The board of governors of Florida’s Citizens Property Insurance Corp. has called for an emergency meeting today to consider phasing in a proposed statewide average 429 percent sinkhole rate increase.
Newly-named Chairman Carlos Lacasa has called for the meeting in response to the growing controversy surrounding the issue. The meeting comes just one day before a public hearing on the issue in Tampa.
A Citizens’ staff proposal calls for no change in the overall sinkhole rate increase. However, the staff is recommending that the increase be phased-in over a yet to be determined number of years.
‘The implementation plan developed by our actuarial staff would result in an overall average statewide and territorial premium increase for sinkhole coverage of 50 percent for the first year,’ states the staff proposal.
The board will also take into consideration the sinkhole provisions contained in SB 408, the primary property insurance bill enacted earlier this year. Among other things, the bill created a statutory definition of ‘structural damage,’ placed a two-year limit on claims, and created a number of fraud provisions.
Insurance Commissioner Kevin McCarty has said that Citizens failed to take these reforms into effect when setting sinkhole rates.
A Citizens’ staff analysis states that while it is difficult to project the impact of SB 408 on sinkhole losses next year, it is projecting that the sinkhole provisions will result in a 60 percent reduction in sinkhole premium for 2012.
In 2010, the state-backed insurer collected $32 million in sinkhole premium, but paid out roughly $250 million in claims.
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