According to a June 20 report in the MiamiHerald, South Florida homeowners insured by Citizens PropertyInsurance Corp. will likely see annual premiums rise by more than10% next year if the company’s recently requested rate increase isapproved.

Citizens PropertyInsurance Corporation was created by the Florida Legislature inAugust 2002 as a not-for-profit, tax-exempt, government entity. Itsrole is to provide insurance protection to Florida policyholderswho are entitled to but are unable to find property insurancecoverage in the private market.

“The horizon looks really cloudy out there,” said Barry Gilway,president and CEO of Citizens, the second-largest holder ofproperty insurance in Florida — behind Universal Property &Casualty — at a meeting of the insurer’s board of governors in theOrlando suburb of Maitland, Mary Ellen Klas of the Herald/TimesTallahassee Bureau reported.

Gilway explained that the soaring rates in Miami-Dade, Browardand Palm Beach counties are because of something regulators havebeen unable to track: excessive water damage claims buoyed byhomeowners who assign their claims to a contractor doing therepairs, giving the contractor — and often the aggressive law firmsthey hire — the right to collect payments directly from theinsurance company.

Related: How false water-damage claims are reaching crisis levels inFlorida

If approved by state regulators, the statewide residential rateincreases will average 5.3%, but because each policy isbased on the homeowner’s risk, no one pays exactly the average. Thecompany is looking for an average rate increase of 10.5% forMiami-Dade, 10.4% for Broward, 9.3% for Palm Beach and 3.8% forMonroe.

Rate decreases projected for the rest ofFlorida

Unlike South Florida, most counties are projected to seemulti-peril rates go down. The Tampa Bay area will be less than thestate average next year, Klas reported.

Pinellas County will see its Citizens rates for multi-perilhomeowners lines drop by 5.7%. Hillsborough County residents willsee a 0.8% increase, Pasco County a 2.7% drop, and Hernando Countya 2.2% increase.

According to Michael Peltier, Citizens spokesperson, as reportedby Klas, “Outside of South Florida, we don’t see the degree ofassignment of benefits abuses that we see in South Florida, andthat’s been reflected in the rates.” He said that the drop inreinsurance costs and more competitive pricing related to windstormcoverage has contributed to the rate declines in the othermarkets.

State law limits Citizens to a maximum rate increase of 10% ayear per policyholder but that doesn’t include the portion of therate included in the Hurricane Catastrophe Fund, so some rates willrise above the cap. The company predicts the cap will lead to aloss of about $124 million this year and $182 million in 2018 inits multi-peril homeowners lines, Gilway said. Profits fromcommercial lines of insurance will offset some of those losses in2017, he said, but not in 2018.

Related: Weather losses in U.S. exceed $1 billion in January for insurers,Aon reports

Private insurers also look for rateincreases

Private insurance companies, which aren’t under the samerestrictions, are seeking rate increases that are even higher thanCitizens, Klas reported. Deerfield Beach-based People’s Trust,which insured 54,267 single-family homes in South Florida asked fora 14.5% average rate hike for multi-peril homeowner coverage inMarch. The Florida Office of Insurance Regulation rejected thecompany’s request and instead improved a higher one — an average of16% — to cover its losses.

In addition to a rate increase, the Citizens board authorizedthe company to ask the Office of Insurance Regulation to alsoapprove changes to the way the company handles claims, in an effortto persuade homeowners to avoid litigation and curb the costs. Ifthe changes are not approved, Citizens said its losses and exposurewill rise.

This is the second time in three years that Citizens is seekinga rate increase for South Florida. This year, rates rose 8.9% to10% for policyholders who renewed in Palm Beach, Broward andMiami-Dade.

This story originally appeared in the Miami Herald, and wasreported by Mary Ellen Klas. She can be reached at 850-222-3095, [email protected],@MaryEllenKlas.