TALLAHASSEE, Fla. (AP) — Florida's largest property company onWednesday proposed an average increase of nearly 430 percent foroptional sinkhole coverage in response to soaring claims and 8.8percent for all other perils, including hurricanes, fire and theft,all effective in 2012.

The board of state-backed CitizensProperty Insurance Corp. voted 4-0 to ask forapproval for the higher rates from the state's Officeof Insurance Regulation. Two members abstainedbecause they are Citizens agents.

A new law passed this year lets Citizens,which insures more than 1.4 million homes and businesses,charge whatever it takes to pay for sinkhole claims. Citizens lostmore than $200 million on sinkhole coverage in 2010, which wasabout twice as much as the previous year, said Sharon Binnum, thecorporation's chief financial officer.

Annual increases for all other coverage remain capped at 10percent for each policyholder.

Homeowners in high-claim areas, mostly around Tampa Bay, couldsee their sinkhole rates increase by as much as $5,000annually.

“We recognize that our rate need for sinkhole coverage isenormous,” Binnum told the board during a conference call meeting.“This fact and its impact on policyholders is not lost on us, butthese rates are based on Citizens' actual sinkhole lossexperience.”

Unlike windstorm rates that are based on computer models of potential hurricane damages, Binnumsaid the sinkhole rates “are a direct result of the explosion ofsinkhole claims.”

The board's decision drew criticism from formerstate Insurance Consumer Advocate Sean Shaw, now a Tampalawyer who represents policyholders with sinkhole claims. Shawcalled the rate request “brash, devastating and irresponsible.”

Last year, Citizens took in $32 million in sinkhole premiums butpaid out an estimated $245 million in claims. Most of the claimshave come from Hernando, Hillsborough and Pasco counties, where theincreases would be the greatest.

The state created Citizens as an insurer of lastresort for Floridians who could no longer get private hurricanecoverage, but in recent years it has begun to serve the same rolefor sinkholes.

In response to rising sinkhole premiums charged byprivate insurers, particularly in Pasco, the Legislature madethe coverage optional in 2007.

As a result, only 20 percent of Citizens' customers in Pascocurrently buy sinkhole coverage, said company spokeswoman ChristineAshburn.

Sinkholes are caused when the ground gives way due to erosion,the collapse of a cave roof or the lowering of the water table.Florida has experienced drought in recent years.

Officials suspect fraud is a factor in the growth of claims, butAshburn said that's hard to prove and juries tend to side withhomeowners.

“There are absolutely sinkholes in Pasco County, but PascoCounty is not falling into the ground,” Ashburn said.

Lawyers and public adjusters have also become more active inseeking out potential clients.

With most Pasco homeowners opting out of coverage, she said theproblem has migrated to neighboring Hillsborough.

The proposed premium increases vary widely from one place toanother based on their experience with sinkhole claims.

For example, the annual premium for a home in inland Pasco wouldgo from $1,084 to $6,192, an increase of 471 percent. The premiumfor a home in inland Escambia County at the western tip of thePanhandle would go up what seems like an astronomical amount —2,514 percent — but in terms of real money it would increase from$3 to $71.

Proposed premium changes for non-sinkhole coverage also vary byarea although not as dramatically. In a few places rates woulddrop, notably in Tampa where they would decline by 9.4 percent forhomeowners. In most areas homeowners would get increases at or near10 percent and the statewide average would be 9.4 percent.

For owner-occupied mobile homes the average increase fornon-sinkhole coverage would be 4.8 percent and for condominiumowners it would be 5.2 percent.

Many policyholders are expected to drop sinkhole coverage ratherthan pay higher premiums, but no estimate has been made of howmany, Ashburn said.

That won't be an option for some, though, because it's requiredby their lenders. That includes Freddie Mac, one of twogovernment-controlled mortgage giants, Ashburn said. She said theother, Fannie Mae, does not require it.

“By and large the information we've received is that themajority of the market is not requiring it,” Ashburn said.

Binnum said she's optimistic other changes affecting sinkholeclaims in the new law will stem tide of losses over time andultimately reduce premiums. That includes a provision limitingclaims filed after two years.