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Insurance claims for Florida sinkhole damage spike

TALLAHASSEE — Florida homeowners are filing damage claims from sinkholes at a rapidly growing rate with claims this year totaling one-third more than the previous four years combined.

State Insurance Commissioner Kevin McCarty briefed Gov. Charlie Crist and the Cabinet on the trend Tuesday. He said the payout figure for this year could exceed $2 billion.

McCarty attributed the trend in part to the role of public adjusters, who file claims on behalf of homeowners and receive commissions on claims paid.

"Public adjusters in many cases play a valuable service, particularly when a company has been nonresponsive," McCarty told reporters. "But what we're seeing is a proliferation of cases where cracks in the pavement or cracks in the stairwells that are a result of settlement, and it's costing billions of dollars in claims."

The Florida Association of Public Insurance Adjusters earlier said it welcomed the review by McCarty's office, but hoped regulators would also look at the number of claims denied based on reports from insurer-funded engineers, as well as which insurers have either eliminated or redefined sinkhole coverage so it's no longer available. Lawyers who represent property owners have defended the increase in sinkhole claims as justified, arguing years of overdevelopment and several dry seasons have left the terrain susceptible.

Over the past four years, total sinkhole costs amounted to $1.4 billion, making sinkhole claims a primary reason for escalating insurance rates.

Pasco and Hernando remain far and away the top two counties in sinkhole claims, accounting for half of all claims statewide from 2006 to 2009.

Hillsborough accounted for 16.3 percent of all claims during that period and Pinellas 6.3 percent. Hillsborough leapfrogged Pasco this year and accounts for 23 percent of all claims filed.

Sinkhole claims from Miami-Dade and Broward counties also have spiked. So far in 2010, Miami-Dade has accounted for 137 claims compared with 261 over the previous four years, and Broward reported 149 claims this year to 252 for the previous four years.

"We know the problem is out there. It is one of the major reasons insurance rates are going up," said Sam Miller, executive vice president of the Florida Insurance Council, a trade association.

"We're not talking about a sinkhole that swallowed up your house. The vast majority of claims involve cracking in a driveway or cracking in a wall."

For its Sinkhole Data Call, McCarty's Office of Insurance Regulation gathered data from 211 property insurers.

From 2006-10, the industry reported 8,959 open claims and 15,712 closed claims for a statewide total of 24,671.

The report is online at floir.com/pdf/2010_Sinkhole_Data_Call_Report.pdf.

Times/Herald staff writers Mary Ellen Klas and Jeff Harrington contributed to this report. Steve Bousquet can be reached at (850) 224-7263 or bousquet@sptimes.com.

Insurance claims for Florida sinkhole damage spike 11/09/10 [Last modified: Tuesday, November 9, 2010 10:16pm]
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