St. Petersburg Times
Letter to the Editor
March 2, 2011
You would think with the absence of a major hurricane catastrophe for the past five years, insurance companies would be able to build surpluses for claims. Not the case.
Sinkhole claims have unexpectedly and mysteriously quadrupled over this period. In Hernando County, one private insurer reported sinkhole premium income of about $133,000 and sinkhole claims of more than $2.3 million. That means for each dollar of sinkhole premiums collected, $17 was paid out in claims. “Hurricane Sinkhole” is a Category 5 disaster, and we have to address it.
Many claims are prompted by unscrupulous adjusters and policyholders looking for cash payments. Huge insurance payments, if not used to repair damages, result in a significant decline in property values.
The Florida Senate is addressing the crisis. SB 408 is a collaborative effort among regulators, insurers and consumer advocates. It will strengthen the marketplace by requiring insurers to maintain higher levels of capital. It closes loopholes that invite fraudulent claims by restricting misleading advertising and misleading solicitations. It attacks rising costs by permitting insurers to initially pay actual cash value on claims, and as repairs are made, pay the full replacement cash value.
Florida needs an insurance industry that is solvent and on which policyholders can rely. Our state needs to attract capital to increase the number of insurers so we can get out of the state-owned insurance business. SB 408 is intended to promote these objectives. It will strengthen the market, responsibly address the factors driving up costs, and close loopholes that promote fraud.
State Sen. Garrett Richter, District 37, Naples
