A spur for a national fund?

Long promoted by Florida, the program would call for U.S. homeowners or taxpayers to share the costs of huge storms.

Hurricane Katrina certainly was full of surprises as it morphed into one of the most expensive storms to ever hit the United States.

Its aftermath may hold a few more unexpected twists for Florida's shell-shocked property insurance market. Not all for the best.

There are fears that homeowners' rates could go up further or insurers could become even more selective in coverage.

On the positive side, however, Katrina's multibillion dollar tab - including up to $600-million of it in Florida - is raising hopes that Washington politicians may finally rally around a national program to insure hurricane risk.

As long promoted by Florida, the program would help defray the price tag for a megastorm, spreading the costs among all taxpayers or property owners.

Hurricane Andrew couldn't drum up enough political resolve behind the idea. Neither could the Terrible Four of 2004: hurricanes Charley, Frances, Ivan and Jeanne.

Gov. Jeb Bush was among those Monday who said Katrina might spark "a growing consensus" for a national fund.

"The concept is that there are disasters that take place - floods, earthquakes, hurricanes, fires. That makes sense to share that risk in a broader way than just one state bearing the burden," Bush said.

Some large insurers are in favor of some sort of national backstop.

But on Monday they were busy on two more immediate fronts: sending adjusters to help out their Gulf Coast neighbors to the west and assuring Floridians that the nearby catastrophe won't trigger any immediate rate hikes here.

Rates in Florida are supposed to be set based on risks in this state alone.

As spokesman for State Farm, the largest property insurer in both Florida and Louisiana, Tom Hagerty said he didn't see how any damage in Louisiana, Mississippi or Alabama would affect Florida's rates. "That was part of the reason we formed State Farm Florida: so the company here would stand on its own," Hagerty added.

Sam Miller of the Florida Insurance Council, a statewide trade group, was more adamant: "Rates in Florida are not going to go up a penny because of what happens with this storm in other states," he said.

Yet, even Miller conceded that holding down rates is not entirely in the hands of insurers.

Katrina could prompt a spike in the cost of reinsurance. Reinsurance, bought by insurers as an added layer of coverage in case of huge losses, isn't regulated in the same way as insurance.

"If there is a spike in private reinsurance rates because of this storm, that's something that could affect Florida," Miller said. "I just don't know what there's going to be."

Last year, private reinsurers raised rates between 10 percent and 15 percent, on average, said Bob Hartwig, chief economist of the Insurance Information Institute. It's likely there will be pressure to raise rates again this year, he said.

Reinsurance rates are typically negotiated prior to hurricane season so any impact wouldn't be felt until next year, Miller said.

Insurers also may opt to pull the reins in further on writing in Florida. That would force more homeowners into the state-run Citizens Property Insurance which, by state law, has more expensive rates than the marketplace.

During Florida's hurricane series last year, many insurers insisted they were sticking with Florida. Since then, however, Allstate decided not to renew 95,000 of its Florida policies. Some smaller insurers have pulled out entirely. And Nationwide is considering dropping a significant number of customers here.

Both Florida and Louisiana already are among the most expensive homeowners' markets in the country. As of 2002, the last comparison data provided by the National Association of Insurance Commissioners, Florida had the fourth-highest homeowners premiums behind Texas, Louisiana and Oklahoma.

After last year's hurricane barrage, rates rose in coastal areas throughout the country, though not as much as in Florida, Hartwig said.

Rates for many in Florida have jumped in the double digits since last year's hurricanes. Plus, property owners face a statewide surcharge of about 7 percent to help Citizens Property wipe out a $515-million deficit directly caused by the storms.

Among other anticipated legacies of Katrina:

--The National Flood Insurance Program took a closer look at who should and should not be required to have flood insurance after the 2004 season. Federal officials are expected to revisit flood maps in neighboring states because of the storm.

--Louisiana and other states may at long last try to emulate Florida's model of a hurricane catastrophe fund.

Only Florida and Hawaii have a so-called Cat Fund to help insurers pay losses from multibillion-dollar storms. In Florida, the Cat Fund is funded by insurers through homeowners' premiums.

After restructuring its homeowners' insurance market post-Andrew through higher rates and the Cat Fund, Florida has promoted itself as the best-prepared state in the country to handle a hurricane.

After Katrina, Hartwig isn't so sure.

He said he was shocked that the hurricane caused an estimated $600-million in damage when it crossed South Florida as a relatively mild Category 1 storm. To him, that indicates the state shouldn't be too cocky about being prepared.

"God forbid this had been a Category 3 or 4 storm," he said. "South Florida has not been tested in any significant way since Andrew. This was not a big test, but South Florida certainly didn't get a passing grade."

--Times staff writer Joni James contributed to this report. Jeff Harrington can be reached at harrington@sptimes.com or 813 226-3407.