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Storms to Test Florida's Insurers

Florida's homeowner's insurance market may be put to the test this year if a major hurricane hits the state. Florida has experimented in recent years...
July 13, 2010

Florida's homeowner's insurance market may be put to the test this year if a major hurricane hits the state. Florida has experimented in recent years with ways to keep insurance affordable even as private homeowners insurers have been cutting the number of policies they sell there. In April Florida TaxWatch, an independent, nonpartisan research institute, characterized the state's insurance system as a "high stakes gamble" that "may be one major hurricane hit away from depending upon Federal relief or facing financial crisis" and in May, the U.S. Government Accountability Office released a report saying Citizens Property Insurance Corp, the giant state-run insurer of last resort for coastal properties, may not be charging high enough premiums to cover coastal properties.

According to the Insurance Information Institute (I.I.I.), between 2004 and 2007 insured coastal exposure in Florida increased 27 percent to $2.459 trillion. At the same time national carriers said they were not being allowed to charge rates that reflected their risks and began to reduce the number of customers they sold policies to. The I.I.I. reports that at the end of 2009 the average homeowners insurance premium in Florida was $1,641, down $274, or 14 percent since mid-2007, when lawmakers froze Citizens' premiums at 2006 levels.

Storms to Test Florida's Insurers (Wall Street Journal 7/10/2010)

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