Florida Insurance Commissioner gets praise for limiting sinkhole rate hikes
10NEWS – WTSP
Tuesday – September 20, 2011
Tallahassee, Florida – Customers of Citizens Property Insurance Corporation with sinkhole coverage are breathing a sigh of relief.
Florida Insurance Commissioner Kevin McCarty has rejected the huge rate increases that Citizens wanted. McCarty says the company did not justify its request.
Citizens had asked McCarty to approve premium increases of more than 2,000 percent in some areas, including Tampa. Some customers would have faced rate hikes of $6,000 a year.
McCarty approved a rate hike averaging about 33 percent statewide – less than one-tenth of the 447 percent average increase that Citizens requested.
McCarty said he tried to give the company sinkhole rates that were more actuarially sound. But he limited the increase because he said a new law passed this year should help reduce sinkhole fraud and bogus claims.
“The Legislature while uncapping the rates, contemporaneous with that, they put in a very comprehensive reform having to do with sinkholes and we think that will have a moderating effect on rates going forward.”
Citizens paid out nearly $250 million in sinkhole claims last year, while collecting only $32 million in premiums.
Sen. Mike Fasano, who pushed McCarty to hold a public hearing on the issue in Tampa, said people’s input made a difference in the case.
“We had a sign-waving rally opposing the rate increases where hundreds of people turned out. We encouraged many to write letters and e-mails and phone calls to the Office of Insurance Regulation. I know for fact hundreds did that and I also believe the message was heard loud and clear up here in Tallahassee.”
Sean Shaw of Policyholders of Florida echoed Sen. Fasano’s comments, saying people showed they can make a difference.
“I think that’s what this showed. I mean, we had rallies. We had press conferences. We had people showing up to the rate hearing, the rate hearing was moved to Tampa. A lot of politicians switched course that voted for (SB) 408 and subsequently said, ‘Ya’ know, that’s a big rate increase. People can’t afford this.’ So I think it does show if you rise up and you get involved, I think you can make a difference and that’s a wonderful development.”
Florida Chief Financial Officer Jeff Atwater called it a “solid ruling.” He praised McCarty for deciding Citizens’ request was too aggressive.
“I’m really pleased with what the commissioner did and his staff did in very, very short order. It’s what the people of Florida needed for some relief from what was coming. That was an inappropriate rate filing and didn’t take into consideration what the Legislature had done to keep down those rates. So it was well done.”
Gov. Rick Scott repeated his longstanding position on rates for Citizens Property Insurance Corp., saying he wants the company to be financially viable but fair to customers.
“We’ve got to make sure the rates are as fair as we can have to consumers but they want to have a product that they can rely on, a company they can rely if God forbid we have a hurricane, that it can pay the claims.”
The new rates will take effect in 2012.
By Dave Heller