Citizens Goes Along with Reduced Florida Sinkhole Rate Hike Decision

Florida’s state’s-backed property insurer has indicated it will implement a newly-approved sinkhole rate increase even though it falls far short of what it says it needs.

Insurance Commissioner Kevin McCarty slashed a proposed statewide average 447 percent increase in Citizens Property Insurance Corp.’s sinkhole rates to just 32.8 percent.

While McCarty defended his decision, maintaining the insurer failed to take into effect the sinkhole reforms enacted earlier this year, he also stressed that his decision did follow a late Citizen’s proposal to raise rates by only 50 percent this year.

“They put in a cap, and what they put in that cap is very similar to what we ultimately approved,” McCarty said.

Citizens officials have signaled they will go along with a McCarty’s decision, while hoping the reforms will improve the insurer’s financial position. In 2010, the insurer collected $32 million in sinkhole premiums versus $200 million in claims.

“We believe this increase, which is most of the phase-in request, will provide additional premiums while allowing for time for the SB 408 provisions to have an impact of sinkhole losses,” said Christine Ashburn, director of legislative affairs for Citizens.