Does Anybody At Citizens' Have A Lick Of Sense?
Everybody who reads this blogsite knows that I stay far, far, far away from political commentary. I write about real estate and marketing, and that's about it. I don't even talk politics with my friends ... or religion.
Until now.
The bureaucrats in Tallahassee who operate Citizens' Property Insurance must not be able to generate a clear thought between them. Or, perhaps they just don't give a rat's pahookey about property owners or economic recovery in this state.
I'm sure by now you have heard about the new proposal to increase sinkhole insurance premiums. The news broke on Monday of this week. The average premium increase statewide will be some 429 percent. That proposal was unanimously approved Wednesday by the board that runs Citizens'.
If approved, average sinkhole rates will jump in Tampa from $156 to $3,651 annually. In Pasco County, from $1,270 to $3,598. In Hernando County, from $1,356 to $5,734. Those figures are courtesy of the St. Pete Times; I'm not sure how they calculated them but I assume they are correct.
Don't worry too much about paying these increases. Citizens' is going to make it easy on homeowners. Citizens' CFO, Sharon Binnun, told the board that the agency is working to develop plans so policyholders can pay their sinkhole premiums quarterly or even semiannually. How kind! It will be like getting skinned with a sharper knife.
They're supposed to have some hearings about this increase in Tallahassee during the coming weeks. I assume the public will have a chance to talk. If so, I'm sure policymakers will get an earful. Somehow, I think they better rent a very large hall.
Lest I forget to mention it, these sinkhole increases are on top of the 8.8 percent statewide average premium increase already scheduled for non-sinkhole coverage.
Look, I realize Citizens' lost a lot of money on sinkhole claims last year ... they brought in $32-million in premiums and paid out $245-million in claims. Sure, something has to be done about that kind of financial loss and it can't be allowed to continue. No argument.
But for heaven's sake, does Citizens' have to recover all the loss in one year?
And has anybody at Citizens' given a single thought to the negative impact such premium increases will have on the struggling real estate recovery in this state?
Most financially responsible people buy as much house as they can reasonably afford. That means they are okay financially as long as they do not suffer some kind of financial setback. Raising these sinkhole premiums is just another form of financial setback for many of these homeowners. Just look at the amounts of these increases! Thousands of dollars per year for Pete's sake! Where are people going to find the extra money to pay those higher premiums?
And if they can't pay the premium, what then? I guess foreclosure is the ultimate answer. After all, their mortgage company will likely require the sinkhole insurance be kept in force or the mortgage will be cancelled. So what then? Well, we'll have a whole new bunch of foreclosed properties on the market.
And who in the world is going to buy the homes that have sinkhole insurance premiums costing additional thousands of dollars each year? Nobody. Why would anyone incur such an insurance obligation? So we may have a new bunch of foreclosures sitting vacant and driving down neighborhood appearance and further prolonging the drop in the value of real estate.
I wonder if anybody at Citizens' ever gave that any thought? Probably not. Like a lot of people, I suspect they can't see past their own set of bureaucratic problems.
Don't believe it can happen? Well, a lot of people didn't believe the real estate bubble would ever burst either. That's why they continued to pay supercharged prices for houses through 2006. Today, they are the short sale victims.
Citizens' needs to re-think these sinkhole premium increases. It's unrealistic and puts a terrible burden on middle-class homeowners at a time when these people have plenty to worry about.
In collecting increased premiums, perhaps Citizens' needs to spread out the recovery over a number of years.
Perhaps there needs to be some kind of easily affordable surcharge on all Citizens' policies so every policyholder contributes a little each month toward recovering the loss.
At the risk of hearing outrage from members of the Tea Party, perhaps there needs to be a tiny uptick in the state sales tax that is earmarked for sinkhole shortfalls -- kind of like the "Penny For Pinellas" program that funded so many good things in Pinellas County. Once the shortfall is made up, the tax increase could (and should) be withdrawn.
I don't have the answer, but I sure see the problem.
Now is the time when we need to stop listening to insurance actuaries and government bureaucrats who can't see past the requirements of their own departments and start using a little common sense and humanity in this matter. The great middle class is financially stressed right now. Adding increased sinkhole premiums serves only to compound the problem. Government, remember, is supposed to work for the people, not vice versa.
