Insurance Bill Attacking Sinkhole Claims Heads to Senate Floor

Senate Bill 408, which eliminates requirements for private insurance companies to carry sinkhole insurance, cleared its final committee hurdle in the Senate Tuesday, and will now head to the floor. An amendment was also tacked on in the Rules Committee preventing Citizens Property Insurance, the state-run homeowners' insurer, from paying sinkhole claims for anything other than repairs of the related damages.

While some fretted over the possibility of moving all sinkhole policies into Citizens, Sen. Garrett Richter, R-Naples, contended that the private market will voluntarily step in to offer those policies. His bill, he said, will help to rein in sinkhole claims that are at the heart of rate increases. State Farm recently cited skyrocketing sinkhole claims in their request to the Office of Insurance Regulation for a 25 percent rate increase in homeowner policies.

Richter said his bill will shore up Citizens, and make it more actuarially sound. A catastrophic hurricane causing $25 billion worth of damage in the state would wipe out Citizens reserves, he said, leaving taxpayers with the bill.

"Where do you get the other $10 billion? You assess the taxpayers of Florida," Richter said.

Sen. J.D. Alexander, R-Lake Wales, who chairs the Budget Committee and helped usher to the Senate floor a $69.8 billion budget with significant cuts to address the state's $3.8 billion deficit, called the problem of the underfunded state insurer "the single biggest financial crisis facing this state."

In a show of solidarity with Sen. Richter, Alexander offered an amendment that changes Citizens formal name to the "Taxpayer-Funded Property Insurance." The amendment passed, but may not make the final cut, as the bill is expected to undergo changes when it makes it to the floor.