Data Call: All Commercial and Residential Property Insurers Must Report Sinkhole Claims Information to Florida Office of Insurance Regulation by September 21, 2010

All Florida commercial and residential property insurers are required to report information relating to sinkhole claims opened between 2006 and 2010 by September 21, 2010, pursuant to a data call issued by the Florida Office of Insurance Regulation (“OIR”) yesterday, August 24.

To help in finalizing a Florida Senate Interim Project Report on sinkhole-related issues, the collected data will be used to learn more about sinkhole activity, including the frequency and severity of claims, as well as their geographic location.  The OIR plans to compile a report based on the results, which is expected to assist regulators in determining potential actions and whether additional authority is needed through legislation.

Through testimony given during the 2010 Legislative Session, the OIR identified increased sinkhole claims as one of the cost drivers affecting Florida homeowners’ insurance rates. The OIR also has acknowledged the insurance industry’s recently expressed concerns relating to a substantial increase in the frequency of sinkhole-related claims, and that these claims are being filed outside Florida’s traditional “sinkhole alley” in Hernando and Pasco Counties.

Specifically, the information collected from the OIR’s Sinkhole Data Call is needed to help define the following:

o   The types of claims being filed
o   Testing procedures to determine the legitimacy of claims
o   Costs of inspections
o   Geographic location of claims
o   Legal fees and public adjuster fees
o   Amount of structural loss

The Florida Legislature has made multiple changes to laws governing sinkhole insurance coverage in 2005, 2006 and 2007.  However, in light of the recent increase in sinkhole-related activity, it has been determined that lawmakers should examine further issues, including, but not limited to, sinkhole investigations and reports; the burden of proof in sinkhole claim disputes; fraudulent practices pertaining to sinkhole claims; the procedures and time parameters for the stabilization and repair of damaged buildings and structures, including the payment by insurers of sinkhole claims; the accountability and liability of engineers and geologists involved in sinkhole claims; the neutral evaluation process, including the selection and qualifications of the sinkhole neutral evaluator; and the purpose and effectiveness of the Florida Department of Financial Services’ sinkhole database

Once finalized, the OIR’s sinkhole data report will seek to provide information to aid the Senate and other interested parties in assessing these issues.

Should you have any comments or questions, please contact Colodny Fass.