For three years, insurers have increasingly shunned sinkhole-prone properties and even neighborhoods in the Tampa Bay area, forcing homeowners to buy more costly insurance from the state-run insurer of last resort.
Sinkhole coverage is the chief reason the number of bay area, personal-lines policies in the state-run Citizens Property Insurance has ballooned from fewer than 2,000 in 2001 to 125,000 today, Citizens executive director Bob Ricker said.
Last year, Citizens paid out $6-million in sinkhole claims; this year, it anticipates paying $25-million. Next year, "we could be seeing $40-million to $50-million in sinkhole losses," Ricker said.
Citizens' staff and board of directors agree it's a problem. They just can't agree what to do about it.
On Tuesday, Ricker offered one solution to his board: endorse legislation to create a sinkhole reinsurance plan. The reinsurance idea is expected to be among the recommendations coming out of a pending sinkhole study by Florida State University.
As envisioned by Ricker, insurance companies would carry a homeowner's base policy but sinkhole claims would be paid out of a reinsurance fund that does a better job distributing the risk.
That didn't fly with Citizens' board chairman Bill O'Neil.
"What we don't want to do is create another monster like the windstorm pool," O'Neil said. "I'm scared to death we're going to do the same thing with sinkholes."
Board member Edward London also questioned who would fund the reinsurance pool, objecting to the notion of all of Florida subsidizing four Tampa Bay area counties.
The board held off any action pending further study.
After the meeting, Ricker said the board misunderstood him. The sinkhole reinsurance program wouldn't become another bureaucracy like the wind pool, he said.
Nevertheless, he wasn't about to push it.
"It's really more of an industry issue," he demurred. "We'll let the industry take the lead."
