Insurance bills for cars, homes and other coverage are among the biggest expenses a California resident faces. That's why consumers need a vigilant and tough-minded advocate like Dave Jones as state insurance commissioner.

Jones, a Democrat, and his rival, Republican state Sen. Ted Gaines, represent nearly polar opposites in their views of the powerful Sacramento office. Jones, a four-year incumbent looking for a second term, favors vigorous enforcement, mainly by approving or rejecting most insurance premium increases sought by companies.

Challenger Gaines, who runs a family insurance agency in Roseville, Placer County, thinks the office has become too powerful. He believes Jones has chased companies out of California, chilling competition and harming innovation.

A key example of the difference between the two candidates is Prop. 103, the initiative approved by voters in 1988. The measure gave the commissioner the power to review rates for drivers' insurance, which is required for anyone who gets behind the wheel.

Jones is an enthusiastic supporter and has used his official hammer to push down costs in a car-crazy state, saving drivers billions. Gaines has his doubts, and believes prices can be kept low through more vigorous competition.

It's a halfhearted and industry-friendly stance that undercuts one of the most effective tools the commissioner has. Voters who approved the auto insurance measure a generation ago did so because the market had failed to deliver reasonably priced policies. There's a role for informed review of premiums with a process that can protect consumers from being gouged, a stance that Jones has taken in his first term.

The race features an intriguing sideshow that is drawing in interest groups amid the public's uncertainty about the federal Affordable Care Act. Jones has allied himself with trial lawyers behind Prop. 45, which would give give the commissioner's office additional power to control health coverage rates now beyond his reach. That measure, which this editorial page opposes, would add unneeded complications to the rollout of California's adaptation of the ACA.

Gaines has cited Jones' role in this separate dispute. But it's not a good enough reason to dismiss Jones' track record as an effective public watchdog.

For nervous California homeowners, there's an issue going nearly unmentioned in the race: earthquake coverage. Only 10 percent of the state has purchased coverage, which is costly and comes with a high deductible. Neither candidate has come up with an answer to protecting homeowners against severe damage such as that suffered in the Napa tremor in August.

Insurance policy may not make for a riveting campaign. It's especially true for next month's ballot, which may feature one of the lowest turnouts on record. But it's no exaggeration to say that this office has an impact on Californians' pocketbooks and sense of security.

The two candidates offer a clear choice in their approach to the office. Jones has both the experience and judgment to protect consumers. He deserves re-election.

Our nations top security guards are all retiring to go into the cybersecurity business. Former NSA chief Keith Alexander is asking (only) $1million/month for his cybersecurity consultations, which apparently include the use of patents he developed completely unrelated to his NSA work in his basement during his spare time.

Now, former top DHS official Tom Ridge is getting into the cybersecurity business, albeit one nowhere near as glamorous as Alexanders rockstar-level consulting service. Instead of showing up occasionally to offer his expertise (and collect paychecks) on cyberattack preparedness, Ridge will be performing the most everyman of services: selling insurance.
Ridge on Monday announced a new cyber insurance package that he said should make it easier for companies to safeguard their networks and their bottom lines.

What we have seen is the sophistication of these attacks continue to elevate, Ridge said at a launch event in London, according to Bloomberg news service. Who would have thought that JPMorgan, with its security budget, could be hacked into? Now a lot of people are thinking if it could happen to them, it could happen to us too.

The first Homeland Security secretarys new company, Ridge Insurance Solutions Company, is teaming up with the insurance giant Lloyds of London to sell cyber insurance coverage.
When selling insurance, the old adage can one have too much insurance of course not better safe than sorry here is some anecdotal evidence supporting my profitable belief is doubly true, thanks to government agencies (such as Ridges former employer) pushing a very fearful and apocalyptic narrative. At any moment, US businesses will be hit by cyber Pearl Harbor and former government officials like Ridge and Alexander are perfectly placed to take advantage of their own agencies previous cyberthreat marketing warnings.
Ridge makes the claim that simply offering insurance will prevent attacks, which is an odd thing to say about a purely defensive product meant to mitigate post-attack financial damage.

Ridge said the new insurance is designed to help prevent those types of attacks.

In order to obtain insurance, companies will need to make sure their cyber defenses are up to snuff, which in and of itself should make businesses more secure, he predicted.

