Aug. 14--A law rewritten in 2007 raises questions about a requested 10.2 percent average statewide rate increase in 2013 by last-resort insurer Citizens, regulators say.

At issue is something called "risk load," a way of calculating the cost to cover losses from a once-in-a-lifetime storm. Citizens, the state's largest property insurer with 1.4 million customers, wants to charge customers more for that risk than regulators have approved in the past.

"The Office has no objection to the use of a risk load since both Florida Statutes and Actuarial Standards of Practice would allow such a load," said a statement from Amy Bogner, spokeswoman for the state's Office of Insurance Regulation, in response to a question from The Palm Beach Post. "However, the Office does not believe that a risk load determined on the basis of a repealed law is appropriate."

The statement cited the 2007 law that replaced previous legislation and capped Citizens rate increases at 10 percent a year.

Citizens' board voted July 27 to file two requests for increases in 2013, one averaging 8.8 percent and the other 10.2 percent, with the latter reflecting "risk load" costs. A 3-2 majority of the Citizens board voted to endorse the second request.

Regulators will decide on Citizens' request 45 days after its filing, which had not formally arrived in state offices as of Monday, according to OIR officials. If past years are any guide, Citizens customers can expect a 2013 rate increase closer to 10 percent than zero, but the debate over how to set the carrier's rates remains a contentious economic and political topic.

Citing concerns about risk exposure, Gov. Rick Scott has called for Citizens to increase premiums, reduce coverage and otherwise push people toward private insurers. But many Citizens customers say they see few or zero other options in the private market where they live, and some legislators and consumer advocates question the need for dramatic price increases, especially given the fragile state of the state's housing recovery. Records show a Citizens surplus of nearly $6 billion would likely cover a repeat of the 2004 or 2005 seasons, for example, without assessments to its own customers or others.

Beyond annual increases, reinspections have removed discounts for hurricane-resistant building features for 74 percent of more than 225,000 Citizens customers visited, boosting bills an average of 23.5 percent or nearly $600. Some have seen annual premiums double.

The Citizens board backed off a proposal to uncap rates for new customers, as well as a measure to cap coverage for certain kinds of water damage. But board members including John Rollins, a Scott appointee, have continued to advocate for higher rates by means such as the "risk load" factor.

Citizens maintains its 10.2 percent request does not violate the state's 10 percent cap because it includes surcharges for the Florida Hurricane Catastrophe Fund that do not count against the limit, a company spokeswoman said.

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