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Too much fraud, too few remedies for Citizens

By ANDREW SKERRITT
Published January 10, 2006

It's an anxious time for Pasco County homeowners who do business with Citizens Property Insurance Corp., the largest home insurer in the county.

Established by the state as an insurer of last resort, Citizens is the place to go when no one else will take your homeowners insurance check. Unfortunately, last month Citizens approved rate hikes that will give its Pasco County customers the highest increases statewide. Rates in Citrus will climb as much as 24 percent, while Citizens' Hernando customers could see rates rise between 51 and 86 percent.

If Insurance Commissioner Kevin McCarty okays the rate hikes, it would be the third consecutive year that some Pasco homeowners are seeing their Citizens bills more than double.

McCarty should say no to this increase, but that won't happen.

The big hike is blamed on Pasco's large number of sinkhole claims. The company paid $17-million on Pasco sinkhole claims in 2004. Whenever insurance premiums don't cover those high claims, the company can seek a rate hike. That's reasonable. But the supporting evidence is hard to swallow.

In 2004, Pasco made more than 90 percent of all sinkhole claims statewide, according to state Sen. Mike Fasano, R-New Port Richey.

But that's like Pasco residents being suspected of 90 percent of all the armed robberies statewide. That's statistically suspicious.

Citizens insures 25,140 homes in Pasco County. It insures more Pasco homes than any other company. The largest private insurer in Pasco, State Farm, insures almost 5,000 fewer homes. And the gap is expected to widen. Despite repeated rate hikes, the number of Citizens customers grows as private insurers drop customers left and right.

Retirees Joy and David Timmons of Holiday are among those dropped by a private insurer. Three years ago, they used to pay $600 a year for insurance through Clarendon. Now their bill with Citizens is $2,600. And that's before the projected increase.

"We can't afford that," said Joy Timmons, who is petitioning just about every elected official who has an e-mail address.

Having paid off their mortgage, the Timmonses are thinking about dropping wind and sinkhole coverage and just getting fire, theft and liability insurance.

Others, such Pasco County Commissioner Ann Hildebrand, who lives near the water, are thinking about paying off their mortgages so they will have the option of dropping their homeowners insurance.

Unfortunately, many families don't have that option.

Many won't be able to afford their mortgages and the new rates. They may have to sell. We can expect more home foreclosures.

From where Joy Timmons lives in Beacon Square, she sees a lot of houses for sale. Nobody's looking to buy, she said.

If you are house hunting, would you buy a house on which the insurance is going up more than 100 percent? I can already picture Pasco's real estate bubble bursting.

State Chief Financial Officer Tom Gallagher has proposed using the $450-million in additional sales tax generated from hurricane recovery efforts to soften the blow. But that has been dismissed as the kind of idea one would expect from a gubernatorial candidate.

Fasano has filed a bill to limit fraudulent or questionable sinkhole claims. Such legislation could expect stiff opposition from private contractors and lawyers who profit from sinkhole claims. But at least Fasano is looking in the right direction.

Most folks are familiar with the stories of contractors driving around, seeing a crack in a house or a driveway and telling the homeowner he or she has a sinkhole.

We don't need legislation to step up prosecution of insurance fraud. We just need to go after those who file fraudulent claims. If 90 percent of sinkhole claims are generated in Pasco, it suggests widespread fraud, said Bill Newton of the Florida Consumer Action Network. South Florida has a model insurance fraud prosecution program. Pasco County can follow that example.

But we also need to find ways, despite hurricanes, sinkholes and other quirks of nature, to have real competition in the insurance industry. If Citizens is the only choice for many homeowners, then that's no choice at all.

--Andrew Skerritt can be reached at 813 909-4602 or toll-free at 1-800-333-7505, ext. 4602. His e-mail address is askerritt@sptimes.com

[Last modified January 10, 2006, 19:33:35]