This is not just about insurance but helping and incentivizing companies to manage their cyber operations more effectively, Ridge said in a statement.
Ah. But mostly about insurance.
Insurance policies of as much as $50 million each are available from today... The company expects to generate $40 million in premiums in the first 18 months.
True, insurance isnt nearly as profitable if payouts are constantly being awarded. Hence the demands for up-to-snuffness. But it also helps if youve got a background in overselling the threat, which makes the product and its premiums seem miniscule in comparison to the potential damage. This would explain the press junket bearing headlines like Ex-Homeland Chief Says Risk of Cyberattacks Elevated.

So, did Ridge join the DHS with the express intent of developing a market for his post-retirement dip into the private sector waters? My tin foil hat isnt that snug, but Im sure his years of priming the cyberthreat pump factored heavily in his post-retirement job selection.

Heres a statement of Ridges dating all the way back to 2003, as quoted in a United States Institute of Peace cyberterrorism report. [pdf]
Terrorists can sit at one computer connected to one network and can create worldwide havoc, cautioned Tom Ridge, director of the Department of Homeland Security, in a representative observation in April 2003. [They] dont necessarily need a bomb or explosives to cripple a sector of the economy or shut down a power grid. These warnings certainly had a powerful impact on the media, on the public, and on the administration.

For instance, a survey of 725 cities conducted in 2003 by the National League of Cities found that cyberterrorism ranked alongside biological and chemical weapons at the top of a list of city officials fears.
The Hill points out that some critics are upset the government isnt doing more to protect companies against cyberattacks. Im guessing Tom Ridge (and Keith Alexander) are no longer members of that group.

In an unexpectedly tight race, Republican Sen. Pat Roberts of Kansas is doing everything he can to paint his opponent -- independent Greg Orman -- as a liberal henchman.

One of Roberts favorite points is Ormans stance on the Affordable Care Act. Orman says he does not support the health care law, but he also says pushing legislation to repeal it is impractical, because President Barack Obama would simply veto it.

In a recent Web video, Roberts treats that view as support for Obamacare.

The ad starts out with video of Orman shaking hands with constituents, one of whom asks him a question about repealing Obamacare. Orman replies, Thats an interesting question, and moves on down the line.

Greg Orman wont repeal Obamacare, the ads narrator says, even though 20,000 Kansans lost their health insurance because of it.

Roberts was expected to easily win a fourth term (the last time Kansas elected a Democrat to the Senate was in 1932). Then, Democratic candidate Chad Taylor dropped out, and independent Orman surged in the polls. Now the race is a toss-up. Some see a Roberts win as necessary for Republican Senate control in 2015.

Both candidates say they do not support Obamas health care law, but we wanted to know how the law had affected Kansas -- did 20,000 people really lose their health insurance?

The answer, it seems, is no.

How many Kansans lost insurance?

We asked Linda Sheppard, health policy adviser for the Kansas Insurance Department, how many Kansans had lost their insurance due to Obamacare. She said the state does not require health insurance carriers to report when people go on or off coverage, so theres no way to definitively know the answer.

However, Sheppard said insurance carriers do have to check in with the department when they decide to terminate a policy. So 20,000 people losing health insurance would have likely come to her attention.

We are not aware of any wide-scale cancellation of policies, she said.

Heres what happened. About a year ago, in October 2013, Kansas largest insurance carrier -- Blue Cross and Blue Shield of Kansas -- sent letters to about 9,450 policyholders, according to numerous news reports. Those members would be unable to renew their plans for 2014 because those plans do not comply with new standards under the Affordable Care Act.

Sheppard told us there are no official numbers for how many people received these notices from insurance carriers other than Blue Cross and Blue Shield of Kansas.

Roberts ad cites the 20,000 figure from an October 2013 story out of Kansas Watchdog, a conservative news website. That story says Blue Cross and Blue Shield of Kansas City (which is primarily based in Missouri but also serves two Kansas counties) sent out notices to about 10,000 Kansan policyholders, on top of the 9,450 from Blue Cross and Blue Shield of Kansas.

For Roberts, this is where the story ends. But in reality, the thousands of people who received these letters did not end up without insurance.

The following November -- after the failed roll out of (Kansas uses the federal marketplace) -- Obama announced that people who had recieved these nonrenewal notices could keep their policies through 2014.

Then in March of this year, Kansas agreed to another transitional policy that allowed all of these policies to continue through 2016.

Its Sheppards understanding that Kansas insurance companies turned around and retracted those nonrenewal notices -- meaning the thousands of people who received those notices were able to keep their health insurance.

Retracting the nonrenewal notices caused some behind-the-scenes challenges for the carriers, but for the consumer it was pretty easy, said Scott Brunner, senior analyst at the Kansas Health Institute, a nonprofit think tank.

