CITIZENS SINKHOLES–At Least Some Are Willing to Listen!

Since my last post on Citizens sinkhole rate increase; the one where I mentioned that some advocating for consumers may not fully understand the issue, I’ve had communications with all of them, except Senator Fasano. Chip Merlin and Sean Shaw have both, in their own way, indicated they will take a closer look at the facts. Sean Shaw has even indicated he is doing research on specific points. Frankly, regardless of whether minds are changed, this is what I’ve come to expect from two respected lawyers and advocates; the willingness to listen and, perhaps, learn.  As for the Pasco County activist, Ginny Stevans,  not so much!

Her lengthy response is replete with false statements, distracting exaggerations masquerading as fact, and a fundamentally flawed understanding of Citizens and the concept of insurance subsidies.

I’ve reproduced her comments in their entirety, followed by the “The Truth”. Unlike Ms Stevans, I’ve cited some helpful references and may add more in the future. Most can be found in the library on my website. Others are available from, or

Stevans: “Yes Mr. Scott I would say you might be delusional in thinking that I might agree with you. Sorry for the delay in responding, my family and I have been very sick with the flu. That being said I guess I will have to again clear up my position.”

The Truth–Sorry to hear about the flu and glad you’re better.

Stevans: “First of all I do TRULY care about consumers and have nothing to monetarily gain from my position, as do many others.”

The Truth–You’re asking for subsidies for your area and yourself at the expense of  others, many of whom are poor and can’t even afford to own property–that’s hardly nothing to “monetarily gain” and frankly, in the eyes of those paying, quite selfish.

Stevans: “It is absurd to me that you could even write that this increase helps a huge majority of Citizens policyholders.”

The Truth–What I said is true and, if not, easy for you to refute by citing some facts.  My proof; see the ICA testimony in the Hartford Rate Hearing June 2011, the Citizens rate filing December 2010, and the explanation on Citizens website of how it’s first tier assessment is levied on existing policyholders.

 Stevans: “IF you would do your homework you would find out that MOST (if not ALL) consumers that HAD sinkhole coverage WANTED and NEEDED that coverage! It was FORCEFULLY removed from their policies several years ago and made (in THEIR words) “OPTIONAL” and at a HUGE increase to purchase it. When that happened many (if not ALL) consumers that “OPTIONALLY” dropped that coverage did it so they could afford to keep some type of coverage verses not being able to afford total coverage on their home. They were fooled into believing that “catastrophic” coverage would be adequate. In fact we know that “catastrophic” coverage covers nothing unless your home is condemned, falls into the ground, AND is deemed un-inhabitable!”

The Truth–You said the same thing three times. Obviously if it falls into the ground it is uninhabitable and condemned. But, it is also possible that the structure is only being “threatened” by a sinkhole with no visible damage but would still be condemned.

Stevans: “That only happens in LESS than 1% of sinkholes in Florida.”

The Truth–Good point, I wish I’d thought of it. In fact Citizens VP of Underwriting, Paul Palumbo testified that Citizens had “never” had a claim “filed” for catastrophic collapse; though there may have been one or two since he said that. Do you see the problem; no sinkholes but lots of claims for sinkhole “activity”?

Except for the exaggerations as to motives and harm, you’re history on sinkhole activity coverage above is accurate. But…it’s also irrelevant to the issue of the rate increase–the coverage is what it is. The question before us is, do you think it’s fair for others to subsidize losses (forget for now whether they are legit or not) that are unique to Pasco County or Sinkhole Alley?  If “yes” then, you should also think it’s fair for those in Pasco to pay for hurricanes in Southeast Florida and Key West? How ’bout earthquakes in California or mudslides in the Northwest? No?  Then, you only want subsidies that flow to you and not to others from you.  How nice!   Consumers in Citizens and the rest of the state need to know how costly your advocacy on their behalf is. 

Stevans: “That being said sinkholes can create thousands of dollars of damage that is NOT covered by catastrophic coverage…”

The Truth–So can Floods or Earthquakes but, they aren’t covered.  Besides, it’s very unlikely. While you may have an example of a home with windows that won’t close or large cracks, the majority aren’t sinkholes but settlement, construction defects, bad windows, doors or contractors, etc.  The claims are filed alleging sinkhole “activity” in the area; without any visible signs of land subsidence. Please see the OIR 2010 Sinkhole Data call, the Senate Banking and Insurance Interim Study titled, Issues Relating to Sinkholes; The Deloitte Sinkhole Report — 2006; Insurance Study of Sinkholes–2005, Sinkholes in Florida (County Maps) Fla. Center for Instructional Technology, University of South Florida and Areas of Sinkhole Occurrence Florida in 2008

 Stevans: “… and there are banks and mortgage companies that REQUIRE full-coverage.”

