However, increases for the sinkhole coverage portion range from 0 percent in Lake County to 2,226.1 percent in Orange County. This disparity in percentage increases has led to widespread consumer concern about the new pricing in the areas most affected.

SB 408 Impact

Some critics have questioned what they see as excessive increases, noting that the comprehensive property bill SB 408 passed in the 2011 legislative session contains language that addresses sinkhole coverage cost drivers. Lacasa asked Binnun to comment on the impact of SB 408 on the proposed rate increases. Binnun said that despite some reports otherwise, the provisions in SB 408 were “absolutely” taken into consideration during the calculations. She further noted that the rate indication “would have been much higher in the absence of SB 408.”

Binnun's remarks were in line with the staff documents provided to board members at the meeting. In that handout, staff recommends “that the Board utilize the provisions of Section 627.0629(5) to implement the sinkhole rates, once approved by the office, on a phased-in basis over a period of years. Staff recommends that the board approve an overall average statewide and territorial premium increase for sinkhole coverage of 50 percent for the first year, with new indications to be reviewed annually thereafter. Should the sinkhole rates approved by the office differ materially from those that were filed, staff recommends that the board be given an opportunity to reconvene and review the implementation schedule.”

Sumner discussed the legal basis for the board to approve the phase-in approach, assuring the members that such action was acceptable, and Binnun provided additional information on staff's calculations.

Following the presentations and discussion among board members, the board voted unanimously (with Everhart and Lynch abstaining) to implement the staff recommendation phase-in as described above, dependent on approval by the OIR, and if there are no material changes to the percentage of increase.

Rate Hearing to Come

Today's emergency board meeting (which was rescheduled from its previously announced date of September 28) was held some 24 hours prior to a public rate hearing scheduled by OIR for 4:00 p.m. to 10:00 p.m. September 13 in Tampa. The unusual hearing in Tampa (most rate hearings are convened in Tallahassee) was prompted by a written request from Sen. Mika Fasano, R-New Port Richey, whose district includes areas with significant sinkhole claims.

The proliferation of sinkhole claims in recent years has been staggering. In 2009, Citizens collected $19 million in premium for the sinkhole activity peril and paid $84 million in losses. In 2010, Citizens received about $32 million in premiums for sinkhole coverage, but ultimate losses and loss-related expenses totaled an estimated $245 million. Over the past nine years, Citizens has paid out $1 billion in sinkhole claims.

As of September 6, Citizens had 1.43 million policies in force. The vast majority (973,536) were in PLA coverage. The Coastal-Personal Residential Wind-Only Account had 246,855; Coastal-Personal Residential Multi-Peril had 170,073.

The date for the October meeting of the board of governors has not been set. The full eight-member board has yet to be seated. The two appointees allocated to Gov. Rick Scott have not been selected.