The Senate voted 25 to 12 in favor of a sweeping property insurance bill that would free private insurers from having to offer comprehensive sinkhole insurance. Instead, they would have to offer only coverage in cases about catastrophic ground cover collapse, which represents about 1 percent of sinkhole claims. To address concerns that SB 408 would mean people whose banks require that they have such coverage in the lurch, the bill requires the state-run Citizens Property Insurance to offer comprehensive sinkhole coverage.
"This is an economic disaster waiting to happen," said Sen. Mike Fasano, R-New Port Richey, who read a letter sent from a constituent's bank saying they must have sinkhole insurance. "There will be more foreclosures. More forced insurance on homeowners." Forced insurance, he said, means more people will end up unregulated surplus lines for insurance coverage.
But bill sponsor Garrett Richter, R-Naples, and his supporters have argued that the private sector will continue to offer comprehensive sinkhole coverage if they believe they can make money on those products.
Sen. Mike Bennett, R-Bradenton, said it's not fair to force insurers to offer a product and then tell them how much they can charge for it.
"I don't think that's the American way. It's not the capitalist way," he said.
Sen. Ronda Storms, R-Valrico, took exception to that, noting that she's a "free-market person" who has run a business with her husband for 30 years. But the insurance industry, she said, is not really a free market.
"People are forced to buy homeowners insurance as a condition of having a home. So it is a hyper regulated market already. It is not the same as every other free market principle," she said. "I believe people will lose their homes."
Storms characterized the bill as a gift to the insurance industry as a gift to the insurance industry by cutting them loose from sinkhole claims so they can shore up profits.
"I don't' mind for insurance companies to make a living," Storms said. "I do mind for them to make a kiling. And I think this bill allows for them to make a killing."
But J.D. Alexander, R-Lake Wales, noted that just as it's difficult to insure property on naturally vulnerable coastlines, it's difficult to insure property sitting on a sinkhole-pocked state.
"We all live on top of Swiss cheese that's below us. There's a sinkhole sitting beneath every single house in this state," he said. "As a consequence, there are issues."
But he said requiring coverage only for damage caused by a sinkhole that leads to catastrophic groundcover collapse is sufficient. As it is now, trial attorneys encourage homeowners to file sinkhole claims for hairline cracks in a driveway, and claimants take payouts and use the money to pay off mortgages instead of making repairs. That's an expensive proposition for insurers, he said.
"You get enough losses in these insurance companies it will eventually perk up in two ways. Either your rates are going to go up, or they're gong to leave," he said. "A competitive market ultimately will deliver the most cost effective goods and services in the world."
Richter disagreed with Fasano's assessment that the bill was one of the most anti-consumer measures of the legislative session.
"This bill is very consumer friendly," he said. "It attacks cost drivers. It attacks fraud. It promotes competition." All of those things, he said, will lower costs for consumers.