Homeowners Boo Insurer's Solution

Article Courtesy of The Tampa Tribune

Published  December 19, 2006

NEW PORT RICHEY - Citizens Property Insurance Corp. presented a case before state insurance regulators Monday night for what the state insurer of last resort describes as significant homeowners rate reductions in Pasco County.

Many of the estimated 200 residents and local leaders who attended weren't buying the explanation. They said the proposed rates, which make sinkhole coverage optional, are not low enough.

Citizens wants to increase deductibles and make coverage elective for minor sinkholes and to settle claims as a way of lowering premiums. Policyholders would have to get coverage for catastrophic events, defined as a 5-foot-deep sinkhole forming within seven days and making a house uninhabitable.

Susanne Murphy, Citizens' executive vice president, said the changes would reduce rates by 47 percent in coastal Pasco and 58 percent inland.

Citizens' soaring rates in Pasco in recent years have been blamed on an inordinate number of sinkhole claims. From January through October, Citizens customers statewide filed 613 sinkhole claims, including nearly 400 in Pasco, company spokeswoman Christine Turner said.

In comparison, in 2002 there were four sinkhole claims in Pasco totaling $160,000.

Paul Ericksen, a consultant for Citizens, said eliminating mandatory sinkhole coverage would put Pasco's rates more in line with those in other counties.

Two local lawmakers who sponsored legislation to make sinkhole coverage optional, along with a lawyer hired by Pasco to investigate rising rates, disagreed with that assessment.

Attorney Timothy Volpe noted that the average sinkhole claim in the Bay area has risen from about $32,000 in 2002 to about $109,000 last year. "This is probably reflective of an attitude for the people of Citizens to pay for claims when perhaps they should not," he said.

Volpe argued Citizens was raising rates when its own research showed that decreases were warranted.

Allan Schwartz, who is working for Pasco with Volpe, said his calculations show that rates should be 20 percent to 40 percent lower than what Citizens proposes, based on risks and costs.

During the three-hour hearing, several residents shared stories of how their rates have doubled and tripled. Wil Nickerson, of the grass-roots group Homeowners Against Citizens, urged state leaders to continue the fight.

The crowd frequently heckled Citizens officials, yelling, "Get a life!" and "This is ridiculous!" A group walked out of Spartan Manor 45 minutes into the meeting as one man yelled, "You guys created this problem, and now you want us to correct it."

State Insurance Commissioner Kevin McCarty, who will review Citizens' plan, frequently had to remind speakers from the crowd to stay on point. Citizens hopes he makes his decision this month so the new rules can take effect by March.