Citizens Property Insurance Corporation approves move to hike rates on sinkhole coverage

Jul 27, 2011

The following article was posted to the Bay News 9’s website on July 27, 2011:

Citizens approves move to hike rates on sinkhole coverage

By Jason Lanning

he board for Florida’s largest insurer of homes and businesses, state-backed Citizens Property Insurance Corp., voted 4-0 Wednesday to approve a rate increase for providing coverage on sinkhole policies.

The rate increase application still has to go before the Office of Insurance Regulation for certification.

If approved, the increase on average would be more than 400 percent.

  • In Tampa, rates would spike from about $150 to $3,650.
  • In Pasco County, rates would increase from $1,270 to $3,500.
  • In Hernando County, rates would jump from $1,350 to $5,700.

Tampa area State Senator Mike Fasano called the move “incomprehensible” and is calling for the Office of Insurance Regulation to hold public meetings before approving the rate hike.

In 2010, Citizens received about $32 million in premiums for sinkhole coverage with ultimate losses and loss-related expenses estimated to total $245 million. In areas where sinkhole claims have been particularly high, premium increases could be multiplied 20 times or more under the proposal.

Since the last major hurricane hit Florida in 2005, sinkhole claims have skyrocketed, totaling nearly $2 billion in the last four years. Most of the claims have come from the Bay area – Hernando, Hillsborough and Pasco counties.

New legislation passed this spring allows Citizens to raise its rates to whatever level it believes is necessary to offset such losses. Lawmakers heard testimony that sinkhole claims have tripled in the last three years with two-thirds of those coming from that tri-county region.

Citizens is Florida’s largest insurer of homes and businesses with more than 1.4 million policyholders. It was created by the Legislature in 2002 to provide insurance to homeowners in high-risk areas and those who couldn’t find coverage in the private market.

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