Of course, these policyholders could have chosen not to renew. They could have picked a different plan, switched to a different provider or dropped insurance altogether -- but they were not forced out of health insurance by the Affordable Care Act.

It is disingenuous to focus on those who lost insurance without acknowledging that it doesnt mean they are currently (uninsured), said Roberta Riportella, a professor of community health at Kansas State University who supports the Affordable Care Act.

Roberts ad also ignores that the number of uninsured Kansans who have gained coverage under the Affordable Care Act.

Because the state does not meticulously track the number of insured folks, and the law only became fully implemented this year, it is hard to know with certainty how many people gained insurance as a result of Obamacare.

But about 57,000 Kansans are now enrolled in the health insurance marketplace, Riportella said. If Kansas follows national estimates, then roughly half of those people were previously uninsured.

Theres no evidence to suggest that more people are uninsured now than before the Affordable Care Act was implemented, Brunner said.

The expectation would be that with the Affordable Care Act that the number would continue to decline, he said.

Our ruling

Roberts said, 20,000 Kansans lost their health insurance because of (Obamacare).

Theres no official information to corroborate Roberts claim. Several thousand Kansans received notices that their insurance plans could not be renewed because they did not comply with Obamacare standards, but the notices were retracted about a month later. Meanwhile, about 57,000 Kansans obtained insurance on If the state follows the national trend, roughly half of these people were uninsured before the law.

We rate Roberts claim False.

A sinkhole policy from state-run Citizens Property Insurance Corp.; visible cracking in the walls and floors of the Spring Hill home they bought new in 2003; and a sinkhole confirmed by both an engineer and the Hernando County Property Appraisers Office.

But the era of easy sinkhole claims is over, slammed shut by a 2011 overhaul of the state insurance law. Based on the new law, the same engineering firm that found the Irizarrys sinkhole -- and recommended that it be filled with grout -- deemed that it wouldnt qualify for an insurance claim.

We pay our insurance but (Citizens) doesnt want to pay to fix the house, and I cant sell my house because (it) has no value, said Iris Irizarry, 64, a retired Head Start director from Brooklyn. What kind of a law is that?

In short, its a law that has done what it was supposed to do: stem a flood of claims that by 2011 were driving up insurance rates and driving down property values in the sinkhole alley of Hernando and Pasco counties.

But concerns are surfacing that the sinkhole fix has gone too far: It has limited the availability of sinkhole insurance and allowed insurers to charge prices rivaling the cost of a standard homeowners policy. It has made it far more difficult for homeowners to qualify for a claim. And by leaving homeowners stuck with sinkhole homes they cannot repair, it has created a potential new drag on property values.

Jim Flynn, marketing manager of LRE Ground Services, one of the most active sinkhole repair companies in Tampa Bay, initially supported the new rules.

We were advocates for doing something. What was happening was crazy as far as people filing sinkhole claims for something as simple as a driveway crack, he said. But its really gone from one extreme to the other.

Along with a widely praised requirement that homeowners use payouts to fix sinkhole damage, the law included a long list of rules that were definitely a gift to the insurance industry, said Aaron Kling, a Tampa lawyer who represents homeowners.

It sets standards for structural damage that are almost impossible to meet short of a catastrophic collapse, several sinkhole lawyers said. It allows insurers to pick the engineers who decide whether homes meet that standard and limits coverage to homes only, not driveways, patios or cabanas. It gave insurers more power to deny sinkhole coverage and made sinkhole insurance separate from a base homeowners policy, which helped drive up Citizens average sinkhole premiums between 2011 and 2013 from $1,105 to $1,955 in Hernando and from $1,449 to $2,105 in Pasco.

Florida Insurance Commissioner Kevin McCarty credits the overhaul for stemming rampant fraud and runaway abuse when thousands were receiving insurance payouts for minor cracking damage. Both the frequency and severity of claims has gone down significantly.

But he also acknowledged critics of the overhaul have a point.

One could argue the pendulum has swung too far the other way, McCarty said in an interview It makes sense for us to do a more sweeping analysis of the market and see whats happening.

Without enough complaints in his office to warrant action, the commissioner said he plans to put out a data call to property insurers to examine issues like the affordability of sinkhole insurance and how often claims are being denied under the new system.

Of course, were concerned (if) its gone too far, he said.

Getting past the crisis

The last thing McCarty wants, however, is to go back to the way things were a few years ago, when insurers complained that the escalation of sinkhole claims had become a crisis.

Between 2007 and 2011, the number of sinkhole claims filed with Citizens ballooned from 1,432 to 4,032, nearly half of them in Hernando County.

