Becalmed by a string of relatively uneventful hurricane seasons, a growing army of claims adjusters has found lucrative work ... in sinkholes.

And they're digging deep into Florida insurers' reserves.

The number of public adjusters, hired directly by policyholders, swelled from 678 in 2004 to 2,914 last year, according to a state report.

That rising number of adjusters, which is now more than double the national per-capita average, has triggered a commensurate surge in sinkhole claims in the past year.

Citizens Property Insurance Corp., the largest insurer of Florida homes, reports receiving about 200 sinkhole claims a month, nearly double the rate a year ago.

That increase is straining the state-backed insurer, and threatens to submerge small private insurers altogether.

The public adjusters say they provide a needed service to property owners. But with adjusters earning as much as 20 percent of a claim's payout, there's a huge entrepreneurial incentive to look for problems.

"It's like Whac-A-Mole," says Kevin McCarty, commissioner of Florida's office of insurance regulation.

The state's West Coast seems particularly susceptible to sinkholes, in which underground limestone dissolves.

Citizens' average sinkhole claims last year cost the insurer $86,297. Citizens paid out a total of $97 million -- five times the premiums collected from policyholders for sinkhole coverage.

According to Citizens, it costs about $10,000 just to verify the presence of a sinkhole.

Gene Waddell, owner of Waddell Insurance in Vero Beach, said insurers need regulatory relief to keep the spate of sinkhole claims from destabilizing the industry.

But a package of reforms -- including a clampdown on profiteering adjusters -- was vetoed by Gov. Charlie Crist this year.

Waddell believes that Republican Rick Scott will be an improvement over Crist when it comes to bringing market-based regulatory relief to the industry.

"This is one of those 'leaks in the pipe' that is being abused, and this leak will be plugged," Waddell vowed.

Scott says he wants to revamp Florida’s insurance system by giving insurers more “certainty" and limiting their exposure when it comes to writing policies for hurricanes and sinkholes.

Republican lawmakers are inclined to agree and are scheduled to override Crist's veto when they meet in a one-day special session Tuesday.

Even beleaguered homeowners are starting to express concern about over-eager and hyperactive adjusters.

Noting a rising tide of fliers and solicitation calls -- and a Tampa billboard screaming "SINKHOLE DAMAGE?" -- the Wall Street Journal reported that aggressive advertising by adjusters and lawyers could be digging a hole for neighborhoods.

Homeowners who are scared "into believing you have a sinkhole" could wind up "being involved in a fraudulent claim" that also hurts their property values and pushes premiums higher, McCarty said.

--

Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.