Citizens Hikes Standard and Sinkhole Coverage

Citizens Property Insurance Corp. board members on Wednesday boosted the standard coverage 6 percent for the majority of its nearly 1.5 million customers, while formally hiking sinkhole policies to a rate lowered last month by state regulators.

Sinkhole policies will still jump 32.8 percent, but the amount is down from the initial request from the state-backed Citizens that averaged 447 percent statewide.

The board had agreed to cap the sinkhole increase at 50 percent on the eve of an expected contentious public hearing in Tampa on Sept. 13.

However, the Florida Office of Insurance Regulation declared that even the 50 percent rate hike was not supported by credible evidence to meet Florida statutes meriting such a large increase.

Citizens' officials had argued the sinkhole rate increase was needed because current premiums dont cover payouts for sinkhole claims. Instead, the state regulators opted to grant a 32.8 percent markup.

The state regulators also instructed Citizens to contract with an independent firm to conduct an analysis of Senate Bill 408 from the 2011 legislative session, which lifted a 10 percent cap on the maximum rate sinkhole premiums could be increased if certain conditions could be met.

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

Some of the largest sinkhole premium increases are proposed for the Tampa Bay area, which has the largest percentages of Citizens coverage in relation to other insurance providers.

Sen. Mike Fasano, R-New Port Richey, said at the Tampa hearing many in the Tampa area face upside-down mortgages and that the increase would be a devastating hit if approved, even if phased in over a number of years.