"I think there are some important things that are going to happen in the next year or two," said Allan Katz, a Tallahassee attorney who was reappointed to the board by Chief Financial Officer Alex Sink. "We have got to figure out what role Citizens is going to have in the marketplace. Right now the idea of Citizens going back to what it was is to me somewhat like ignoring reality. The question is what Citizens' role is going to be on a long-term basis. The insurance industry has indicated they are unwilling to put any more capital in the marketplace to be able to move Citizens out of its current role."

That point of view is echoed by Carlos Lacasa, a former state legislator from Miami who served on the Citizens board in 2006 and was appointed to a new three-year term by outgoing House Speaker Marco Rubio. Lacasa said he saw the 2007 changes as "step one in a two-step plan." He said he wants to see Citizens use its existing capital in concert with private insurers.

"I see Citizens with a large war chest of capital, assuming no storms hit, as a player in the market like how the Fed (Federal Reserve System) plays in the monetary market," said Lacasa. "I think we can influence the entry of private capital into Florida by working with private insurers using our capital in various ways."

New Board, New Chairman

The terms of each member of the Citizens Board of Governors expired at the end of the July. Those appointed to new three-year terms included some familiar faces, but Sink tapped James Malone to succeed Bruce Douglas of Jacksonville as the new chairman. Malone is founding managing partner of Naples-based Qorval LLC, an investment banking, financial advisory, and turn-around firm, and chairman of Boyne Capital Partners.

Malone, 65, has a history of turning around distressed companies and is on the board of directors of Regions Financial Corp., the company that owns Regions Bank. Sink, who once served as president of the Bank of America Florida operations, said she's not expecting "major changes" from Citizens with Malone. But she said she hopes his lengthy experience will help in running Citizens.

"I'm expecting him to bring his 30 years of executive leadership experience into the biggest public company in the state," said Sink. "He's well known for going into companies and finding more efficient ways to operate. He's a very strategic thinker."

Shortly after his first meeting as chairman, Malone said he has no firm ideas of what direction Citizens should take. Instead, he said his main goal was to make sure that everyone who has to interact with Citizens is dealt with fairly and honestly.

"I want to make sure everything we do has a transparency to it," said Malone. "That all of our constituencies are dealt with integrity, with honesty, and fairness, whether you are an agent selling our product or whether you are a policyholder that is paying for the service and the protection we provide. That is our role.

"And a fair definition of our success from my point of view is are we doing that and are we doing it in a financially responsible way," added Malone, "but maybe more importantly, are we dealing with all of our constituencies in the way I described."

Four members of the board that got new terms are holdovers from the existing Citizens board: Katz, Jay Odom, Earl Horton, and Carol Everhart. (Crist appointed TECO Energy CEO Sherill Hudson and William Corry of Corry Capital Advisors on August 15, too late for the first meeting.)

New Policy Restrictions

The first challenge for Malone and the new members of the Citizens board will be how well the company transitions to a new system of forms. Citizens began in August notifying those holding residential wind-only policies that starting in February their policies would expire. Company officials say it will take about a year before all 350,000 existing policies transition to the new forms.

Susanne Murphy, executive vice president for Citizens corporate operations, said the changes were needed because the existing wind-only forms are confusing and often include information that may not pertain to the individual account. She also said another reason for the change is that it will allow the insurer to place customers in a new computer system that will also be easier to use.

Most policyholders will automatically be eligible for new policies upon reapplication. However, homeowners with shingle roofs 25 years or older must replace their roofs or have a roofing contractor verify the roof can remain intact for an additional three years in order to get a new policy. Some customers will also be required to increase their coverage policy limits to cover the replacement value of their homes.

Murphy said that company officials don't know how many people will be required to increase their policy limits, or how many would be required to get new roofs in order to keep their current policies.

Murphy added that the vast majority of customers will not have to do anything until right before the expiration date. They will be sent letters six months, four months, and two months before the expiration date to remind them to talk to their agents about what steps to take.

To try to get the word out about the changeover, Citizens also plans to push ahead with an intensive communications strategy that includes holding forums in South Florida in the fall, sending out sample editorials to newspapers, and posting frequently-asked questions on the company website.

New Board Asks for Assurances About Change

The expiration of the 350,000 policies was one of the main issues discussed by the new Citizens board when it held its first meeting in August.

Malone, the new chairman, wanted assurances from the Citizens staff that the changeover would benefit customers and agents and that company officials were not embarking on the project at the suggestion of the company information technology staff. He said too often companies make changes that "may not be good for the company as a whole and the customer base."

Murphy replied that while Citizens was transitioning from an antiquated and "unreliable" computer system. She said the genesis of the changes was prompted by state insurance regulators, who had faulted Citizens for the lengthy and complicated forms it forced customers and agents to fill out.

Horton, the Pinellas County insurance agent reappointed by Rubio, asked that Citizens officials change the information given out about the changeover if customers and the 9,000 agents that sell Citizens policies begin to ask different questions.