Tuesday, September 6, 2011
Premiums May Increase for Sinkhole Insurance
The State of Florida has more sinkholes than any other state in the nation, providing an important part of the aquifer system that supplies 95% of Florida’s drinking water by allowing rainwater to replenish groundwater. Despite their ecological importance, sinkholes also create tremendous destruction of property, sometimes literally swallowing houses whole. Due to increased urbanization of sinkhole regions in Florida, FEMA has reported that the number of sinkholes as doubled since 1930, and insurance claims resulting from property damage are skyrocketing – from 1987 to 1991 insurance claims for damages increased 1200%, costing nearly $100 million.
In 2007 the Florida legislature responded to the complaints of Citizens Property Insurance Corporation clients regarding elevating sinkhole insurance premiums – as a result of a special session, the State Senate froze Citizens rate increases for sinkhole insurance and implemented a 10% annual rate increase cap for subsequent years.
Despite these safeguards implemented by legislature nearly five years ago, some Citizens policyholders are about to see their premiums increase 2000%, with a 429% average statewide increase, due to the legislature’s passing, and Governor Scott’s signing into law, of a 2011 bill (SB 408) that removed the 2007 rate increase cap. The Office of Insurance Regulation has yet to officially approve the increases applied for by Citizens, and some state senators are demanding that policyholders and members of the public have the opportunity to voice their concerns with the proposed rate hike.
Rallies in protest of the proposed premium increases were held in many west Florida counties on August 16, and while Citizens customers await the decision of the Office of Insurance Regulation, many wonder if they will be able to come up with extra money demanded by the insurance company or if they will face the prospect of losing their homes.