(Corrects number of policies in second paragraph to 1.3 million from 400,000) MIAMI, Nov 17 (Reuters) - The cost of owning property in hurricane-prone Florida could cast a dark shadow over many residents of the Sunshine State when they get hit with staggering increases in their insurance payments next year. State-run Citizens Property Insurance Corp., Florida's largest property insurer with about 1.3 million policies, plans to introduce a 55.8 percent average statewide hike in premiums for homeowners starting March 1, spokesman Rocky Scott said on Friday. That would come on top of the 25.9 percent average statewide hike for homeowners that Citizens was due to start collecting effective Jan. 1, he said. Hit by devastating hurricanes including Andrew in 1992, which caused $44 billion in losses -- adjusted for inflation -- and four hurricanes in 2004, Florida already had some of the highest U.S. insurance rates. Many private insurers have cut back on offering coverage in the state, forcing creation of the state-run company. The rate hikes will be submitted to regulators on Dec. 7 and, if approved by state regulators, could add substantially to the cost of doing business in Florida. Commercial policyholders will be hit with a statewide average increase of 610 percent in payments to Citizens next year, Scott said. According to the St. Petersburg Times newspaper, commercial property owners in coastal Pinellas County, in western Florida, who have Citizens policies could see their average yearly premium jump to $16,190 from $1,514. The rate hikes stem partly from a new state law requiring Citizens to calculate its expenses as if it were buying reinsurance on the open market, instead of at a lower rate from the state-supported Florida Hurricane Catastrophe Fund. "The reinsurance market has been so screwy this year, so tight, that there are several companies out there that have paid in excess of 100 percent for their reinsurance," Scott said. He said price hikes were also due to the new law requiring Citizens to set rates high enough to cover all possible losses from the type of monster storm that could hit once in 70 years. The state legislature created Citizens in 2002 as an "insurer of last resort," aimed at serving the needs of homeowners in high-risk coastal areas and others unable to find coverage on the open, private insurance market. Its customer base has grown dramatically as private companies have cut back homeowners' policies in Florida. Scott said Citizens was now getting 15,000 new policies a week.
