Senate Banking & Insurance Chairman Garrett Richter's opening statement during his committee's January 11 workshop on the sinkhole insurance crisis. Richter, R-Naples, warns of a $120 sinkhole tax on all Florida homeowners.

Today our committee staff, Steve Burgess and Kathie Emrich, will present a summary of our sinkhole interim study which I emailed to each of you.  I would like you to hold your questions until they have made their presentation. The study shows that the sinkhole insurance market in Florida is broken and it is affecting every homeowner in the state. That is because each homeowner, whether they have sinkhole coverage or not, will have to pay, on average, $120 to cover sinkhole claims.

When most people think of a sinkhole, they think of a large hole in the ground. However, almost no sinkhole claims involve that sort of situation.

A cottage industry has arisen which is spreading across the state, of people filing sinkhole claims based on minor damage to their house, collecting claim payments or settlements that routinely hit six figures, and then simply pocketing the money instead of repairing their home or property. As a result of this behavior, property values in some of these counties are plummeting which effects the financial stability of local governments.

For example, the Hernando County Property Appraiser, Alvin Mazourek, who will testify today, estimates that the county has lost $173 million in total market value as a result of value adjustments to sinkhole homes since 2005.

When there is a legitimate sinkhole, it is absolutely in the public interest that insurance monies are used to repair the sinkhole, not pocketed by the policyholder.

This explosion in sinkhole claims jeopardizes the solvency of property insurance companies and will result in higher insurance premiums for almost all insured homeowners in this state.

We are in the process of developing ideas to solve the sinkhole epidemic for our property bill which will be presented at our next meeting. Statutory changes are needed to reduce the cost drivers for sinkhole claims, to encourage policyholders with sinkhole losses to repair their homes and stabilize the land, and remove incentives for filing spurious claims.

But today we are focusing on the sinkhole problem. I urge you to read the full report.