Battered Homes, Battered Insurers
South Florida Sun-Sentinel
April 9, 2006

The gravity of Florida's home insurance problems became clear last week. The state's property insurance market is "in a crisis," Senate President Tom Lee said. After eight hurricanes in two years, home insurance prices are soaring. Insurers are shedding thousands of policies. Homeowners wonder how they can afford the higher premiums.

Making matters worse, the state's home insurer of last resort and the backup fund for the insurance industry are broke and looking to Floridians to bail them out.

The Legislature has a month left to resolve the crisis, just in time for the 2006 hurricane season that starts June 1.

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The situation is so dire a national consumer group on Friday suggested that windstorm coverage -- basically hurricane insurance -- be taken out of the hands of private insurers completely.

Nonprofit group Americans for Insurance Reform released a report that proposed shifting all of Florida's hurricane risk to a state-controlled entity. The authors, Joanne Doroshow of the Center for Justice & Democracy and Robert Hunter of the Consumer Federation of America, said making such a change "would end low-risk cherry-picking by the insurers."

Private insurance carriers would sell policies to cover fire, theft and liability, and wind risk would be covered by the state. Policyholders would pay lower rates.

Despite what some might think, Florida's insurance market is not at a crisis point, but a tipping point, said Hunter, director of insurance for the Consumer Federation of America.

The state has given insurance companies approval for "higher and higher rates, and [companies have] given less and less coverage," Hunter said. "At some point, you have to say, `Hey, this isn't working.' Let's take this away from them so they don't have any excuse for these high prices and less coverage."

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