No big windstorms this year, so where's the break for us?

Article Courtesy of the Sun Sentinel

By Ralph De La Cruz
Published November 30, 2006


Congratulations, y'all. It's official.

The 2006 hurricane season is over today. And the only thing we got was a little bit of a scare-turned-summer-shower called Ernesto.

OK, so none of us had anything to do with this good fortune. Doesn't matter. I'm always willing to take credit for something I had no control over.

Besides, we might as well give ourselves a pat on the back. It's the only thing we're going to get. Doubt my insurance company is writing a celebratory rebate check today.

Curious how money only seems to flow one way when it comes to hurricanes and insurance. When we get pounded by storms, we can expect to have our pockets shaken out. And yet, when we have a clear season, we get ...

"In the past two years, Florida insurers paid out in excess of $35 billion and took in less than $18 billion in premiums," Sam Miller, of the Florida Insurance Council, explained in a letter to the editor in August. "Simple math shows us that no business can survive under that kind of financial picture."

Of course, Miller's math isn't only simple, it's myopic.

"They shouldn't be able to just count recent years," said Chris Kowalczyk, vice president of Homeowners Against Citizens. That's big C, as in Citizens Insurance, Florida's insurer of last resort.

Yep. What's conveniently ignored by Miller is that there wasn't much action in the dozen years between Hurricane Andrew in 1992 and the Season of the Four Hurricanes in 2004.

Let's see ...

There was Erin, a ragged Category 1 storm in 1995. Category 1 Earl hit the Florida Panhandle in 1998. And Irene, which quickly downgraded after making landfall near Cape Sable, hit South Florida with tropical storm winds and a lot of rain in 1999.

Three hurricanes in 12 years -- none an insurance breaker.

No hurricanes hit the state in 2000, 2001, 2002 or 2003.

I assume everybody still had to pay their insurance premiums during that time. So, taking Miller's numbers and adjusting them downward a bit to compensate for inflation, you've got to figure the insurance industry raked in upwards of $60 billion -- without significant hurricane payouts -- during those four years alone. Throw in 1993, '94, '96 and '97 and, well, you're talking some serious money.

A $17 billion shortfall in 2004-2005, with all that money in reserve, shouldn't have been a big deal.

And yet, companies have gone under. Others said they wouldn't insure us anymore.

The problem, of course, is that being publicly traded companies, when the big money's made, it's not simply kept in reserve for a windy/rainy day. It's paid out to shareholders, big-dollar execs and parent companies.

So when we get hit hard over a couple years time, the companies claim hardship and demand exorbitant rate hikes.

It's not just the insurance companies doing this. If you want to read an interesting analysis, go to Monday's editorial pages where Brad Ashwell of the Florida Interest Research Group broke down BellSouth's proposed $34.6 million hurricane-related increase.

Thankfully, Floridians aren't keen on being easily separated from their money. So groups such as Kowalczyk's emerge.

HAC ( is confronting the problem politically. It was one of the major issues in last month's elections.

"Floridians have been crying for rate relief for more than six months already," said Kowalzcyk. "If the Legislature doesn't act within the next three months, it's going to be an economic disaster."

The group has a 33-point plan that starts with a call for an investigation of Citizens, and an overhaul of state insurance laws -- including the law allowing national companies to have Florida-only subsidiaries.

I'm partial to No. 32.

"The citizens of Florida should not shoulder the burden of risk. Insurance companies are in the risk business, let them accept their risk."