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A costly proposition



Published: Fri, August 19, 2005 @ 12:00 a.m.



Orlando (Fla.) Sentinel: Sucker-punched by five hurricanes in the past year, homeowners' insurance is a little tougher to come by in Florida these days. And, as most residents know, policy costs are through the roof.

But it could be worse. And, in fact, it could get better if legislators would take some needed steps.

Clearly, Florida's vulnerability to Mother Nature isn't sucking the insurance industry dry. And that's largely because state lawmakers limited the industry's exposure post-Andrew, establishing huge consumer deductibles for hurricane-related claims. At the same time, lawmakers also created a hurricane catastrophe fund to help offset insurance losses.

Insured losses

But therein lies today's problem. Before tapping the fund, most insurance companies must first cover $4.5 billion in insured losses for each of the first two storms, $1.5 billion for each storm after that. And the spiraling cost of private reinsurance for those multiple deductibles is what's driving most of the rate hike requests, insurance executives contend.

Last year, lawmakers properly changed the law so that homeowners wouldn't be hit with multiple hurricane deductibles in one year. And to keep homeowner insurance rates affordable, they should do the same for the insurance industry. That's only fair.




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