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.
First, the legislators promised as much as $32 billion for insurers, and ultimately homeowners, if a major hurricane hits. This money would come from the state's catastrophe fund, which currently counts less than $1 billion on hand for such payouts, though it annually collects premiums from insurers.
The second set of changes affects Citizens Property, the state-chartered insurance corporation, which is Florida's largest insurer. Most of its policies are focused in the state's hurricane-prone south, where many private insurers refuse to do business.
The new legislation lowers Citizens premiums even though those premiums were already arguably too low to support the claims it has to make: The company ran out of money in 2004 and 2005, and it received $715 million from the state's general fund and imposed surcharges on insurance bills across the state to pay claims.
The projected shortfalls could be staggering in the event of a major hurricane strike. If, for example, something like the 1926 Miami hurricane were to hit next year, the state entities by some industry estimates would have to raise an additional $40 billion, or more than $5,000 for every Florida household. The federal government probably would be asked to pitch in to alleviate the burden.
"The legislature's 'savings' for homeowners are largely illusory," said Robert Hartwig, president and chief economist of the Insurance Information Institute, an industry group. "When the next big hurricane strikes in Florida, somebody is going to have to pay."
At the root of the trouble is that insuring against a major storm in much of South Florida has been deemed simply too risky to be affordable.
While private insurers generally plan for a severe "once in 100 years" storm, the state-chartered company bases its premiums on a lesser "once in 35 years" storm.
Planning for a more severe storm, while it might seem like common sense, may make premiums unaffordable for too many people.
"What everybody knows is that no one could charge enough in the high-risk areas of Florida to cover the potential damage in a one-in-100-year storm," said Rocky Scott, spokesman for Citizens. "We just can't do it."