Citizens Board Agrees to Stair-Step Statewide Sinkhole Insurance Rate Hike

There will be no reduction in the proposal to boost Citizens sinkhole insurance by 428 percent across Florida and by more than 2,200 percent in the Tampa Bay area known as "Sinkhole Alley."

However, rather than slamming customers with the hit all at once, members of the governing board for Citizens Property Insurance Corp. on Monday agreed without objection that any approved rate increases will be phased in over a number of years.

The first step would be for 50 percent of the requested rate hike for sinkhole coverage in the first year. The agency will consider future hike totals in subsequent years.

I dont think if we get the rates we want, the chairman will ensure we have another meeting, said board member Tom Wallace, a former state House member from Tampa.

Count on it, replied Citizens board chairman Carlos LaCasa.

LaCasa, a former state representative from Miami, was appointed the new chairman of the Citizens board last Wednesday by state Chief Financial Officer Jeff Atwater. He replaced Naples businessman Jim Malone.

LaCasa called Monday's emergency board meeting to deal with complaints about the proposed hike, which is set to go before the Office of Insurance Regulation Tuesday in Tampa.

"I want to tell you how moved I am that those of you who were newly appointed to the board were initiated into your work on Citizens with such a controversial and important matter," LaCasa said.

Prior to Mondays meeting, Gov. Rick Scott said any adjustments to the proposed rate hike for Citizens sinkhole insurance must be fair to both insurance providers and customers.

We have to have a financially sound insurance program, we want insurance companies coming to our state, but we've got to be fair to our citizens also, Scott said.

Citizens, with 1.4 million policies, is the states largest property insurer. While Citizens accounts for less than 15 percent of insurance policies in most counties, the percentages range from 20 to more than 50 per county in the Hernando, Pasco, Pinellas and Hillsborough county region.

Citizens' officials have claimed that the rate increases are needed because current premiums dont cover payouts for sinkhole claims.

In 2010, sinkhole coverage premiums brought in $32 million to Citizens, while sinkhole claims required nearly $250 million in payouts.

Florida House Speaker-designate Will Weatherford, R-Wesley Chapel, called the increase a reform measure and applauded the decision to stagger the increase.

Under the leadership of board chair Carlos LaCasa, Citizens appropriately recognized the impact that SB 408, a comprehensive insurance bill passed last session, could have on reducing the volume and cost of claims," Weatherford stated in a release. "The Florida Legislature is laser-focused on preventing fraud, which will ultimately lower insurance costs for all policyholders. We know that it is going to take time for these reforms to work, and we also know that Floridians cannot shoulder such dramatic increases, particularly in the middle of a national recession."

In the 2011 legislative session, the insurance reform bill SB 408 lifted a 10 percent cap on the maximum rate sinkhole premiums could be increased. All other policies, homeowners' and dwelling/fire lines, continue to have a 10 percent cap this year.

The Florida Office of Insurance Regulation hearing is set for 4 p.m. at the Tampa Convention Center.

The Florida Channel will cover the hearing live on its website: http://thefloridachannel.org/.

Reach Jim Turner at jturner@sunshinestatenews.com or at (850) 727-0859.