The plan to make sinkhole coverage optional by Citizens Property Insurance Corp. faces two criticisms:
Rates still would be too high without sinkhole coverage - and too high with it, said experts hired by Pasco County to fight for lower premiums.
Jacksonville attorney Timothy Volpe and New Jersey actuary Allan Schwartz told county commissioners Thursday they will argue that premiums should drop more when Florida regulators have a hearing Dec. 18 in New Port Richey.
"We have certain problems, certain issues with what Citizens has done, in terms of how they've tried to reconcile how much money they're taking in, how much they claim they need and how much is going out," Schwartz said.
Pasco leads the state in sinkhole claims, with Citizens raising rates by triple digits. But Citizens has estimated Pasco customers will save 56 percent, and Hernando 44 percent, if the state-run insurer can drop sinkhole coverage from standard policies statewide.
Hillsborough and northern Pinellas counties would see lesser drops because they have not been hit quite as hard by sinkhole-related rate spikes.
Volpe and Schwartz have not finished their report, but they said Citizens has not provided enough data yet justifying the proposed rates.
Volpe and Schwartz - who won lower rates this year in Monroe County - were also loath to reveal detailed legal arguments before the hearing.
But one issue appears crucial: a September mandate by the state that sinkhole coverage rates drop 14.4 percent because of changes in state law.
Instead, the Citizens proposal will mean people who want sinkhole coverage by the state-run insurer - Pasco's largest - will have to pay more next year than they do now.
By Citizens' account, insurance costs $7,019 on a 1978 masonry house worth $250,000 in Pasco. Without sinkhole coverage, the premium would be $3,664.
But the premium would rise to $7,395 if sinkhole coverage with a 10 percent deductible is included.
Citizens spokesman Rocky Scott declined to provide details on how the rates were calculated and declined comment on Volpe and Schwartz's questions until they submit a proposal.
But he said sinkholes might not be the only factor driving the rates. For example, a 25 percent rate increase on Jan. 1 is for reinsurance, the backup insurance for insurers.
The Florida Office of Insurance Regulation's decision on Citizens' proposal, expected in January, will be important for customers of private insurers, too. Area lawmakers are writing a bill mimicking the Citizens proposal that would allow private insurers to make sinkhole coverage optional.
Volpe, who supports making sinkhole coverage optional, has helped write the proposed bill.
In both cases, "catastrophic collapses" would still be covered. But they would be defined as homes that drop 5 feet within seven days and become uninhabitable. Which leaves grass roots activists from Homeowners Against Citizens asking: What happens if a house drops just 4 feet - a drop that could still leave it unlivable?
Citizens could have flexibility if a home is uninhabitable, Scott said. The key issue was eliminating minor settling of houses under sinkhole coverage, he said. Doing so could reduce claims.
But Ginny Stevans, HAC president, questioned the wisdom of moving the sinkhole risk to homeowners instead of finding solutions that drop rates.
"We don't think that's effective," said Stevans, whose group will meet at 2 p.m. Saturday at the New Port Richey Library to discuss its options.
David DeCamp can be reached at (727) 869-6232 or email@example.com.