July 28--The board of Citizens Property Insurance Corp. voted Friday to raise rates by a statewide average of 10.2 percent, adding $250 million in new insurance costs for policyholders already burdened by reinspections, higher deductibles and reduced coverage.

The vote reflects the latest effort in an aggressive campaign, backed by Gov. Rick Scott, to make Citizens more expensive and less attractive to homeowners. The goal: push Citizens customers into the limited private insurance market.

The rate increase, which is still subject to approval by the Office of Insurance Regulation, would go into effect for the 2013 calendar year. In South Florida, rates would go up by as much as 11.2 percent, costing most homeowners hundreds of dollars.

At a meeting in Miami on Friday, board members said the higher rates were necessary to reduce Citizens' level of risk and make Florida more friendly to private insurance companies.

Citizens' president, Barry Gilway, said the company was "selectively moving rates higher in a very measured way so that, over time, we can be appropriately positioned in the marketplace."

The board decided not to move ahead with controversial plans to charge even higher rates for new customers or to limit claims on water-related losses to $15,000.

The 10.2 percent rate increase takes into account the potential impact a major hurricane could have on the Florida economy, board members said. If Florida gets hit with a once-in-a-lifetime type hurricane catastrophe, the insurer of 1.4 million policies might have to levy surcharges on consumers to cover its losses. Though Citizens is making about $100 million per month in profit under current rates, company leaders fear its $6 billion cash surplus might not be enough to cover a brutal storm season.

In Miami-Dade and Broward Counties, the rate increases foreshadow what will likely be several years of continued price hikes. Citizens' data indicates that rates in South Florida are underpriced by as much as 90 percent. The company is looking for ways to reach "rate adequacy," but it is bound by a law that limits increases to about 10 percent each year. (In some areas, rates will go up a little more than 10 percent because of surcharges for reinsurance.)

Consumer advocates and some lawmakers spoke out against the proposed rate hikes, saying homeowners have already been hit hard enough. The $250 million hike comes at a time when Citizens has reduced its coverage and eliminated more than $135 million worth of discounts through a massive reinspection program.

"It's not just the 10 percent increase," said Sen. Mike Fasano, R-New Port Richey. "It's [inflating] the replacement value of people's homes, it's taking away the mitigation discounts that people paid thousands of dollars to put on their homes. This is a ploy by Citizens to discourage people from getting coverage."

Kirsten Llamas, a Citizens policyholder who lives in Pinecrest, said her insurance costs have already gone up $2,000 this year, after an inspector eliminated the discounts she was receiving. Llamas said she is on Medicare and is just "squeaking by," so she may have to take out a mortgage on her home to cover the rising costs of ownership.

Citizens has inspected more than 225,000 homes since last year and about three in four homeowner save lost their discounts after an inspection. On average, premiums have gone up by about $600 following a reinspection.

Citizens board members said they were taking homeowners into account when they opted not to remove the 10-percent cap for new customers. That would have caused rates to skyrocket for those who join Citizens in 2013.

There was also a lot of heat from local lawmakers, who didn't mince words when they heard about the proposed cap removal.

South Florida lawmakers slammed the plan, with Rep. Carlos Lopez-Cantera, R-Miami calling it a "blatant circumvention of state law" and Sen. Anitere Flores, R-Miami, blasting it as "nothing short of immoral."

Citizens also opted against limiting the maximum claim on a water damage event to $15,000. Insurance agents, consumer groups and public adjusters came out against the plan, saying it would lead homeowners into bankruptcy after a water catastrophe such as a broken pipe.

Hector Chinea, an insurance professional from Miami, told the board to consider the impact of the $15,000 on low-income and elderly homeowners.

"If your 90-year-old grandmother or mother were at the end of their life, and they had a water loss, and Citizens came out and denied it or limited it to $15,000, how would you feel?" he asked.

Fasano, the state senator from New Port Richey who has been one of Citizens' most vocal critics, said "Tallahassee has no clue what it's doing to homeowners."

"I'm frustrated, I'm disgusted," he said. "Shame on Citizens' board for even pushing this at an economic time when homeowners are barely getting by."

Toluse Olorunnipa can be reached at tolorunnipa@MiamiHerald.com and on Twitter @ToluseO

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