Florida Citizens Property Insurance Corp. on Aug. 20 madeits case to regulators for an average 7.5 percent rate hike, whileacknowledging what the CEO of the state-run insurer callsa "difficult and delicate exercise."

The largest insurer of property in the Sunshine State says it isasking for an increase of 6.5 percent in homeowners insurancerates, which would add $96 million in premium.

In his opening remarks, CEO Barry Gilway (pictured) said thatwhile last-resort insurer is striving to become more actuariallysound, it recognizes the financial impact on its policyholders.Still, the entity also has an "obligation to all Floridapolicyholders who will be called upon to pay assessments in theevent our financial resources are exhausted."

After years of mandated rate freezes, lawmakers have recognizedthe risk and consequences of artificially suppressing the insurer'srates and put the insurer on a "glide path"—allowing it to raiserates no more than 10 percent per policyholder.

Gilway says the plan is working. In 2011 Citizens needed a rateincrease of 56 percent to achieve actuarially soundness. In 2014 itis 18.3 percent, Gilway adds.

Despite Citizens being in the "best financial position ever topay claims after a major hurricane," with a surplus of about $6.3billion, according to Actuarial Research Manager Paul Kutter, it"remains only a bad storm season away from breaking the bank andbeing forced to assess all Florida policyholders," addedGilways.

Kutter said Citizens is looking for an average statewide rateincrease of 24.8 percent, or an additional $15 million to Citizens'coffers, for sinkhole claims. The risk has become one of Florida'smost expensive to insurers and in 2008 Citizens collected just $191million in premium but paid $1.2 billion in sinkhole claims.

Homeowners with the bigger sinkhole risk will be paying themost. Hillsborough County residents are being asked to absorb a 50percent hike for sinkhole coverage.