Board Member Citizens Property Insurance Corp. chose Wednesday to approve a rate increase for the colossal sinkhole coverage, including an increase of more than 2,000 percent in a few Tampa Bay-area. Office of Insurance Regulation states must approve the new tariffs before they take effect. If they do, some critics claim, it could spell the beginning of the end of sinkhole coverage in Florida.
Increased by an average of more than 400 percent statewide, but dramatically higher in the Bay area based on the losses the insurance company there for five years. Country's largest property insurer, Citizens collects approximately $ 32 million in premiums for coverage of sinkhole last year, but lost $ 245 million on those claims.
The proposed rate hike would increase the cost of coverage for homeowners sinkhole by 2239 per cent on average in Tampa, from $ 156 to $ 3,651. Rates in coastal Pasco County, will increase 810 percent from $ 441 to $ 4,017.
In some cases, the percentage change more dramatically than the dollar amount. Rates in Pinellas County coast will jump 2046 percent from $ 3 to $ 72. Sinkhole coverage is optional insurance lines, although as a citizen board noted Wednesday, some mortgage lenders require it
At the direction of the Legislature, Citizens increased overall interest in stages, up to 10 percent per year, to cover losses. Legislation passed this spring and approved by Gov. Rick Scott, however, exempt from the gradual rise of sinkhole insurance, allowing Citizens to charge actuarially sound rates for coverage that year.
Scott said Wednesday the proposed increase, while "shocking in some cases," it is not surprising.
Because before I was elected, I have warned that residents in desperate need of serious attention and soon have to face day of reckoning," the governor said. "This proposal is the unfortunate result of politicians playing politics too long to maintain artificially low rates."
If losses exceed premiums, Citizens must phase in rate increases, said former state Insurance Consumer Advocate Sean Shaw, Tampa lawyer who founded the activist group Florida Policyholders. He called the proposed increase directly - at double-digit unemployment and record foreclosures - ". It is anti-consumer"
Free market advocates praised the sound board of Citizens, however.
In a written statement, the Christian conservative Heartland Institute Camara called the decision "a difficult but necessary."
"The surge in sinkhole claims are not due to some changes in the geology of Florida, but for many people who have used the claim as a lottery jackpot hole," said Camara. "This is not sustainable and, unfortunately, the time to cover these losses have come."
Blisters on the state mandate that they offer sinkhole coverage, private insurers told lawmakers this spring that sinkhole claims and fraud are often the industry has created a crisis.
In response, a bill that was passed also limited window of sinkhole claims submission, narrowing the definition of such claims and policyholders make a claim like that is required to spend all of their insurance payment on repairs.
If state regulators approve a rate hike Citizens', private insurers will ask the same thing - effectively eliminating the sinkhole coverage by making it unaffordable, said Sen. Mike Fasano. "That is why private companies, along with Senator [Garrett] Richter, who pushed the bill into the throat of everyone."
With some mortgage lenders require immediate coverage holes that could cost thousands of dollars more, "I have people in my area, senior citizens, cried for it," said Fasano, R-New Port Richey.
Richter, R-Naples, said it was important that Citizens charge actuarially sound, because the taxpayers on the hook if the government-owned insurance company can not recoup.
He said the magnitude of some of the Citizens' proposed increase was surprised. "But you can not sell widgets $ 75 to $ 10," he said. "That's apparently what the citizens do."
Insurance Commissioner Kevin McCarty said Wednesday it would be too early to comment on Citizens demand 'before he got it.
McCarty, who supports the Richter insurance bill, said he would consider, but not committed, the demand from Fasano to hold multiple public hearings across the country on request.
While the level of demand will increase the cost of sinkhole coverage, the effect of non-hole coverage will vary. The cost of non-hole coverage will drop nearly 9 percent in Tampa, but rose about 8 percent across Hillsborough.
