Citizens Insurance to discuss sinkholes
By TOM ZUCCO
Published June 22, 2006
The Citizens Property Insurance board will consider a proposal today that could offer some rate relief to owners of homes in Florida counties affected by sinkholes, Citizens president Bob Ricker said Wednesday.
"If their home truly has a cover-collapse sinkhole (a visible sinkhole), the homeowner will be paid for it," Ricker said. The plan, which must be approved by Florida's Office of Insurance Regulation (OIR), would make sinkhole coverage optional for homeowners who could buy back portions of their coverage for $10,000, $25,000 and $50,000.
Citizens, the state-run insurer of last resort, incurred more than $60-million in sinkhole losses last year, primarily in the Tampa Bay area, with Pasco County suffering the brunt.
Ricker said the optional sinkhole coverage could eventually be offered by private-sector carriers and allow them to return to the market in areas affected by sinkholes.
"We want to help reduce rates and get carriers back into the market," Ricker said. "This will mean lower rates for homeowners and, ultimately, fewer sinkhole claims for Citizens."
In addition to the proposed sinkhole changes, the board also will discuss a plan by Citizens to no longer offer "builder's risk" policies in the high risk account.
Citizens insures about 6,500 of these policies, which amount to about $4.4 billion in exposure. This is a type of policy issued to contractors to cover new structures as they are being built.
Ricker said Citizens is not required by state law to offer the insurance and has done so only because they were offered by the former Florida Windstorm Underwriting Association.
Board members will also discuss the statewide impact of the actuarial rates for Citizens that were recently approved by state regulators. The statewide average rate increase is 13.3 percent in the personal lines account and 23.9 percent in the high-risk account.