Florida Cabinet Approves Mitigation Form for Publication; Florida Insurance Commissioner Reviews Sinkhole Data Report
Nov 9, 2010
Today, November 9, 2010, the Florida Cabinet, with all of its members now effectively in lame-duck status, met in Tallahassee for the first time following the 2010 General Election. To view the complete meeting agenda, click here.
As part of the agenda, the Cabinet considered several insurance-related items, a summary of which follows:
Florida Office of Insurance Regulation
Acting in their capacity as the Financial Services Commission (“FSC”), the Cabinet Members approved for publication amendments to Proposed Rule 690-170.0155 relating to the Form OIR-B1-1802, also known as the Uniform Mitigation Verification Inspection Form (“Form”). The Form is being amended pursuant to statutory changes from the 2010 Regular Legislative Session that seek to reduce fraud and more accurately reflect the mitigated features of an inspected property. Related materials are included within the Florida Office of Insurance Regulation (“OIR”) meeting packet, a copy of which can be viewed by clicking here.
In his report to the Cabinet, Florida Insurance Commissioner Kevin McCarty provided an update on sinkhole-related matters, expanding on a report issued today by the Florida Office of Insurance Regulation (“OIR”) that was based on information collected from a recent industry-wide sinkhole data call. The report showed that the severity, frequency and geographic dispersion of sinkholes has overwhelmingly increased. Claim frequency has tripled in a three-year period. From 2006 through 2010, insurer sinkhole-related expenses totaled $1.4 billion, while thousands of sinkhole-related claims remain outstanding.
To access the report, click here.
While sinkhole claims were originally significant in Pasco and Hernando counties, Miami-Dade and Broward county sinkhole claims are increasing.
In response to a question by Florida Attorney General Bill McCollum regarding the cause of sinkhole claim increases, Commissioner McCarty noted that it is difficult to ascertain. However, he stated that public adjuster involvement appears to be a factor.
Commissioner McCarty reviewed possible solutions to Florida’s sinkhole issues, including:
- Amending the definition of “structural damage”
- Creating a sinkhole facility with the State to facilitate sinkhole-related repairs
Florida Commissioner of Agriculture and Consumer Services Charlie Bronson noted that sinkholes are often caused by rehydration. He also reminded that sinkholes have been and will continue to be a problem in Florida for many years.
Commissioner McCarty also reviewed second quarter surplus and underwriting results for Florida’s property insurance market. His report begins on page 44 of the OIR Cabinet meeting materials, which can be viewed by clicking here.
According to Commissioner McCarty, 63 percent of insurers doing business in Florida posted net increases to surplus and 42 percent posted underwriting gains. The cost of reinsurance, Florida’s replacement cost statute, insurance fraud, mitigation discounts and sinkhole claims are considered to be primary cost drivers.
The next Cabinet meeting is scheduled for December 7, 2010.
Should you have any questions or comments, please contact Colodny Fass.