New legislation that supporters hope will reduce homeowner's insurance premiums in sinkhole-prone Pasco and Hernando counties is close to getting Gov. Charlie Crist's signature.
The bill, sponsored by Sen. Mike Fasano, R-New Port Richey, and Rep. John Legg, R-Port Richey, allows private insurers to do something that state-run Citizens Property Insurance Corp. has been doing since late 2007: Automatically drop sinkhole coverage on policy renewals unless a customer requests otherwise.
Citizens customers in some areas have saved more than 50 percent by dropping the coverage, blamed for high insurance rates.
Fasano, who describes the now-optional coverage as "bells and whistles," estimated that tens of thousands of homeowners in Pasco and Hernando counties have saved a total nearly $10 million in premium costs with Citizens, the largest insurer in the two counties.
The intent behind the new legislation, he said, was to see if private insurers who peeled out of the area because of sinkhole claims would be lured back by the new provision.
"We wanted to see if we could get the private insurers to come back to Pasco," Fasano said.
Another part of the legislation, pushed by Pasco County officials, would require regulators and insurers to consider reducing rates in counties that have tougher building codes and a way to track sinkhole claims.
Pasco County Commissioner Michael Cox, who pitched the idea to Fasano and Legg, said the county has a couple of approved ordinances that fit that bill as well as one proposed ordinance aimed at strengthening building standards.
"For that, we expect to see some sort of reduction in rates," Cox said.
How much of a reduction is up in the air. And another sticking point: Insurers want to see four years of data before they'll cut rates. Some consumer activists say the bill, particularly the extension of the opt-in sinkhole coverage provision to private insurers, is a bad idea because it cuts at the heart of what insurance is supposed to do —spread the risk.
"They're a la carting our policies," said Ginny Stevans, a Pasco resident. She said people, facing tough financial pressures, will drop the coverage and then be in big trouble when cracking and gaping holes show up.
"Sinkholes happen. They do, and not where you expect them," said Bill Newton of the Florida Consumer Action Network.
Newton said he was skeptical, too, about the practical impact of local building ordinances on insurance rates.
"It's great for new construction," he said. But companies look at entire counties. "I don't know how that benefit is going to get passed along," he said.
Jodie Tillman can be reached at firstname.lastname@example.org or (727) 869-6247.