Florida seeks insurance fix amid housing woes

By Tom Brown

MIAMI (Reuters) - Florida's big push to slash homeowner insurance premiums, a major issue in a state hurt by a sinking real estate market, has turned to bust in the face of stiff opposition from the powerful property-insurance industry.

"It certainly didn't pan out," said Bob Milligan, the state's consumer insurance advocate.

"At best we've seen kind of a reduction in the increases, not really decreases from what they were prior to 2006," Milligan said in an interview.

He was referring to the huge increases many homeowners have seen since eight hurricanes crisscrossed Florida in 2004 and 2005, when insurers paid out about $35 billion in insured losses in the state.

Prodded by Gov. Charlie Crist, who has had several insurers subpoenaed over rate issues after campaigning aggressively last year on a promise to fix the insurance problem, state lawmakers have enacted a sweeping package of property insurance reforms.

Among other measures, they doubled the size of Florida's state hurricane catastrophe fund to $32 billion and authorized state-controlled Citizens Property Insurance Corp. to compete directly with private insurers.

Through the catastrophe fund, lawmakers also agreed to provide state-subsidized reinsurance -- backup coverage for property -- to insurers on the understanding that savings would be passed on to their customers.

Though expected to result in a statewide cut in homeowners' insurance premiums averaging 24 percent, Bob Hunter, insurance director at the Consumer Federation of America, said the new laws were now seen cutting rates only about 12 percent.