forever. Now it’s up to Citizens’ board to find a replacement who will continue Binnun’s commitment to spreading risk abroad, rather than concentrating it; reducing the size of Citizens; and relying less on a taxpayer bailout.

Given her commitment to these issues, her institutional knowledge, and the millions of dollars Florida has saved from her expertise as a global reinsurance negotiator, the board has a tough job ahead.

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