Perspective

We need answers on home insurance

It's about time lawmakers asked insurance executives under oath to explain why property insurance premiums have not dropped significantly after the state put taxpayers on the hook for billions in insured hurricane losses. Perhaps a new state Senate committee can get more enlightened responses that way when it holds hearings and starts asking questions next month.

A year ago, insurers blamed much of the premium increases on the high cost of reinsurance they buy to help cover their losses. So the state offered an additional $12-billion in cheap reinsurance that would trigger the need for enormous assessments on the backs of Floridians after a major hurricane. The idea was to provide relief now and gamble taxpayers would not have to pay later.

It hasn't worked out so well. Some rates dropped, but not as much as predicted. Some insurers did not trust the state and bought reinsurance for the reinsurance. Some use new hurricane models that predict greater storm risk to justify higher rates.

Floridians got lucky, and hurricanes avoided the state last year. Insurers made big profits. Reinsurance prices on the private market for 2008 are down by 10 percent. Yet many insurers are seeking significant rate increases. The industry says even after two years where Florida premiums exceeded losses by nearly $6.4-billion, that hasn't made up for the losses from the 2004 and 2005.

But no hurricanes and lower reinsurance costs should not add up to significantly higher rates - particularly when Floridians are still shouldering enormous risk.

The state Senate wants some answers. So do Florida homeowners.

[Last modified January 12, 2008, 21:21:58]