Citizens incurred $537 million in sinkhole losses in 2011 while collecting only $52 million in premiums. And partly because about 60 percent of homeowners in Hernando had pocketed the payments rather than making repairs, the county lost more than $110 million in taxable property value in 2011 alone.

There was nothing worse than having 40 to 50 percent of the homes not being fixed, McCarty said.

Tampa land-use lawyer Ron Weaver equated the sinkhole crackdown to some much-needed parenting. But he acknowledges, whether the children are being held in too tight a straitjacket in the back seat remains to be seen.

Among the signs of the squeeze: In two years, the number of Hernando, Pasco and Hillsborough homeowners who have sinkhole coverage through Citizens has shriveled by more than 50 percent. Before the 2011 law, known as SB 408, Citizens was averaging between 500 to 600 sinkhole claims per month; now its seeing between 25 to 35 claims monthly. State Farm has seen similar shrinkage, from handling 769 claims in 2011 to just 107 last year.

The situation has left attorneys who specialize in sinkhole cases bemoaning the dying years of a once very-lucrative era.

With a five-year statute of limitations to file, some 2009 and 2010 cases are still wending their way to the courthouse, said local attorney Rob Nipps, who recently launched his own practice after working years for one of the dominant sinkhole litigation firms, Marshall Thomas amp; Burnett.

But over the next year or two that will start to fade off, Nipps said. I think in five years, all the claims will be gone.

Spring Hill, a Hernando community that has long been one of the epicenters of sinkhole claims, is illustrative of what has happened.

A couple years ago, Flynn of LRE Ground Services, could rattle off 30 jobs his company was handling there; now hes hard-pressed to cite one or two. The few repair jobs under way involve cases that have lingered in litigation pre-dating the 2011 legislation.

Most of the work the contractors are getting now is old stuff, Flynn said on a recent afternoon as he watched two workers drive steel piping more than 70 feet underground so they could pump in grout.

The owner of the home, Tricia Lyons, said her claim languished for a couple years because Citizens initial offer included only $2,000 for cosmetic repairs.

Citizens eventually agreed to pay $14,000 toward cosmetic damage and repair work recently began. But it was too late for Lyons.

While waiting, she and her husband fell behind in mortgage payments, and they recently divorced. Theyre now arranging a short sale that may come through before the sinkhole repair is finished.

We should have had the money way back when, but they refused to write a check, she said. Were now told because of the short sale, well never see the money.

Bought in 2005 for $248,900, the home is now appraised at only $38,000. What Im told by the public adjuster is once you fix the house, you could double the $38,000 and thats what you could sell it for, Lyons said. Were going to lose no matter what.

Qualifying difficulties

How much harder is it to qualify for a claim now?

Walter Coleman can show you from his yard in the northern Pasco subdivision of Heritage Pines. Before the new law went into effect, four of his closest neighbors received sinkhole payouts -- all of them for damage very much like that in Colemans home.

When Coleman, a retired police officer from Philadelphia, first noticed several interior cracks in 2011, he filled them with putty and painted.

When the cracks reappeared, Coleman started to think they might be caused by a sinkhole, especially because the house, built in 1999, was too old to still be settling. He was more convinced his property was riddled with voids after he pushed a gardening stake into a slight depression that had formed in his back yard.

It went in without any resistance at all, said Coleman, 73.

He filed a claim with Citizens, which, before the new law passed, would have been required to send out a geologist to look for sinkhole activity and, if the geologist found it, pay to stabilize the home.

Under the new law, Citizens was allowed to choose an engineer to determine whether the cracking met the new standard for structural damage that includes the leaning or buckling of load-bearing walls and signs the home is likely to imminently collapse.

In November 2012, Citizens denied Colemans claim based on the report of its structural engineer, even though the same report said the depression in the back yard may warrant geotechnical testing.

I thought, did the adjuster even read the engineers report, said Coleman, who has challenged the denial in court.

Homeowners are discouraged from challenging the findings of structural engineers because under the new law doing so requires them to pay half the cost of geological testing up to $2,500, said St. Petersburg lawyer Amy Boggs.

And if these tests do reveal an underground void, homeowners often end up in the same situation as her clients in a suit against Citizens, the Irizarrys: a deep cut in the value of their property and little chance of receiving a payout.

Really, this is a disincentive for people to identify dangerous sinkhole activity on their property, she said. Its like saying we shouldnt fill a cavity until you need a root canal. Then well cover it.

