After the hurricane season of 2004/05, I decided never to have risk
exposure in Florida...apparently some insurance companies have to.

TMT


Florida seeks insurance fix amid housing woes By Tom Brown
Sun Oct 7

Florida's big push to slash homeowner insurance premiums, a major
issue in a state hurt by a sinking real estate market, has turned to
bust in the face of stiff opposition from the powerful property-
insurance industry.

"It certainly didn't pan out," said Bob Milligan, the state's consumer
insurance advocate.

"At best we've seen kind of a reduction in the increases, not really
decreases from what they were prior to 2006," Milligan said in an
interview.

He was referring to the huge increases many homeowners have seen since
eight hurricanes crisscrossed Florida in 2004 and 2005, when insurers
paid out about $35 billion in insured losses in the state.

Prodded by Gov. Charlie Crist, who has had several insurers subpoenaed
over rate issues after campaigning aggressively last year on a promise
to fix the insurance problem, state lawmakers have enacted a sweeping
package of property insurance reforms.

Among other measures, they doubled the size of Florida's state
hurricane catastrophe fund to $32 billion and authorized state-
controlled Citizens Property Insurance Corp. to compete directly with
private insurers.

Through the catastrophe fund, lawmakers also agreed to provide state-
subsidized reinsurance -- backup coverage for property -- to insurers
on the understanding that savings would be passed on to their
customers.

Though expected to result in a statewide cut in homeowners' insurance
premiums averaging 24 percent, Bob Hunter, insurance director at the
Consumer Federation of America, said the new laws were now seen
cutting rates only about 12 percent.

"It's the big national companies that are balking," Hunter told
Reuters, saying they had failed to pass on reinsurance savings to
consumers despite record profits in recent years.

One such company is Allstate Floridian Insurance, a unit of Allstate
Corp, the nation's largest publicly traded insurer, which recently
filed to raise homeowner rates in Florida by nearly 42 percent.

Allstate Floridian spokesman Adam Shores said the increase, partly
prompted by a decision to buy additional reinsurance on the private
market, was in line with harsh economic realities and the costs
associated with catastrophic risk.

"We fully recognize that this is a difficult time for a lot of
Floridians; people are hurting; and they're experiencing a lot of high
costs with property insurance, property tax, things of that nature.
But we need to be in a position of financial strength to protect
customers when a major catastrophe strikes, like we know it will,"
Shores said.

"A LOT OF PROMISES"

"There have been a lot of promises that have been made by the
political leaders in Tallahassee about where rates would be and what
those rates would look like," he added. "The promise that we have
made, and the promise that we will continue to stand by, is to be
there for our customers when it comes time to pay their claims."

Crist, a Republican, is still pressing for relief in a state saddled
with what industry insiders rate as the second- or third-highest
priced homeowner's insurance of any state in the country. He appeared
to win at least a partial victory last week when State Farm agreed to
cut its property insurance rates in Florida by an additional 2
percent, on top of the 7 percent cut it implemented earlier this year.

State Farm, one of three companies hit with subpoenas by officials
probing high insurance costs, has also agreed to cooperate with
authorities on further investigations into potential collusion between
insurers, trade associations and rating organizations aimed at
preventing homeowner premiums from going down.

Since more dramatic rate cuts have failed to materialize so far,
however, many Floridians say they back a measure proposed by two of
the state's Democrats, who recently submitted a bill in Congress
calling for the creation of a federal catastrophe fund where states
could pool their risks against future storm damage.

"The citizens of Florida are really fed up," said Teri Johnston, who
heads a grass-roots organization known as Fair Insurance Rates in
Monroe that has pushed for insurance cuts in the Florida Keys.

"They're very frustrated and angry right now," said Johnston, who
noted that skyrocketing premiums have been driving residents out of a
place once considered a sun-drenched, tropical paradise at a rate of
about 17 people a day.

Like other homeowners in southernmost Key West, Johnston said she
currently pays more than $1,000 a month to insure her 1,200-square-
foot house there.

"It's something that's supported by a number of important insurers,"
Bob Hartwig, president of the Insurance Information Institute, an
industry trade association, said when asked about a federal
catastrophe fund.

"I think the issue is getting somewhat more traction and interest in
Congress," he added. "As we move along I think we'll hear more about
this."