-30-
Until now.
The bureaucrats in Tallahassee who operate Citizens' Property Insurance must not be able to generate a clear thought between them. Or, perhaps they just don't give a rat's pahookey about property owners or economic recovery in this state.
I'm sure by now you have heard about the new proposal to increase sinkhole insurance premiums. The news broke on Monday of this week. The average premium increase statewide will be some 429 percent. That proposal was unanimously approved Wednesday by the board that runs Citizens'.
If approved, average sinkhole rates will jump in Tampa from $156 to $3,651 annually. In Pasco County, from $1,270 to $3,598. In Hernando County, from $1,356 to $5,734. Those figures are courtesy of the St. Pete Times; I'm not sure how they calculated them but I assume they are correct.
Don't worry too much about paying these increases. Citizens' is going to make it easy on homeowners. Citizens' CFO, Sharon Binnun, told the board that the agency is working to develop plans so policyholders can pay their sinkhole premiums quarterly or even semiannually. How kind! It will be like getting skinned with a sharper knife.
They're supposed to have some hearings about this increase in Tallahassee during the coming weeks. I assume the public will have a chance to talk. If so, I'm sure policymakers will get an earful. Somehow, I think they better rent a very large hall.
Lest I forget to mention it, these sinkhole increases are on top of the 8.8 percent statewide average premium increase already scheduled for non-sinkhole coverage.
Look, I realize Citizens' lost a lot of money on sinkhole claims last year ... they brought in $32-million in premiums and paid out $245-million in claims. Sure, something has to be done about that kind of financial loss and it can't be allowed to continue. No argument.
But for heaven's sake, does Citizens' have to recover all the loss in one year?
And has anybody at Citizens' given a single thought to the negative impact such premium increases will have on the struggling real estate recovery in this state?
Most financially responsible people buy as much house as they can reasonably afford. That means they are okay financially as long as they do not suffer some kind of financial setback. Raising these sinkhole premiums is just another form of financial setback for many of these homeowners. Just look at the amounts of these increases! Thousands of dollars per year for Pete's sake! Where are people going to find the extra money to pay those higher premiums?
And if they can't pay the premium, what then? I guess foreclosure is the ultimate answer. After all, their mortgage company will likely require the sinkhole insurance be kept in force or the mortgage will be cancelled. So what then? Well, we'll have a whole new bunch of foreclosed properties on the market.
And who in the world is going to buy the homes that have sinkhole insurance premiums costing additional thousands of dollars each year? Nobody. Why would anyone incur such an insurance obligation? So we may have a new bunch of foreclosures sitting vacant and driving down neighborhood appearance and further prolonging the drop in the value of real estate.
I wonder if anybody at Citizens' ever gave that any thought? Probably not. Like a lot of people, I suspect they can't see past their own set of bureaucratic problems.
Don't believe it can happen? Well, a lot of people didn't believe the real estate bubble would ever burst either. That's why they continued to pay supercharged prices for houses through 2006. Today, they are the short sale victims.
Citizens' needs to re-think these sinkhole premium increases. It's unrealistic and puts a terrible burden on middle-class homeowners at a time when these people have plenty to worry about.
In collecting increased premiums, perhaps Citizens' needs to spread out the recovery over a number of years.
Perhaps there needs to be some kind of easily affordable surcharge on all Citizens' policies so every policyholder contributes a little each month toward recovering the loss.
At the risk of hearing outrage from members of the Tea Party, perhaps there needs to be a tiny uptick in the state sales tax that is earmarked for sinkhole shortfalls -- kind of like the "Penny For Pinellas" program that funded so many good things in Pinellas County. Once the shortfall is made up, the tax increase could (and should) be withdrawn.
I don't have the answer, but I sure see the problem.
Now is the time when we need to stop listening to insurance actuaries and government bureaucrats who can't see past the requirements of their own departments and start using a little common sense and humanity in this matter. The great middle class is financially stressed right now. Adding increased sinkhole premiums serves only to compound the problem. Government, remember, is supposed to work for the people, not vice versa.
-30-
posted by Terry Ward at 5:33 AM
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