Florida's last-resort insurer has approved an average statewiderate increase in 2014 of 7 percent.

The Citizens Property Insurance Corp. Board of Governors on June26 approved the rates, which include the continued phase-in of rateincreases for sinkhole coverage.

The approved proposed rates not head to the Office of Insuranceregulation for approval.

Citizens, the largest property insurer in the Florida, sayshomeowners not in need of sinkhole coverage are slated for anaverage 6.6 percent increase. The average personal residentialpremium in 2014 is estimated to be $2,112.

By law, rates hikes for non-sinkhole coverage cannot exceed 10percent but sinkhole coverage is not subject to the statute.

Actuaries at the state-run insurer recommended a 27.3 percentrate increase for sinkholes but the board approved a plan to slowlyphase in increases. In Hillsborough County, for example, rates willgo up by 50 percent of the indicated need.

CEO Barry Gilway says the board's actions “represents a measureapproach” and it “continues to make the tough but necessarydecisions while recognizing the impact on Citizenspolicyholders.”

The insurer has been trying to get closer to actuarially-soundrates in order to decreases the risk of assessments on all SunshineState policyholders should a large storm strike and Citizens needadditional funds to pay claims.

Citizens says it collected just $56.7 million in sinkholepremiums a year ago but estimates losses to be $187.7 million.Therefore, because sinkhole coverage is not properly priced, lossesfrom sinkholes are robbing the insurer's coffers to pay for othertypes of losses, such as for a hurricane.

Citizens is additionally trying to reduce the amount of policiesit has on the books. It was never intended to become the largestproperty insurer in the state but due to mandated rate suppressionand other factors, Citizens has remained in competition with theprivate marketplace and has typically been the cheaper option forhome insurance.