The Truth–Thank you for not saying “many” banks as Seantor Fasano has done. Out of a few hundred in Florida, there were possibly two such banks: US Bank and Bank of America.  Both believed that sinkhole coverage was for catastrophic collapse. I’ve been told that B of A has recently rescinded its requirement when it learned the truth.  US Bank does not require any land movement coverage in the rest of the country; including earthquakes in California or mudslides in the Northwest, or Mine Subsidence in West Virginia.  It requires sinkhole activity coverage in Florida because it, like Bank of America, didn’t understand it wasn’t catastrophic collapse.  Besides, people can always move their mortgage which is what I would do if I didn’t want to pay for a coverage I didn’t want.  Your motives appear transparent when you don’t advocate that banks shouldn’t be allowed to force people to buy sinkhole activity coverage  when they don’t even require earthquake coverage in California. And…why aren’t you telling consumers to move their mortgage from such institutions?

Stevans: ” So WHO does a 2000% rate increase help?”

The Truth–Those who don’t want to continue paying subsidies to others; which is well over 80% of the people in Citizens and even more statewide. Besides, there are very few who would pay 2000% more, and only “IF” they choose to buy the coverage. See above that banks don’t require it. Please don’t say they do, just provide the proof of which ones so I can tell their borrowers to move their mortgage.

Stevans: “So don’t say for one minute that people do not WANT this coverage and that it is “optional” because it isn’t for everybody.”

The Truth–Even in Sinkhole Alley, and in Citizens, well over 80% aren’t buying it, are they? See Citizens board meeting reports and the last Cabinet presentation by Citizens, you can find more at

Stevans: “By the way do you live in Pasco????”

The Truth–No,  too many sinkholes. 🙂

Stevans: “The “logic” that suggests that SB408 will reduce future sinkhole losses is simply because no one will be able to afford the coverage, therefore unable to file a claim. As for those who are REQUIRED by their banks or mortgage company I foresee increased foreclosures, as again who can afford a 2000% increase? Can you?”

The Truth–It isn’t 2000% of the premium; it only applies to the small portion that applies to the “optional” coverage. I hope your continued omission of this distinction isn’t intentional; accuracy is what consumers need more than anything else. 

Stevans: “I also foresee many homes being abandoned once the damage is too much for the homeowner to fix out of pocket and with no coverage. People were not only duped but they have had their feet held to the fire and have had to make adjustments in their insurance coverage so they can keep their homes AND eat! DISGUSTING!”

The Truth–“You foresee homes abandoned”; people were “duped”; “feet to the fire”? These are the typical exaggerations and hyperbole needed to distract from an argument that otherwise has no merit. That’s “disgusting”!

Stevans: “I was at the sinkhole Rally this past Tuesday and met the new Consumer Advocate. We had a long conversation and again I do not agree with all her points and feel that she is and can be swayed by the insurance lobbyists. That I believe is the biggest problem with the Consumer Advocate, it should NOT be an appointed position but done by a vote of the people. After all should the people not be able to chose WHO they want helping them in Tallahassee, or someone who chooses who will best work in THEIR interests? I guess you could say I have little trust of who our elected officials are getting to help us.”

The Truth— Hmmm…you and I may agree on this one, sort of. First of all, as I said in my blog, the genesis of the ICA was pure politics dating back to when Tom Gallagher was insurance commissioner.  But, an elected ICA might give the majority subsidizing the losses of a few, a needed voice. It would also give those in Sinkhole Alley, the majority who are tired of blighted neighborhoods, reduced tax rolls and unsavory advertising, a chance to elect someone less prone to appease a few activists and one very loud Senator.  I’m hopeful our new ICA, appointed by an “elected” official, is that person.

Stevans–“Let me end by asking you this….maybe I am wrong and you just have an abundance of money so it might not matter to you. Could you live in a house that you had cracks in your floors that raised the slab up 3 or 4 inches, all or most of your windows unable to be opened or closed, your front door won’t open, your ceiling collapsed in one or more of your rooms, you can put hour hand outside and wave “HI” to your neighbors through the crack in your wall. Think this is cheap to fix? Ok fix it…then 6 months later it is back and now is worse. Ok, maybe sell….OH but who would want that house now? I sure wouldn’t! Have you ever been in a sinkhole house? Seen the damage?? Also please be aware that NONE of what I listed above is covered under catastrophic and can cost 100k to 200k to fix…..pocket change for some but several years pay for others! Now WHO do you care about???? C’mon!”

The Truth–It is covered under catastrophic loss if it’s due to a sinkhole. If not, then it’s due to settlement or construction defect, foundation flaws, poorly poured concrete, or a bad real estate purchase.  Please listen to the testimony of Greg Armstrong, a Realtor from your area, which clarifies what is really happening vs. the exaggerated single example provided above. You can find it under the “video” section on my blog titled; Sinkhole Horror Stories. See also testimony from the Hernando County Property Tax Appraisers Office regarding the effect of “false” sinkhole claims on property values and countywide tax rolls; delivered to Senate B&I, 2011.

Stevans–“I don’t understand how ANYONE can take the position you have on this bill and see it being a good thing, unless of course you have something to gain from the insurance industry. THAT is my position! Hope it came through loud and clear this time!.”

The Truth–I’m only talking about the provision excluding sinkhole activity losses from the 10% glide path, not talking about the bill. You’re right, I do have something to gain; a reduction in the assessments on my homeowners policy.  Finally, as to your hope that your position comes through “loud and clear”, I must admit….it was loud!  


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