Aug. 01--Keys property owners with Citizens Property Insurance Corp. windstorm insurance will find costs going up next year.

And hundreds of current policyholders who got discounts for storm-hardening their homes are finding those mitigation credits disappearing.

It's a double whammy, according to Annalise Mannix, executive director of Fair Insurance Rates in Monroe. She said rates for 2013 are likely to increase by 11.2 percent for Keys residents. That includes an override being levied by the Citizen board to build up reserves needed to pay out claims in the event of a major hurricane.

"We're already over 10 percent rate hikes here in the Keys," Mannix said, adding that those windstorm rates are pegged to risk models for future losses that FIRM believes are not accurate in the Keys.

"We're working on what is our real risk? We truly believe those [hurricane risk] models are so inaccurate, we need to have somebody analyze our portfolio."

Mannix, who met with other members of the FIRM board and Citizens officials last week, said the other big cost factor now hitting Keys property owners involves loss of mitigation credits.

Owners who "hardened" their homes with hurricane-certified shutters, reinforced doors and hurricane-impact windows got discounts on their rates.

But a program to shrink the number of Citizens policies -- and thus, reduce the state's risk -- has been ramped up with hundreds of thousands of homes being re-inspected statewide.

Nearly three out of four homeowners whose property has been re-inspected lost some discounts. Statewide, that reduced discounts by more than $100 million, according to figures reported by the Florida News Service.

Ironically, Citizens reported last week that its cash surplus has now topped $6.1 billion, thanks to six years in Florida without a major hurricane event to trigger large claims.

Some insurance industry risk models indicate that Citizens' reserves need to be closer to $14 billion. To cover that gap, the state-run corporation has purchased reinsurance coverage. The cost of that additional coverage, the board decided, will be added to all Citizens policies starting next year and can be added on top of the 10 percent rate-hike cap set by the Legislature.

That additional charge will push Keys rate hikes somewhere between 11 and 12 percent in 2013, Mannix said.

Changing rules on mitigation credits are being felt this year and lots of Keys residents are angry over the higher rates they're seeing when those discounts are denied, she said.

"Four years ago, my house was considered a hip-roof house and that has a credit attached," she said. "Now, the state requires a measurement and if more than 10 percent of the roof is not hip-roof, then you lose that credit. A small Florida room added to the back of the house means you no longer qualify. Come on, what's that?"

She also took issue with the state eliminating wood shutters from Citizens' storm-hardening discount program. "Wood shutters are phenomenal and three-quarter-inch material is still in the Florida Building Code. Yet, now they say no credit?"

That hits Keys property owners two ways. They lose the discounts once offered for hardening their homes, and they're subject to even higher rates coming next year.

The statewide rate hikes are still subject to approval by the Office of Insurance Regulation.

This report was supplemented with material from the Miami Herald and Florida News Service.

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