Posted by: rainworks | July 28, 2011

Florida – the new Atlantis?

Sinkholes – Insurance Companies call for 2000% Rate Increase

Senator calls for Citizens sinkhole rate hike hearings

By Janet Zink, Times/Herald Tallahassee Bureau
Posted: Jul 27, 2011 11:35 AM

 

TALLAHASSEE — The board that oversees Citizens Property Insurance unanimously approved massive increases to sinkhole premiums on Wednesday, saying the rate hikes — which could cost policy holders thousands of extra dollars — are necessary to cover the cost of sinkhole claims.

Sinkhole premiums would rise by an average of 429 percent under the Citizens proposal, though rates would rise more than 2,000 percent in some parts of the Tampa Bay area. The rate hikes, which surfaced Monday, still must be approved by the Office of Insurance Regulation. It is expected to schedule a rate hearing in Tallahassee.

The increases are on top of a proposed 8.8 percent average increase in non-sinkhole related coverage.

Citizens officials say the increases are necessary because premiums collected don’t cover the cost of payouts made for claims. In 2010, the company collected $32 million in premiums and but had loss-related expenses of $245 million, Citizens chief financial officer Sharon Bunnun told the board.

“Our rate need for sinkhole coverage is enormous,” she said. “We’re optimistic that the sinkhole claims will stem losses over time and help reduce premiums.”

The board approved the tentative increases 4-0 during a meeting via conference call.

If approved, the rate increases mean the average premium for a sinkhole policy in Tampa would increase from $156 to $3,651. In coastal Pasco County, rates would increase from $1,270 to $3,598. In coastal Hernando County, premiums would soar from $1,356 to $5,734.

Overall, about 94,400 property owners in the Tampa Bay area currently have sinkhole coverage provided by Citizens.

Bunnon said the state-run insurer is working to develop plans so policyholders can pay premiums on a semi-annual or quarterly basis.

Sen. Mike Fasano, R-New Port Richey, who unsuccessfully fought 2011 legislation that allows Citizens to massively boost its sinkhole insurance premiums, is calling for statewide hearings.

“The economic impact on homeowners will be devastating,” Fasano wrote in a letter to insurance commissioner Kevin McCarty. “In light of these almost incomprehensible rate increases I respectfully expect that all Floridians be given the chance to have their voices heard on this issue before the Office of Insurance rules on the application. Hearings held throughout the state, especially in those areas which will receive the highest rate increases, must be held before the application is given consideration.”

Comments on the rate proposal can be sent to ratehearings@floir.com, with the word Citizens in the subject line.

Janet Zink can be reached at jzink@sptimes.com or (850) 224-7263.

 

Hot spot for sinkholes

Sinkhole claims to insurance from 2006-2010. Percent is percent of statewide total, which was 24,671. The Tampa Bay area had 72 percent of the total claims in the state.

Hernando 6,036 24.5%
Pasco 5,932 24.0%
Hillsborough 4,450 18.0%
Pinellas 1,466 5.9%

Source: Florida Office of Insurance Regulation

Proposed increases at a glance

Citizens Property Insurance released proposed rates for

sinkhole insurance Monday. Here is a look at what average rates could be:

Region Current average Proposed average Percent increase
Tampa $156 $3,651 + 2,239%
Hillsborough remainder $260 $3,651 + 1,304%
Hernando coast $1,356 $5,734 + 323%
Hernando remainder $1,084 $6,192 + 471%
Pasco coast $1,270 $3,598 + 183%
Pasco remainder $1,475 $4,440 + 201%
Pinellas coast $3 $72 + 2,046%
St. Petersburg $38 $100 + 164%
Pinellas remainder $243 $256 + 5%

 

Comments by the Blogger

Sinkholes – Insurance Companies call for 2000% Rate Increase

Why, because in 2010, Insurance paid out $245 million in claims. That’s like an average of 1225 – $200,000 dollar homes lost in Sinkholes in Florida in one year; how many more in the next 5-10 years? Florida the new Atlantis!

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Responses

  1. It’s scary. In my neighborhood alone there must be 20 houses that are or have dealt with sinkhole damage, including us, our neighbors two doors down, and two neighbors across the street. If it continues it will be like a very slow hurricane, devastating Florida real estate and the insurance companies.

  2. […] https://rainworks.wordpress.com/2011/07/28/florida-the-new-atlantis/ Share this:TwitterFacebookLike this:LikeBe the first to like this post. […]


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