Florida's Big Hurricane Gamble

By Peter Whoriskey
Washington Post Staff Writer
Tuesday, February 20, 2007

HALLANDALE BEACH, Fla. -- In this hurricane-battered state, living near the coast has always been a gamble.

In recent years, though, the estimated storm risks soared, and homeowners' insurance premiums doubled and tripled beyond what anyone deemed tolerable.

Now the entire state is in on a vast meteorological wager.

Last month, state legislators voted in an emergency session to lower insurance rates, primarily in South Florida, by pledging tens of billions in public money to affected homeowners if a major hurricane or two strikes again.

Since neither the state's catastrophe fund nor the state-chartered insurance company has anywhere near enough money on hand to pay the claims they may now be required to pay after a major hurricane, the measure is considered a gamble, even by proponents.

"We all need to pray to the hurricane gods," said state Sen. Steven Geller, who represents this beachfront condo city and negotiated a portion of the bill. "Yes, we're taking a risk. But what were our options?"

Critics have decried the measure as irresponsible. Under the legislation, in the event of a major hurricane, the state will pay claims by taxing home, automobile and some other types of insurance policies sold in the state. That makes it especially unfair, critics argue, to inland and upstate Floridians, who could be asked to help pay to help bailout riskier coastal areas in South Florida.

"If I wanted to gamble -- personally, I don't even buy lottery tickets -- and I'm pulling money out of my own pocket, that's one thing. But taking money out of someone else's pocket with the force of law is just irresponsible," said state Rep. Don Brown, the chairman of the insurance committee, who cast one of only two votes in the Florida House against the measure. "It's the most irresponsible measure that I ever was asked to vote on."

Though last year's hurricane season was mild, insurance markets across the Southeast have been roiled by the aftermath of the disastrous seasons of 2004 and 2005. Several insurers have pulled out of storm-prone regions; state legislators in Louisiana and Mississippi have sought ways to hold premiums down without driving away any more companies.

But the crisis may have been most acute in Florida, where a hurricane strike is deemed most likely, and where pollsters ranked rising premiums as the principal issue for voters in the November governor's election. Economists warned that rising rates could send the economy into a tailspin.

The Florida measure passed nearly unanimously and won the approval of Gov. Charlie Crist (R), who had campaigned on a pledge to address the rising premiums.

There are essentially two pieces to the hurricane insurance reform.

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