After getting deluged by angry residents and lawmakers on Tuesday in Tampa, state insurance regulators have less than a week to decide on the requested spike in sinkhole rates for Citizens Property Insurance Corp.
The Office of Insurance Regulation must decide by Sept. 19 whether to allow increases proposed by the state-backed property insurer, including an average 428 percent rate hike for Citizens sinkhole coverage, with a high of 2,226.1 percent in Orange County.
During the meeting, which was streamed live on The Florida Channel, Insurance Commissioner Kevin M. McCarty called the public comments "enlightening."
We talked about some pent-up need, but we also see there is some great deal of anxiety on the consumers, particularly in West Florida, McCarty said. We have high unemployment, people who are underemployed. We have people struggling every day to make ends meet. Some of the rate increases are simply not viable.
Some of the largest sinkhole premium increases are proposed for the Tampa Bay area, which has the largest percentages of Citizens coverage in relation to other insurance providers.
Overall, Citizens is seeking a 12.1 percent statewide average rate increase for coastal accounts and 25.4 percent for others.
Doris Rosen, a Tampa-area Citizens customer who dropped her sinkhole coverage in 2008, said seniors will leave the state if they can no longer afford the coverage.
I keep my fingers crossed and, hopefully, my house will remain level on the property it is above, Rosen said. But I still would like to have sinkhole coverage. It would give me peace of mind and I hope it would become affordable so I could take it on again.
Citizens Chief Financial Officer Sharon Binnun said the insurer has a responsibility to the state and its customers.
We tried to be fair and reasonable, but also fiscally prudent and fulfill fiduciary duty, Binnun said.
Not everyone sees the requested increases, primarily for the sinkhole premiums, as fair.
Sen. Mike Fasano, R-New Port Richey, gave an impassioned plea for senior citizens and young families. He said many in the Tampa area face upside-down mortgages and the increase will be a devastating hit if approved, even if the increase is phased in over a number of years, as was proposed Monday.
Shame on Citizens, Fasano said. A 50 percent (rate hike) in Pasco County means a $1,000 increase. A 50 percent (rate hike) in Hernando County means a $1,200 increase. That is absolutely unaffordable to people in the Tampa Bay area.
He said the housing market in the Tampa Bay region will be further damaged as many residents drop sinkhole coverage.
Fasano opposed the approval of SB 408 in the 2011 legislative session, which lifted a 10 percent cap on the maximum rate sinkhole premiums could be increased.
Citizens' officials claim the rate increases are needed because current premiums dont cover payouts for sinkhole claims.
John Rollins, an expert witness for Citizens before the insurance regulators, backed the numbers from the insurance provider, established as the insurance company of last resort in 2002.
I consider actuarially the range of assumptions that Citizens has used to be reasonable, but, if anything, a little bit optimistic," Rollins said. "Or, said another way, a little bit aggressive in taking into account the benefits of Senate Bill 408 as they begin to appear."
In 2010, sinkhole coverage brought in $32 million to Citizens, while sinkhole claims required nearly $250 million in payouts.
'BACK TO NEW YORK'
Rep. Richard Corcoran, R-New Port Richey, asked for the board to delay any decision until the legislative session next year and to give the states consumer advocate time to research Citizens' numbers.
What Citizens is proposing today, as a freshman lawmaker, is somewhat unfathomable to me, Corcoran said. Ive been elected for six months and we have a group that is proposing the largest insurance increase in Florida, but arguably in the history of the United States of America.
Fasano also said that when the insurance industry pushed SB 408 down our throats, he warned that no insurance companies would take up the slack in the Tampa area once Citizens rates grew too high.
Potential rate increases for all other Citizens policies remain capped at 10 percent this year.
Residents said the sinkhole coverage will skyrocket foreclosures in areas such as Pasco, Pinellas, Hillsborough, and Hernando counties. Limiting next year's increase to 50 percent -- part of Monday's proposal -- will not lessen the blow, they said. Eddie Burgess, Spring Hills, said hes thinking of leaving his home of four years because of the increasing coverage.
How, with insurance going up so high, will we manage to pay for the mortgage? Burgess said. This is ridiculous. Someone mentioned this is a big monopoly with Citizens. Were getting fed up with it. Im thinking of going back to New York.
Reach Jim Turner at email@example.com or at (850) 727-0859.