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Citizens Insurance is making more than a dozen changes, lowering coverages and increasing deductibles, to reduce risk. The company also announced today that the insurer of last resort will transfer 17 thousand policies to a private insurer in February, but as Mike Vasilinda tells us, higher rates may be the only thing that can keep the insurer solvent.

Citizens began 2012 with just under a million and a half policies.That is about twice the number of policies that should be expected for an insurer of last resort.

To make private insurance more attractive, deductibles are going up and insurance limits are going down. No longer will Citizens insure a home for more than a million dollars.

“The challenge of shrinking Citizens requires a dedicated and continuing effort to identify ways to reduce our exposure and policy count,” Scott Wallace, retiring Citizens chairman, said.

Legislation is being considered to lower the assessments that could be passed on to every Floridian if a major storm were to hit the state. Those assessments could cost average homeowners an extra 12 hundred dollars a year. But lowering them means paying more now.

The Citizens changes are almost certainly going to end up with higher bills in mailboxes, and the Governor who usually opposes raising costs, says this one is necessary.

“I have a house on the beach,” Governor Scott said. “I don’t believe that anyone should subsidize my property insurance. I made the decision to do that.”

In supporting higher Citizens rates, the Governor says its the classic case of pay me now or pay me later.

“We do want to make sure people can get insurance that people can afford,” Scott said.

In March, Citizens will also propose eliminating some coverages and requiring inspections on 30 year-old homes.

“I’d go back to my experience of working with supervisors in the past. They have the heavy burden of running the elections; it’s their responsibility. They are very talented, very resourceful, and I look forward to having a partnership with them, supporting them in anyway I can, and having a good election.”