Citizens policyholders in Pasco will pay 10 percent to 11 percent more for non-coverage hole; in Pinellas, the cost will be 4 percent to 10 percent less. Changes in costs reflects both the level requested and the Florida Hurricane Disaster Fund cash build-up factors that Citizens charge on the side.
Increased by an average of more than 400 percent statewide, but dramatically higher in the Bay area based on the losses the insurance company there for five years. Country's largest property insurer, Citizens collects approximately $ 32 million in premiums for coverage of sinkhole last year, but lost $ 245 million on those claims.
The proposed rate hike would increase the cost of coverage for homeowners sinkhole by 2239 per cent on average in Tampa, from $ 156 to $ 3,651. Rates in coastal Pasco County, will increase 810 percent from $ 441 to $ 4,017.
In some cases, the percentage change more dramatically than the dollar amount. Rates in Pinellas County coast will jump 2046 percent from $ 3 to $ 72. Sinkhole coverage is optional insurance lines, although as a citizen board noted Wednesday, some mortgage lenders require it
At the direction of the Legislature, Citizens increased overall interest in stages, up to 10 percent per year, to cover losses. Legislation passed this spring and approved by Gov. Rick Scott, however, exempt from the gradual rise of sinkhole insurance, allowing Citizens to charge actuarially sound rates for coverage that year.
Scott said Wednesday the proposed increase, while "shocking in some cases," it is not surprising.
Because before I was elected, I have warned that residents in desperate need of serious attention and soon have to face day of reckoning," the governor said. "This proposal is the unfortunate result of politicians playing politics too long to maintain artificially low rates."
If losses exceed premiums, Citizens must phase in rate increases, said former state Insurance Consumer Advocate Sean Shaw, Tampa lawyer who founded the activist group Florida Policyholders. He called the proposed increase directly - at double-digit unemployment and record foreclosures - ". It is anti-consumer"
Free market advocates praised the sound board of Citizens, however.
In a written statement, the Christian conservative Heartland Institute Camara called the decision "a difficult but necessary."
"The surge in sinkhole claims are not due to some changes in the geology of Florida, but for many people who have used the claim as a lottery jackpot hole," said Camara. "This is not sustainable and, unfortunately, the time to cover these losses have come."
Blisters on the state mandate that they offer sinkhole coverage, private insurers told lawmakers this spring that sinkhole claims and fraud are often the industry has created a crisis.
In response, a bill that was passed also limited window of sinkhole claims submission, narrowing the definition of such claims and policyholders make a claim like that is required to spend all of their insurance payment on repairs.
If state regulators approve a rate hike Citizens', private insurers will ask the same thing - effectively eliminating the sinkhole coverage by making it unaffordable, said Sen. Mike Fasano. "That is why private companies, along with Senator [Garrett] Richter, who pushed the bill into the throat of everyone."
With some mortgage lenders require immediate coverage holes that could cost thousands of dollars more, "I have people in my area, senior citizens, cried for it," said Fasano, R-New Port Richey.
Richter, R-Naples, said it was important that Citizens charge actuarially sound, because the taxpayers on the hook if the government-owned insurance company can not recoup.
He said the magnitude of some of the Citizens' proposed increase was surprised. "But you can not sell widgets $ 75 to $ 10," he said. "That's apparently what the citizens do."
Insurance Commissioner Kevin McCarty said Wednesday it would be too early to comment on Citizens demand 'before he got it.
McCarty, who supports the Richter insurance bill, said he would consider, but not committed, the demand from Fasano to hold multiple public hearings across the country on request.
While the level of demand will increase the cost of sinkhole coverage, the effect of non-hole coverage will vary. The cost of non-hole coverage will drop nearly 9 percent in Tampa, but rose about 8 percent across Hillsborough.
Citizens policyholders in Pasco will pay 10 percent to 11 percent more for non-coverage hole; in Pinellas, the cost will be 4 percent to 10 percent less. Changes in costs reflects both the level requested and the Florida Hurricane Disaster Fund cash build-up factors that Citizens charge on the side.
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