Citizens Property Insurance Corp. took a significant step forward Monday by pledging to spread over time its indefensible proposed rate increases for sinkhole coverage. The initial rate request to capture the entire increase next year was out of touch with reality. But the new plan still would be untenable for many elderly and middle class homeowners in the Tampa Bay region, and the state insurance regulator should not rubber stamp it.
The revisions by Citizens, the state-run property insurer, were an attempt to get in front of the Office of Insurance Regulation's public hearing at 4 p.m. today at the Tampa Convention Center. Hundreds of angry homeowners are expected to turn out to protest the ridiculous proposed rate increases for sinkhole coverage that would add thousands of dollars to premiums in Hillsborough, Pasco and Hernando counties. The revised proposed rate increases for next year still would be steep, but at least they are more in touch with the real world and worth a serious discussion.
Citizens contended it has properly accounted for recent changes in state law that limit the sinkhole damage that will be covered, require property owners to make repairs and reduce the time frame for filing claims. In fact, the insurer claims the new law reduced by 60 percent what it needs to collect in sinkhole premiums next year. But there remain questions about how credible Citizens' projections are in the first place, and state Insurance Commissioner Kevin McCarty should come to an independent conclusion.
Citizens' board of governors agreed in an emergency meeting to limit the average sinkhole premium increase to 50 percent for 2012. That's progress, but the cap is still too high and there are no promises for any limits on increases after next year. The sinkhole premium increases also would come on top of a 10 percent increase in the premium for other coverage from Citizens, the state's largest insurer. The message: We're actually saving you money. That argument is not likely to be well-received at today's public hearing.
While Citizens has to raise its rates for sinkhole coverage because of a surge in claims, the 50 percent cap should be closer to the 10 percent cap for the rest of the policy. Blame the Legislature for removing sinkhole coverage from the 10 percent cap requirement this spring.
Under the new proposed sinkhole rate increases agreed to Monday, average premiums in Tampa would rise next year from the current $156 to $233, an increase of $77. That's more than $3,600 less than the previously sought increase. In inland Hernando County, the average premium would rise from $1,084 to $1,625. In inland Pasco County, the average premium still would rise from $1,472 to $2,208. While Hillsborough, Pasco and Hernando accounted for two-thirds of all sinkhole claims between 2006 and 2009, those proposed rate increases still would be too high for many homeowners in those counties to manage.
Much of the credit for pushing Citizens to go this far goes to Sen. Mike Fasano, R-New Port Richey, whose constituents are among those who would be the hardest hit. But Fasano is right that the changes do not go far enough to protect homeowners who have no choice but to be held up by Citizens in an era of declining property values and high unemployment. This rate increase is a recipe for continuing the recession by the very Florida politicians who claim tax cuts will revive the economy. Tampa Bay homeowners have an opportunity to make their voices heard today at the public hearing — and perhaps Gov. Rick Scott and the Legislature will get the message.