Residents in Florida who have a homeowners' policy with thestate's residual insurer can expect to pay an average 10.8 percentmore for insurance at the start of the year.

The rate increase, coupled with an average 8.8 percent hike ondwelling fire policies, signals a "more reasonable approach towardmoving a significant portion of Florida's demographic toactuarially-supported rates," says Insurance Commissioner KevinMcCarty, in a statement.

Citizens Property Insurance Corp, Florida's last-resortinsurer, had asked McCarty's office for an average 11.8 percentrate increase on for homeowners' policies and a 12 percent increasefor dwelling fire.

In an emailed statement, Citizens says it is "pleased thatInsurance Commissioner McCarty has approved its measured approachto achieving sound rates and reducing the potential financialburden of assessments for all Floridians. We are committed toworking further with Commissioner McCarty and OIR as we move towardactuarially sound rates and seek to identify additionalopportunities for our customers to find quality coverage in theprivate insurance market."

By law, Citizens can only increase rates 10 percent, except forsinkhole coverage, on any single policy per year. The OIR says ithas imposed a maximum territorial rate increase of 10 percent toadhere to the law.

The sinkhole portion of either a homeowners' or dwelling firepolicy are going up 21.4 percent and 44.8 percent, respectively,according to the OIR approval.

Citizens had asked for a 29.6 percent rate increase to thesinkhole portion for homeowners and a 43.7 percent increase fordwelling fire.

In its order, the OIR acknowledged testimony from the stateconsumer advocate, who said 2011's SB 408 dramatically reduced the number of sinkhole claims in2012. But the presentation did not include claims in 2012 fordamage incurred in 2011. The OIR was "unable to quantify how muchSB 408 will reduce the frequency and severity of sinkhole claims,"but the OIR did cap rate increases in Pasco and Hernando countiesto 25 percent. Hillsborough County is capped at 50 percentincreases for sinkhole coverage.

"Our primary goal is to ensure Citizens policyholders aretreated fairly and retain an opportunity to return back to a robustprivate insurance market as the Florida Legislature intended,"McCarty says.

The OIR will release its decision on Citizens' mobile home raterequest on Oct. 8 and for commercial lines on Oct.19.