When it comes to any legislative changes aimed at the insurance industry, promises are just promises until that day comes when the collective will of the legislature finally acts in a definitive way to resolve a crisis. And occasionally, such a resolution is tucked away in some bill that covers so many issues that it takes a sharp eye to both identify the reforms and eventually measure their impact on the market. Such has been the case with the long drawn-out debate over how best to approach the sinkhole issue, which has always come in under the radar and then pushed aside by other homeowners' issues. In the 2006 legislative session, however, regulators, lawmakers, and the industry finally took the first steps toward to resolving the long-suffering sinkhole issue and provided policyholders with their first glimmer of rate relief.

A Long Sinking Problem

The sinkhole issue has been one of those perennial topics that, for a number of reasons, has been repeatedly pushed to the back burner, in part because it has been difficult to resolve. Among the many solutions considered was the creation of some sort of joint underwriting association or mini-reinsurance fund to pool the cost of sinkhole claims. Lawmakers rejected the idea, especially since it would require placing into the law some form of policyholder subsidies to fund the financial risk pools.