Sink'hos: a state mascot for our times ... by gimleteye

I had to read it three times. Several Florida papers reported it without elaboration: "Sinkholes blamed in Citizens Property Insurance rate hike request". Here is what has me laughing: in the Herald, the St. Pete Times, and the Sun-Sentinel, there is not a single mention about the cause of sinkholes. Now, if you live in the western or northwest part of the state, you know what sinkholes are because billboards advertise a stream of attorneys trolling for plaintiffs. Sinkholes end up as areas where the surface land unexpectedly gives way, taking property with it. Before sinkholes fully form, there are extended periods when building foundations and walls crack, as the earth below begins to settle and move. It could be your green lawn and ten thousand others like it, or that subdivision that should never have been permitted next door. Whatever the "growth", the blame belongs with Florida water managers, appointed by the governor and representing-- except for the odd civic voice-- the Growth Machine and Big Agriculture. Now you would think that the media would identify why sinholes are suddenly such a problem that the state insurance pool suddenly is forced with losses.



Why sinkholes occur is widely known inside the Engineering Cartel and Growth Machine. Too much water is being sucked out of aquifers to accommodate development. Heck Bubba, the graphic above was created by the state agency called Swiftmud. Let's just call them: sink'hos, the new state mascot!

I suppose in the midst of the worst economy since the Great Depression, who needs more bad news. But the mismanagement of Florida's water resources has taken place over decades on a massive scale, and it is all in the service of Growth Gone Wild. Water withdrawals from once spectacular aquifers are a fact of life. Consumptive Use Permits are the new coin of the realm, as the hidden costs of aquifer destruction are obscured from the public -- mostly because the mainstream media is not reporting out the story.

Yes, Florida homeowners, there are sinkholes. Yes, there are cracks in foundations and walls. Yes, if the media was willing to confront the developer class it could then inform the public about what is the true cause of higher property insurance rates. Oh well. Back to phosphate mines, rock mines, and ASR wells. Read the Herald report! Another blameless consequence of the Growth Machine. This story is almost as hilarious as FPL seeding the Public Service Commission with commissioners favorable to raising rates for nuclear power plants to be built at sea level, requiring fill pads that will speed saltwater intrusion into drinking water wells. Or, Republican operatives recruiting homeless people to run against Democrats as Green Party candidates. Go Sink'hos!

Posted on Wed, Sep. 08, 2010
Sinkholes blamed in Citizens Property Insurance rate hike request

BY NIRVI SHAH
nshah@MiamiHerald.com


C.M. GUERRERO/EL NUEVO HERALD STAFF
Workers surround a sinkhole in Hialeah on Tuesday morning.
Although Florida has gone largely unscathed by hurricanes for the last five years, the state's property insurers, including state-run Citizens, are being swamped by a different kind of catastrophe: sinkholes.

A sharp increase in claims related to damage caused by collapsing earth -- including about 300 in South Florida, where sinkholes aren't usually found -- contributed to Citizens' request for an average statewide 8.4 percent rate increase heard Tuesday by insurance regulators.

Rates could rise even higher in some parts of Miami-Dade and Broward, but could actually drop in coastal parts of both counties. A rate increase is being considered for most of Monroe County, though rates could drop in Key West.

Comments are being accepted until Sept. 14; a ruling could come later this month.

During 2009, Citizens collected about $19.6 million in premiums for sinkhole coverage, but covered losses worth about $97 million. While sinkholes bring to mind the image of a home being swallowed by a circle of collapsing ground, said Paul Palumbo, Citizens' senior vice president of underwriting, no claims in the insurers history have been for a catastrophic loss.

Instead, they have been for damage including cracks in driveways and other parts of homes.

``You're not making money on homeowners insurance even in a non-hurricane year,'' Deputy Insurance Commissioner Belinda Miller said. ``That's a lot of money.''

In August, Insurance Commissioner Kevin McCarty requested that Florida insurers report data about sinkhole claims to his office by later this month.

"The Office has heard from the industry that there has been a substantial increase in the frequency of claims, and that these claims are being filed outside the traditional `sinkhole alley' in Hernando and Pasco counties,'' his office said in a statement. The results could lead to regulatory changes or requests for legislative action.

Claims for other damage, including fires, also contributed to the request for rate increases, along with the need to shore up Citizens' ability to pay claims in the event of a catastrophic storm. Citizens is the state's largest property insurer, with about 1.2 million residential policies -- including about 200,000 the insurer has absorbed since March and following the liquidation of at least two private insurers.

In some parts of Broward, the requested increase is about 11 percent, though coastal Broward could see a drop of about 10 percent. Miami Beach could see a 6 percent drop in rates, but Citizens wants an increase of about 11 percent in rates for most of the rest of the Miami-Dade, as well as in Monroe County. Rates in Key West could actually drop by about 4 percent.

Citizens says it needs to raise rates by larger percentages but is limited to raising rates by 10 percent. Some of the proposed hikes are slightly higher Because the insurer can charge above the cap to pay for back-up insurance, some of the proposed hikes are slightly higher.

A rate increase would be the second-straight hike following a three-year freeze that ended in 2009. The new rates, if approved by the Office of Insurance Regulation, would take effect in early 2011, Palumbo said.

Steve Alexander, an actuary in the state's insurance consumer advocate office, said the exponential increase in sinkhole claims needs a hard look. To keep up with sinkhole payouts, Citizens would have to ramp up premiums from the current $20 million to about $140 million, Alexander said.

``With the 10 percent cap on premiums . . . the concern is you're never going to get there,'' Alexander said. ``Somebody needs to look at this problem and figure out a solution. It's a very, very serious problem. I think the 10 percent cap does not work for this coverage.''

Citizens has paid nearly $13 million for 141 claims for sinkhole damage in Broward County since January 2008, spokeswoman Candace Bunker said. During the same time, the insurer paid $2.5 million toward 159 claims in Miami-Dade.

Unlike other states, Florida's law about how far property insurance extends is unclear, said Lynne McChristian, of the industry-backed Insurance Information Institute.

"Cracks in your home -- that's not necessarily a sinkhole,'' McChristian said. But it can be difficult to prove exactly what the cause is. ``There are more claims happening down in [South Florida], which is not an area historically known for sinkholes. That makes those claims even more suspect.'' While Citizens is struggling to raise rates at a pace that would keep the insurer solvent in the event of a major storm, Chief Financial Officer Alex Sink and state Sen. Jeff Atwater, R-Palm Beach Gardens, have questioned some of Citizens' expenses.

Both want information about why the insurer did not go out for bid on more than 30 contracts, relying on an emergency exemption -- even though some of the vendors were given multiyear deals.



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