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Linda Sapp’s reaction to her insurance bill was sticker shock: The annual premium doubled to $4,800, adding hundreds to her monthly mortgage payment.

Her first thought: “There’s no way I can afford my house.”

Her son needs daily help with a medical condition that causes severe swelling in his legs. The Acreage resident works 20 hours a week at Subway to supplement her husband’s income as service manager for a fire-sprinkler company. Her State Farm bill sent her scrambling to find another insurer.

In Boynton Beach, retiree Thomas Spatafora is on a fixed income and said he has never filed a property claim. But annual premium increases just keep on coming from the state’s insurer of last resort, Citizens.

“How the hell much is enough?” Spatafora said. “They keep increasing the cotton-picking premiums. Are they going to price us out of existence so we can’t afford it?”

Affordability is not as popular a word as it once was in Tallahassee, where the emphasis these days is on encouraging insurance rates to rise. That is particularly true with Citizens, the state’s biggest carrier with 1.5 million policyholders.

“The true cost of living close to the coast, where hurricanes are most destructive, is much higher than Citizens policyholders have been paying,” said Lane Wright, spokesman for Gov. Rick Scott. “That’s because the rates have been held artificially low by politicians who’ve postponed the inevitable and kicked this can down the road.

“This is a problem Gov. Scott inherited and is working to fix now. If we don’t, when the next natural disaster strikes, Florida taxpayers will be hit with a financial disaster to fill the insurance premium gap policyholders aren’t willing to pay.”

Backdoor rate increases

Insurance interests gave more than $94,000 to Scott’s campaign in the 2010 cycle, among the four industries most generous to him, according to online data compiled by the National Institute on Money in State Politics.

Private insurers stand to benefit as Citizens’ bills climb, influencing the market as a whole. Scott wants legislators to consider letting Citizens raise rates beyond the 10 percent a year currently allowed.

For many customers, bigger hikes are already coming through what consumer advocates characterize as backdoor rate increases. One way to boost premiums is to raise the projected cost of rebuilding homes, though existing home prices in many parts of Florida continue to fall and the construction industry has struggled. Software that Citizens uses to determine replacement costs is under review in South Florida and Tampa this month following consumer complaints.

Then there are reinspections that overwhelmingly tend to find homeowners no longer qualify for storm-resistant features that bring discounts, despite protests from homeowners they followed the rules the state set and later repeatedly changed.

Reinspections raised Citizens premiums an average of 24 percent, or $718 a year, for 63 percent of 78,000 homes visited through Nov. 30. In 2012, reinspections are scheduled for 209,000 homes – adding $94 million to premiums at 130,000 homes statewide if trends hold.

In Cabinet meetings, Scott has expressed concern about the $500 billion in property Citizens insures. For example, Citizens customers could be asked to pay an assessment of 15 percent – 6 percent for those with other companies – if a big storm exhausts reserves.

But no storm is likely to flatten every home in the state. The state faces expected annual losses of $4 billion from windstorms, and not quite $60 billion from a once-in-100-years storm, according to a report prepared for the legislature by the Florida Catastrophic Storm Risk Management Center at Florida State University.

Homeowners in South Florida might be forgiven for wondering why sharp increases in premiums now are less damaging to ordinary people than the risk of potential assessments later.

“Absolutely the margin in insurance premiums is often the difference between making the payment and not making the payment,” said foreclosure attorney Michael Alex Wasylik, whose firm has an office in Boca Raton. “It’s a very common story I hear. They had one insurance expectation and that changed and tipped them into foreclosure.”

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