Sinkholes Increase Florida Insurance Rates

According to the article "Sinkhole Claims Are Driving up Florida Insurance Rates, State Official Says" by Laura Green on TCPalm.com, property insurance companies in Florida are reporting a 200% increase in sinkhole claims between 2006 and 2010 with costs of over $1.4 billion.

The Florida DOI and Commissioner Kevin McCarty believe sinkhole claims are driving up insurance rates and a recent report confirms this. He is concerned because rates will never stop increasing if the problem isn't addressed. Only about 1% of the claims represent a catastrophic sinkhole, something that could swallow up a whole backyard or a SUV car.

The majority of the claims comes from Hernando, Pasco, Hillsborough and Pinellas counties, which are all known as the sinkhole belt. The report also shows a steady incrase in claims in Broward and Miami-Dade counties, which are areas not generally prone to sinkholes. Some of the claims may not be legitimate and not only is this type of fraud immoral, but they drive up the costs of insurance for everyone.

Florida Homeowners Insurance Rate Hike

State Farm, Florida's second-biggest property insurance company, said that it will need to raise homeowner insurance rates for Florida residents by almost 70% in some parts of Palm Beach County, and an overall average increase of 47% across the entire state of Florida. State Farm did not mention plans to raise their Florida auto insurance rates

Florida Insurance Companies Increase Profits

Florida Insurance Regulators are sifting through thousands of subpoenaed documents, trying to see if there was collusion between insurance companies to keep hurricane insurance rates high, even after changes in the law.

Within the State Office of Insurance Regulation, investigators are pouring over insurance company records, they are looking for evidence of collusion in the sale of reinsurance, or anything that might explain why insurance rates dropped only half as much as predicted after the state of Florida changed the law.

Insurance rates were predicted to drop 24%, but only fell by 12% on avg.

The investigation is likely to take months before any answers on why rates are still high emerge.