July 18--If you own property in the Florida Keys, better plan to pay more next year for windstorm coverage through Citizens Property Insurance Corp.

The state-backed insurer of last resort plans a series of rate hikes across the board.

On Monday, Citizens' board of governors held a public meeting in Miami to discuss rates and how to shrink the number of policyholders.

That process began last year with a series of rule changes, including maxing out coverage for so-called luxury homes in coastal zones. Equally onerous, Citizens has refused to cover builders' liability on new construction in coastal zones considered high risk.

Well, that includes all of the Florida Keys, which are part of a high-risk flood hazard area as defined by the National Flood Insurance Program.

Citizens doesn't insure against flood, and documentation provided by Fair Insurance Rates in Monroe shows that claims paid out in Monroe County from hurricanes are largely flood related -- caused by tidal surges -- not wind damage.

"Between 2003 and 2011 -- through two of the worst storm seasons in history -- Monroe County generated a gross profit [premiums less claims] for Citizens of $504 million," FIRM officials said in May.

That has raised talk about forming a Keys-only mutual windstorm insurance company, essentially starting a company owned by its policyholders.

The idea may seem crazy at first blush, but that "excess" profit of $504 million the past eight years has some private insurance companies looking and even Citizens thinking more carefully than it did in the past. One encouraging sign on the state windstorm front has been the hiring of Barry Gilway as the new president of Citizens. Earlier this month, he outlined goals, which include shrinking the size of Citizens but doing it "gradually" and not with wholesale rate hikes across the board.

The first test of his resolve -- and his board's acquiescence -- will be to watch what happens with sinkhole rates for inland counties that now pay the lowest Citizens rates for property hazard insurance.

Citizens' risk models indicate sinkhole coverage rates should increase 263 percent to cover projected losses there. For property owners in Pasco and Hernando counties, that could mean paying $4,100 to $9,700 more each year.

At Monday's hearing in Miami, Gilway signaled his intent to move "in a measured manner towards closing that gap."

We'll be watching here in the Keys -- where for too long we've been subsidizing Citizens policyholders on the mainland.

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(c)2012 the Florida Keys Keynoter (Marathon, Fla.)

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