CITIZENS SINKHOLES…The Whole Truth, Please!

On Tuesday, September 13th,  the city of Tampa will host the mother of all rate hearings. Master of ceremonies, Insurance Commissioner Kevin McCarty, has my sympathy.  It will be a televised, choreographed, media event–with buses of pre-fab sign-wavers, some protesting to their own detriment duped into doing so by trial lawyers, public adjusters and one senator. 

About two weeks back Chip Merlin, a friend, trial lawyer and the founder of FAPIA (Florida Association of Public Adjusters); and his associate, former state Insurance Consumer Advocate(ICA), Sean Shaw, separately indicated they would take another look at the issue(s).

It’s now Sunday afternoon, two days before the rate hearing.  Neither has let me know the results of any re-examination. To his credit, Sean Shaw did say he was not ignoring me and had a busy travel schedule, which I’m sure is true.

The only word I’ve seen from Chip is a blog on how Florida’s new ICA had “accepted” his argument that “… 2000% rate hikes just don’t make sense and are dangerous to our state’s economy.”  He attached a copy of the release in question, in which Robin Westcott did say she favored “incremental implementation” but, did not mention “2000%” or say anything about it being “dangerous” to our state’s economy.  And, she certainly did not say “…it doesn’t make sense.”

This approach, expanding statements of others to help an argument the other person wasn’t even addressing, might be unintentional, I don’t know.  But…it’s testament to the problem. Exaggeration, misdirection, unproven statements and assumptions, and most of all…a complete refusal to address the specific issue(s) posed by me and others.  Look at the responses given by Ginny Stevans, an independent activist and Bill Newton with the Florida Consumer Action Network to a blog built around the fact that only 20% of those in Citizens choose to purchase sinkhole activity coverage.

Ms Stevans compares Florida’s premiums with other states and talks about subsidizing floods and earthquakes.  She says Homeowners policies (hers) covers earthquakes. She dismisses my statement that only 20% buy sinkhole activity coverage as though it’s irrelevant. I know Bill Newton, and respect his intentions but, he actually equates sales and property taxes that everyone must pay (if they buy stuff or own property) with sinkhole activity coverage that only 20% of those insured in a government pool choose to buy; and, the pool only insures about 17% of Florida’s homeowners. He never even mentions the fact that a portion of those who received sinkhole “activity” payouts don’t spend the money on the repairs they claimed they needed the money for.  What’s going on?

Worse, the media reproduces many of these type of statements seemingly without question.  Read the articles. You decide.  To my knowledge, no consumer advocate, save Robin Westcott, has done the simplest of things….been  completely  honest with “all” the people.

It’s possible Chip and Sean are waiting until after next Tuesday’s hearing to announce their findings, which would be too late.  Or, maybe they aren’t planning on saying anything, I don’t know.

But, Sean, Chip, Bill Newton… if you want to be honest, completely honest, with all consumers; I’ve put together some statements below that you can address by either proving them to be wrong, revealing them to be exaggerations or stating how your statements or protests to the contrary might have  inadvertently mislead some consumers. If nothing else, this is a good place to start.

Tell me where I’m wrong! You don’t even have to produce the proof, just tell me where you think I’m incorrect and how you would disprove my statement “if” you had the inclination.  Do this from the podium next Tuesday or not, but…at least address the issue.

Here are the statements; true or false:

  •  Sinkhole claims deterioration is indisputable.  Using the Florida Senate report in late 2010 or the OIR data call report (or numerous other government studies), independent actuarial analysis shows: sinkhole claims against private insurers nearly doubled from 2008 to 2009 and tripled from 2008 to 2010; the number of sinkhole claims filed against Citizens also more than doubled from 2008 to 2010; the overall cost is likely $400 Million to $1.4 Billion for the private market, coupled with $150-$500 million for Citizens alone, before the end of 2012.  True or false?
  •  Every Homeowners policy provides coverage for damage due to sinkhole collapse.  The rate increase applies only to “elective” coverage, the payout of which is most often spent   on something other than repairing the  “alleged” damage. True or false?
  • Only 1 in 5 Citizens policyholders in Sinkhole alley “chooses” to buy the elective coverage (sinkhole activity) today; even fewer in the rest of the state. Citizens current sinkhole premiums result, therefore, in a subsidy that flows from a majority of Citizens policyholders (80%) to a minority (20%)  most of whom pocket their claim payment.  Therefore, via Citizens first tier assessment, everybody else, including retiree’s on fixed incomes, pays for an optional and, often unnecessary, coverage. True or false?
  • Many of those who will pay assessments for the deficiency in Citizens sinkhole premiums don’t even own property; some, perhaps, because they can’t afford to.  For this reason, advocating against this rate “adjustment” is, on its face, selfish. In essence, it’s a subsidy for only 20% of those in certain areas at the expense of  others who are both in and out of those areas. True or false?
  • Stating that many mortgage lenders require sinkhole activity coverage and that many people would be foreclosed or have the coverage “force placed” is false.  There are 240 state chartered banks in Florida. Only two may have previously required sinkhole activity coverage.  (if wrong, please provide a list).  Both believed that sinkhole coverage was for catastrophic collapse.  It’s been revealed that one has  rescinded its requirement; presumably because it learned the truth.  The other bank (like all the rest) does not require any land movement coverage in the rest of the country; including earthquakes in California–an indication it thought its Florida requirement was for catastrophic collapse as well.  But, forget the specific numbers; only a few residential lenders actually require the purchase of sinkhole activity coverage.  True or false?
  •  Moving a mortgage usually carries some cost, but…if people began to do so, the few banks requiring sinkhole activity coverage (if there are any) will join the remaining majority that don’t.   Why aren’t you advocating that requiring sinkhole activity coverage in connection with a mortgage is wrong?  After all, 238 state chartered banks do not require it.   Stating that “many” mortgages require sinkhole coverage, without proving it, makes your motives transparent.   You should be arguing that lenders be prohibited from forcing the purchase of sinkhole activity coverage; especially when they don’t require earth movement coverage of any type anywhere else. True or false?
  • It’s wrong to imply that anyone’s premium will go up 2000%.  Again, the increase only applies to the small portion of the premium for an “optional” coverage and it’s only 2000% in a select number of zip codes.  True or false?

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