Rick Scott Says Proposed Citizens Sinkhole Increase Must be Fair to Company and Consumers

Gov. Rick Scott says 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 got to be fair to our citizens also, Scott said.

The governing board of Citizens Property Insurance Corp. will hold an emergency conference call Mondaty afternoon to discuss means to soften the blow of the proposed increases in sinkhole insurance premiums.The proposed rate increase averages nearly 450 percent, with a high exceeding 2,200 percent.

The largest increases are proposed in the Tampa Bay region.

Citizens, with 1.4 million policies, is the states largest property insurer.

Citizens' officials have recommended capping the increase at 50 percent.

The board will also consider phasing-in any increases.

Scott, who said the proposed increase has been discussed during a recent Cabinet meeting, was unaware of the recent staff recommendation.

Its got to be actuarially sound, but you have to understand we did make changes so we shouldnt have the same sinkhole issues weve had in the past, Scott said.

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

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

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

The Office of Insurance Regulation will hold a public hearing Tuesday in Tampa to review the rate proposal.