Fla. Senate Examines Sinkholes; Outlines Ideas for Lawmakers

Posted by on May 13, 2011 | 0 comments

January 7, 2011 By Chad Hemenway, PropertyCasualty360.com

The Florida Senate’s Banking and Insurance Committee has weighed in on the sinkhole issue, proposing a set of recommendations for lawmakers when they meet later this year.

In its 45-page report on the topic, the state Senate outlined recommendations to lawmakers, including:

  • Allowing insurers to not renew a home after paying a sinkhole claim.
  • Requiring claims to be filed within two or three years after damage surfaces.
  • Revising the building codes.
  • Defining the kinds of damages caused by sinkholes.
  • Creating a state sinkhole repair program to fix homes instead of leaving it in the hands of the homeowner.
  • Capping the fee for public adjusters.

Last November the state Office of Insurance Regulation (OIR) released the findings of a data call from 211 insurers. The report concluded that the total cost of about 24,670 sinkhole claims from 2006 to 2010 was about $1.4 billion and increased from $209 million in 2006 to about twice that in 2009. Many claims are coming from outside traditional sinkhole areas, the OIR found.

The OIR and insurers have said claims have increased because policyholders “are incentivized to file such claims because they can keep the cash proceeds from the claim instead of effectuating repairs to their home or remediating the land,” which has plummeted home values in areas especially prone to sinkholes, the Senate committee said.

The report pointed out that as sinkhole claims numbers rose from 2005 to 2009, so did the number of public adjusters in the state. It said the number of public adjusters increased 330 percent to 2,914 from 2003 to 2009.

David Beasley, president of the Florida Association of Public Insurance Adjusters (FAPIA), said there are currently 1,339 licensed and appointed public adjusters in the state–a number that has decreased as Florida has implemented new, stricter and more difficult state tests and required a 12- to 18-month apprenticeship. Public adjusters must also stay current with continuing education to maintain licenses.

The FAPIA has stayed out of the sinkhole debate since most do not handle sinkhole claims, Mr. Beasley said. “Public adjusters are not the cause of cost-drivers,” he said.

The group was behind the language in last year’s omnibus bill that concerned public adjusters, and supported the measure, Mr. Beasley said.

The bill put restrictions on advertising by public adjusters, capped their fees for reopened claims, and established a three-year claims filing deadline.

“We thought it added professionalism to our industry,” Mr. Beasley said of the bill, which was vetoed by then-Gov. Charlie Crist though it had overwhelming support from the insurance industry and lawmakers.

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