Florida Regulator Slashes Sinkhole Rate Hike, Lowers Others

Florida residents who have sinkhole insurance through the state-backed property insurer will not have to pay a proposed statewide average 447 percent increase.

Citizens Property Insurance Corp. customers will also be spared big price hikes for standard coverages under several rulings by Insurance Commissioner Kevin McCarty.

Instead of the approving the requested 447 percent average increase in sinkhole rates, McCarty approved a statewide average 32.8 percent increase for Citizens, an increase he said is viable until there is more data from the reforms contained in this year’s property bill.

In addition to the sinkhole rates, McCarty also reduced the increase Citizens sought for standard coverage. The insurer had initially requested a statewide average 21.2 percent rate increase. Under the rate order, that amount has been reduced to 6.2 percent.

Similarly, McCarty reduced the rate increase request on dwelling fire policies from 18.1 percent to 8.6 percent.

According to McCarty’s sinkhole insurance order, Citizens offered no credible evidence assessing law changes that created a definition for ‘structural damage,’ require homeowners who received a payment for a sinkhole loss to use that money for repairs, and mandate those repairs be made in accordance with the specifications of a professional engineer’s report. He added that the insurer also failed to take into effect another statutory change limiting public adjusters’ compensation to 10 percent.

McCarty is requiring that the insurer contract with an independent actuarial firm to assess the impact of those law changes before making a sinkhole rate request next year.

To apply the sinkhole rate changes, regulators divided the state into four regions based on claims experiences and losses to compensate for the lack of territorial data.

McCarty’s decision comes even after Citizens made several moves to placate regulators, state officials and homeowners. In an emergency board meeting earlier this month, the board agreed to phase in the increase over several years, limiting next year’s increase to a statewide average 50 percent.

Senator Mike Fasano (R-New Port Richey), who organized a protest of homeowners against the proposed rate hike, praised McCarty for his action.

‘Due to the efforts of a few of my colleagues, but most importantly the countless residents who protested, wrote letters, sent e-mails, and attended a public hearing, Citizens will only be getting a small fraction of what they have requested,’ Fasano said.

Topics Florida Pricing Trends Homeowners