Florida Chief Financial Officer Jeff Atwater has urged state insurance regulators to consider an affordable “glide path” for homeowners seeking to buy sinkhole insurance from Citizens Property Insurance Corp.
Atwater questioned Insurance Commissioner Kevin McCarty about the possibility of phasing in any rate increase.
Last week Citizens’ board said it would ask regulators to approve a rate increase for sinkhole coverage by an average of 430 percent and even more in some areas. Homeowners in high-claim areas, mostly around Tampa Bay, could be hit with rate increases of as much as $5,000 to keep their existing coverages.
“We should not put that burden on these citizens right away,” Atwater said following the Cabinet’s first meeting after a six-week summer break. “There should be far less of an increase.”
McCarty told Gov. Rick Scott and the Cabinet that while the seemingly exorbitant rates sought by state-backed Citizens may be actuarially sound, his department would consider a full range of options on the company’s request, including phasing in the increases to soften the financial blow for consumers.
In 2010, Citizens received about $32 million in premiums for sinkhole coverage with ultimate losses and loss-related expenses estimated to total $245 million. Sinkholes are caused when the ground gives way due to erosion, the collapse of a cave roof or the lowering of the water table.
A new law passed earlier this year allows Citizens, which insures more than 1.4 million homes and businesses, to charge whatever it takes to pay for sinkhole claims. The company’s regular property coverage on homes and businesses cannot be increased by more than 10 percent annually.
But Atwater doesn’t believe policyholders should be forced to pay 10, 20 or 30 times more on their premium all at once.
“There needs to be a real different look-see,” said the former Senate president who was elected CFO last November. “There should be some glide path in place. Why not test it for a year or two at 10 percent or another number.”
The Legislature created Citizens in 2002 to provide insurance to homeowners in high-risk areas and those who couldn’t find coverage in the private market.
Topics Florida Pricing Trends
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