Property owners seeking sinkhole coverage from Citizens Property Insurance may have to dig deep to pay for massive increases in the cost of those policies.
Rates could increase an average of 428 percent statewide, according to recommendations released Monday by the state-run insurer’s staff. In Tampa, rates could increase 2,238.5 percent. For the rest of Hillsborough County, Citizens wants a 1301.9 percent increase. Also hit hard: Coastal Pinellas County, where rates for sinkhole policies could rise 2045.6 percent.
That means in Tampa, the average premium for a sinkhole policy could increase from $156 to $3,651. In coastal Pasco County, rates could increase from $1,270 to $3,598.
More than 94,400 property owners in Hillsborough, Pinellas, Pasco and Hernando counties have sinkhole insurance through Citizens.
A Citizens subcommittee is set to consider the rates on Tuesday, and the full board will consider the proposal Wednesday. The rates will need approval by the Florida Office of Insurance Regulation before they go into effect.
Although Florida law limits Citizens overall rate increases to 10 percent a year, a controversial property insurance bill, SB408, passed in the last legislative session gives the agency permission to increase sinkhole policy costs as much as necessary to cover losses.
"This is the reason why I voted against Senate Bill 408," said Sen. Mike Fasano, R-New Port Richey, who fought hard but unsuccessfully against the bill all session. "Those who pushed Senate Bill 408 down our throats said it would actually help the markets. It’s not helping the market. It’s not giving people the opportunity to choose. They have one choice. Either pay the huge increases or have no insurance at all."
But Christine Ashburn, a spokeswoman for Citizens, said the increases are necessary to cover losses incurred by sinkhole claims.
"We’re pushing $1 billion in sinkhole losses over the last nine years. And when we build out rates going forward we look at that actual data," she said. "The numbers are what the numbers are. This is what our actuaries believe is appropriate for the exposure we have on sinkholes."