The director of The Heartland Institute’s Florida office today said the decision by Florida Citizens Property Insurance Corporation to raise its rates for sinkhole coverage was a painful but necessary step to assure the solvency of the state agency. A measure signed into law last month gives Citizens, the state’s largest writer of property insurance, more leeway in setting sinkhole premiums.
“The Citizens Board of Governors made a tough but necessary decision today in voting to raise rates to cover out-of-control sinkhole claims that have spiked in recent years,” said Christian R. Cámara, Florida director of Heartland’s Center on Finance, Insurance, and Real Estate. “Last year, for example, Citizens collected $32 million in sinkhole premiums while paying out approximately $250 million in sinkhole claims.
“The spike in sinkhole claims is not due to some change in Florida’s geology,” Cámara continued, “but rather to many individuals who have used sinkhole claims as lottery jackpots. This is unsustainable and, unfortunately, the time to cover these losses has come. The good news is, new legislation recently kicked in that should crack down on some of the fraud whose bill everyone is now being forced to cover.”