Priced out

Getting approved for a sinkhole claim is one thing. But for many homeowners, particularly in Pasco and Hernando counties, its a moot point: They either cant afford or cant find coverage anyway.

Pasco County Tax Collector Mike Fasano, who frequently challenged Citizens Property rates during his years in the Florida Legislature, continues to field complaints that sinkhole premiums of $3,000 or more are pricing people out of the market. Some who have had previous sinkhole claims or repairs, he says, cant find coverage at any price.

God forbid if you get a mortgage company that says, We want you to get sinkhole coverage. Forget it, Fasano said. Its killing property values.

Ginny Stevens of New Port Richey said she was forced to drop sinkhole coverage due to the expense, and her parents did the same with their home.

Stevens previously used a sinkhole claim to repair her damaged house, including chemical grouting and putting in a new foundation. Even after the repairs, she was quoted premiums between $2,000 and $6,000 to add sinkhole coverage to her homeowners policy.

We have this beautiful home, she said. We put a lot of extra money into it to make sure its stable and were still getting screwed.

Stevens said shed like to move to Ohio, but her house is so undervalued -- plummeting from $350,000 five years ago to an estimated $125,000 today -- she cant sell it.

We will either stay in our house until we die or we will walk away from the house, Stevens said. We want to move but no way we can sell our home. ... Were stuck. We are so stuck.

Elsewhere in New Port Richey, homeowner Allan Schwartz said he was told it would cost an extra $3,400 to add sinkhole coverage. He passed.

Schwartz doubts anyone will want to buy into a neighborhood with a sinkhole reputation, knowing that they either cant get sinkhole coverage or cant afford it. Im not going to pay top dollar for a home that you may have to pay $30,000 to fix in a few years. How is Citizens allowed to get away with this?

Earlier this year, McCarty, the state insurance commissioner, rejected Citizens initial plan to raise sinkhole rates even further in Hernando. A pause in higher rates is probably appropriate, he said in an interview. But he said he needs more data before entertaining a rate rollback.

Beyond paying higher rates, sinkhole policyholders are feeling a financial pain in another way.

Citizens has shifted to a 10 percent deductible on sinkhole coverage, far higher than the two to five percent deductible for other perils like hurricanes. That looks attractive to the financially strapped homeowner facing a multi-thousand-dollar sinkhole premium.

But when it comes time to pay up, it can be a shocker.

Underpinning a home with sinkhole damage may cost $10,000 to $20,000. Compaction grouting, a more durable and costly method, could cost up to $100,000. Translation: With a 10 percent deductible, a homeowner would have to pay $30,000 out of pocket to fix a house valued at $300,000 before any insurance kicks in.

St. Petersburg sinkhole plaintiff attorney Hans Haahr said the combination of a high premium, high deductible and little likelihood of a successful claim means there really is not sinkhole coverage now.

Homeowners could be better off saving their money and -- in the worst case scenario -- just relying on the catastrophic ground collapse coverage thats included in all homeowners policies, he said.

Citizens took over such a big portion of the industry that they can dictate to everybody what they want to do and not have the decency to pay out, Haahr said.

New realities

From the vantage of Citizens Property Insurance, the sinkhole overhaul has worked out just as it should have.

I dont think its gone too far, said Elaina Paskalakis, vice president of claims litigation at Citizens. I truly believe its clarified for the industry what triggers coverage. ... From our perspective, were very comfortable with it.

Armed with that clarity of coverage and a war chest to spend on settlements, Paskalakis legal team is quickly whittling down its mountain of legacy sinkhole cases.

Citizens is about 50 percent of the way through the cases. Out of the 2,200 remaining, about 900 are expected to settle soon, she said, declining to set a timetable for finishing.

As litigation and the frequency of repairs diminishes, the sinkhole industry is adapting.

Haahr, the St. Petersburg attorney, is taking on more real estate work; LRE Ground Services is handling more interior cosmetic work and commercial sinkhole cases, which havent been as heavily impacted by the new rules.

But for homeowners like the Irizarrys, adapting to a new reality isnt easy.

The county property appraiser used the sinkhole finding to justify slashing the value of the Irizarrys home by 40 percent, to $53,744.

Iris Irizarry wants to have family from New York visit. But with her damaged-yet-unrepaired home, shes worried about their safety staying in the house.

Right now, she said, we feel very helpless.

Contact Jeff Harrington at (813) 226-3434 or This email address is being protected from spambots. You need JavaScript enabled to view it.. Follow @JeffMHarrington. Contact Dan DeWitt at This email address is being protected from spambots. You need JavaScript enabled to view it. or (352) 754-6116.