By Greg Giordano
Florida’s Office of Insurance Regulation hosted a public hearing on September 13, 2011 at the Tampa Convention Center to consider an application by Citizens Property Insurance Corporation to raise sinkhole premiums by a statewide average of 429%. The amount of the increase varies by county with one county exceeding a 2,000% increase. The hearing, which included sworn testimony by Citizens executives, capped off an almost six-week roller-coaster ride of protests, organized opposition and members of the community uniting for one purpose: to stop the increase.
In the weeks leading up to the hearing, the genesis of the rate hike application can be found in the passage of Senate Bill 408, a widely criticized piece of legislation that was adamantly opposed to by State Senator Mike Fasano. The bill passed during the 2011 session of the Florida Legislature. The premium increase request was filed as a direct result of a provision in Senate Bill 408 which lifted the existing 10% yearly cap on Citizens premiums increases by excluding sinkhole coverage from that cap.
Senator Fasano, who voted against SB 408, asked the governor and the chief executive officer to voice their opposition to Citizens’ plan. Additionally, the senator requested Florida’s insurance commissioner Kevin McCarty to hold public hearings throughout the state. Senator Fasano wrote: “In light of these almost incomprehensible rate increases I respectfully expect that all Floridians be given the chance to have their voices heard on this issue before the Office of Insurance rules on the application.” Commissioner McCarty ultimately agreed and scheduled the September 13 public hearing in Tampa.
As a call for organized opposition arose, Sean Shaw, a former insurance consumer advocate for the state of Florida, joined the fight against the rate hike. Shaw is the founder and director of the advocacy group Policyholders of Florida. Additionally, Senator Fasano was contacted by Jay Neal, the executive director of Florida Association for Insurance Reform, who offered the services of his organization to fight the increase. The first event was a coordinated effort held on August 16. On that day sign-waving rallies and press events were held in Pasco, Hernando and Citrus Counties at which Citizens policyholders came out to demonstrate their opposition to the proposed hikes. Over 250 people attended the rally in Pasco County alone.
As the date of the public hearing drew closer, the outcry from the public grew louder. Policyholders of Florida and Senator Fasano worked together to plan bus rides for customers who could not otherwise travel to the hearing. On the day of the hearing approximately 150 people from Pasco and Hernando Counties joined in the three bus convoy to downtown Tampa. Many other policyholders drove themselves to the hearing from communities in and around the Tampa Bay area.
On the night before the hearing, no doubt expecting the public outcry that would ensue the following day, the Citizens Board of Directors held an emergency conference call in which it was decided the 429% rate hike would be scaled back to a statewide average of 50%. This did not assuage the concerns of Senator Fasano and others, however.
“This was a fight worth fighting, and a fight that won’t stop today,” said Sean Shaw, founder of the Policyholders of Florida, stated in a released statement following the board’s decision. “We will continue to organize for tomorrow’s rate hike hearing, despite the concessions from the insurer of last resort, because that’s the only way to hold rates in check”
“Even though Citizens has chosen to amend the application in the eleventh hour, the potential devastation on the lives of many is none-the-less standing just around the corner,” Senator Fasano testified at the hearing. “Foreclosure is a real possibility for many people who will be unable to afford the increases that are being sought.”
A large number of those customers had the opportunity to testify at the hearing. Some people spoke for themselves while others testified on behalf of a group of policyholders. In the end all who wished to speak were given the opportunity to do so.
“If dropping coverage is the only option that makes homeowners insurance affordable for some policyholders, they may be faced with an impossible situation,” Senator Fasano warned the members of the Office of Insurance Regulation. “Some lenders require sinkhole coverage if a property is encumbered by a mortgage.”
While not all homeowners may be required to have sinkhole coverage, many simply want to carry the added protections.
“Many homeowners want the peace of mind that comes with knowing that their home, for most their single largest investment, is fully covered if a sinkhole opens up and causes damage to that home,” Senator Fasano commented. “ Anything less than catastrophic groundcover collapse may leave a host of homeowners in deep trouble if they don’t have sinkhole coverage.”
The insurance commissioner has only a few days before he must decide whether or not to grant the requested increases. No matter what he decides, the opposition is not finished with their work. The aforementioned Florida Association for Insurance Reform is circulating a statewide petition asking the Florida legislature to, among other things, repeal the provision in Senate Bill 408 that lifted the cap on sinkhole premium increases. Additionally, Policyholders of Florida intends to hold legislators feet to the fire as the group advocates for consumer-friendly changes to Florida’s insurance laws.
Senator Fasano, in his closing remarks at the hearing, summed up what will happen in the near future if the rate increases are approved: “Every private insurance company that writes sinkhole coverage will soon be lining up, rate increase applications in hand, if you approve this request,” Senator Fasano stated. “If this trend continues sinkhole coverage will be but a part of Florida’s history.”
Senator Fasano fully intends to continue being a voice for the consumer as the prepares legislation for the 2012 session that will give policyholders greater protections than the law currently allows.