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

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

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

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

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

The state created Citizens as an insurer of last resort for Floridians who could no longer get private hurricane coverage, but in recent years it has begun to serve the same role for sinkholes.

In response to rising sinkhole premiums charged by private insurers, particularly in Pasco, the Legislature made the coverage optional in 2007.

As a result, only 20 percent of Citizens' customers in Pasco currently buy sinkhole coverage, said company spokeswoman Christine Ashburn.

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, but Ashburn said that's hard to prove and juries tend to side with homeowners.

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

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

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

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

For example, the annual premium for a home in inland Pasco would go from $1,084 to $6,192, an increase of 471 percent. The premium for a home in inland Escambia County at the western tip of the Panhandle 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 by area although not as dramatically. In a few places rates would drop, notably in Tampa where they would decline by 9.4 percent for homeowners. In most areas homeowners would get increases at or near 10 percent and the statewide average would be 9.4 percent.

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

Many policyholders are expected to drop sinkhole coverage rather than pay higher premiums, but no estimate has been made of how many, Ashburn said.

That won't be an option for some, though, because it's required by their lenders. That includes Freddie Mac, one of two government-controlled mortgage giants, Ashburn said. She said the other, Fannie Mae, does not require it.

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

Binnum said she's optimistic other changes affecting sinkhole claims in the new law will stem tide of losses over time and ultimately reduce premiums. That includes a provision limiting claims filed after two years.