TALLAHASSEE (CBSMiami/NSF) — Citizens Property Insurance Corp. policyholders could see premium increases averaging at least 8.8 percent beginning in January following a governing board vote Friday that officials say would not significantly reduce the number of policyholders in the state-backed plan.

The rates are subject to approval by the Office of Insurance Regulation, which would also be required to sign off on a phase-in plan for sinkhole premiums that if enacted in full would quintuple rates in a three-county, sinkhole prone region.

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Efforts to reduce the number of Citizens policyholders aren’t working, however, as the state-backed insurer continues to offer rates that are increasingly lower than what the private market would charge.

The board also chose to, at least temporarily, stop efforts to charge higher rates for new policies, a controversial position that has put the board at odds with legislative leaders and key state officials including Chief Financial Officer Jeff Atwater.

Restricted by a legislatively imposed 10 percent premium cap, the gap between what Citizens charges policyholders and private companies charge continues to widen. Uncapped, Citizens officials say the company’s rates would increase statewide by more than 33 percent.

The result of the cap is that the efforts to chip away at Citizens’ 1.4 million policies – backed by all insurance policy holders in Florida – is going in the other direction as private companies seek rate hikes for next year that are higher than Citizens is allowed to charge. Even so, Citizens’ premiums are expected to climb by more than $250 million next year.

“Citizens rates continue to be less competitive (with the private market),” said Sharon Binnun, Citizens chief financial officer.

Friday’s vote came after hours of discussion on proposed rates and other efforts to depopulate the state-backed insurance pool, which has grown into the largest property insurer in the state and one of the largest in the nation.

Despite its effort to raise premiums, the board on Friday backed away, at least for now, from a plan to push much higher premiums for new policies coming on line. The company had argued that new policies wouldn’t be covered by the 10 percent limit on increases – that setting an initial rate for new customers wasn’t the same as an increase. The idea drew heavy criticism and the board backed down.

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But the company has hit on another idea for boosting the amount of money coming in. The board said an accounting figure aimed at covering the risk the state would face if a big hurricane hits could be added to the premium, and wouldn’t be covered as part of the 10 percent cap. Citizens officials say using that calculation, called a risk load, could push actual rates higher by an average of 10.2 percent statewide.

The board also approved higher sinkhole rates that would include 50 percent increases in premiums for residents in Pasco, Hernando and Hillsborough counties. Officials say there are so many claims in those areas that customers there would see their rates more than quintuple if the rate hike caps were not in place. Sinkhole rates in portions of Hillsborough County, for example, would increase from $662 to $3,767 if allowed to rise to actuarially sound rates, the company says.

The company’s governors, however, backed away from a proposal to cap water damage claims at $15,000, a level that critics say would not allow property owners of even average means to pay for repairs. While Citizens doesn’t cover flood damage – which is covered by a national flood program – it does cover rain damage and water damage from things like broken pipes.

Putting a $15,000 limit on a $50,000 claim could devastate a family,” said Raul Rivera, a Citizens customer who testified.

Other efforts to reduce Citizens exposure also came under fire. On Thursday, the state’s insurance consumer advocate said Citizens has done a poor job in explaining why it is taking away mitigation credits from many property owners who received discounts for hurricane resistant features.

Nearly three out of four homeowners inspected under the program lost some of their discounts. Statewide, more than $100 million in discounts were rescinded.

Despite the reduction, Citizens still offers nearly $1 billion in so called mitigation discounts for making improvements to their homes to avoid damage.

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“The News Service of Florida contributed to this report.”