Citizens Property Insurance Corp. has a narrow definition of spreading the risk.
By using U.S. 19 and county political boundaries to establish its sinkhole insurance rates, state-run Citizens unfairly forces homeowners in interior Pasco and Hernando counties to subsidize sinkhole claims near the coast. Private companies act similarly. The rate boundaries, based only on coastal hurricane risks, don't accurately reflect the location of sinkhole claims east of U.S. 19 in Pasco and in Spring Hill in Hernando.
The typical result is a Citizens premium increase of 67 percent in central Pasco compared to less than 30 percent directly to the south in Hillsborough and the city of Tampa. Citizens has said the unexplained high number of sinkhole claims in Pasco account for two-thirds of the $95-million paid for sinkhole damage statewide.
While not offering an explanation, data from Citizens does deflate a common contention that increased sinkhole activity is correlated to groundwater pumping by regional water wholesalers. Claims in east and central Pasco, where Tampa Bay Water's major well fields are located, numbered only 34 over the past three years while Citizens reported 1,174 sinkhole claims in west Pasco.
Legislators have suggested attorney fees contribute to the high volume of Citizens' payouts in Pasco, but targeting settlement costs does not address Citizens' mismanagement.
By using the hurricane boundaries for sinkhole rates, Citizens and other companies are focusing the risk unreasonably. Reducing the pool to match the higher sinkhole claims near the coast is just as problematic and would force homeowners there to pay even higher premiums. Spreading risk among a greater number of policyholders is a better alternative.
A number of proposals are percolating in Tallahassee to address the property insurance crisis. Regardless of legislative action, the least Citizens could do is prepare sinkhole actuary tables that more fairly spread the risk.