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Sinkhole rates could drop 14 percent
By DAVID DECAMP
September 7, 2006
Florida's insurance regulator will announce
today that Pasco County will get a little relief on its property insurance
bills.
The portion of the bills related to sinkhole
coverage should drop about 14 percent after a state review of the county's
rates, state Rep. John Legg and state Sen. Mike Fasano said. They were briefed
Wednesday by the Florida Office of Insurance Regulation on today's announcement.
"I don't want people to think all of a sudden
they will see their rates decrease, but they are going down," Fasano said.
Fasano and Legg sponsored a law last spring
that changed state procedures for handling sinkhole-related insurance. The law
set up an alternative mediation process on disputes and increased the limit of
deductibles for sinkhole-related claims to beyond $500.
Once those were in place, the state was
required to reassess the rates for sinkhole coverage.
Insurers are required to use the state's
findings as the basis for their sinkhole coverage in any rate request starting
in October, said Fasano, R-New Port Richey.
Bob Lotane, a spokesman for the Florida Office
of Insurance Regulation, declined to give specific rate changes.
"The more significantly an area is affected by
sinkholes, the more significant the rate relief will be," Lotane said.
All Florida policyholders will see a reduction
but only for the sinkhole portion of their policy. Rate relief affects only the
multiperil portion of policies and excludes wind coverage.
The areas most affected will be the places
where the sinkhole percentage of the premium is the highest, such as Pasco,
Hernando and north Pinellas counties.
"The rate relief declines from there," Lotane
said, "and would be far lower."
Sinkholes have driven rate increases for parts
of Pasco and Hernando beyond the rising rates in neighboring counties.
Along Pasco's gulf coast, rates are increasing
139 percent for customers of Citizens Property Insurance Corp., the insurer of
last resort. Most of Pasco is being hit with hikes of 67 percent from Citizens.
According to Citizens' 2005 filings, Pasco's
increases would have been lower than the state average of 30 percent if not for
sinkhole problems. The average increases were 17 to 30 percent in Citrus,
Hillsborough and Pinellas counties.
The sinkhole-rate reduction is not expected to
put loads of money in people's pockets because it represents just part of the
overall bill in a hurricane-prone state hit by multiple insurance woes. But
Fasano and Legg said they hope the state order will be the first sign things
will get better.
"It is an actual decrease, and it starts to
show stability in the Pasco market," said Legg, R-Port Richey.
Yet some insurance industry members and
attorneys have said the effects to homeowners' bills might end up being small.
They have said it creates another layer of bureaucracy, and ultimately, insurers
still will not expand their exposure to risks with more policies.
Times staff writer Tom Zucco contributed to
this report.
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