Florida homeowners in insurance bind

Despite DHS Secretary Michael Chertoff's admonition that people have a civic duty to take responsibility for their own emergency preparedness and recovery, that just got a little harder for the people of Florida:

Still reeling from 2005 hurricane losses, Atlantic Preferred Insurance Co. said the company won't renew more than 140,000 homeowner policies in Florida.

The Tampa-based company, one of the largest insurers in South Florida, will start notifying customers starting July 13. Customers will have 90 days notice that their policies won't be renewed, said David Gough, a senior vice president for Poe Financial Corp., Atlantic Preferred's parent company.

Atlantic Preferred has 51,000 policies in Broward County, 32,000 in Palm Beach County and 25,000 in Miami-Dade County.

This will also put additional strain on the already over-burdened state-run insurance company:

With few insurers willing to take on new homeowner policies, many of Atlantic Preferred's former customers could end up in state-backed Citizens Property Insurance Corp. Citizens, the state's No. 2 home insurer, now has more than 815,000 policies.

On the surface, that might sound like another case of corporate welfare. But insurance companies aren't in business to lose money, and without some government support nobody could afford the premiums insurance companies would have to charge in areas prone to hurricane damage. Another problem, though, is that the State of Florida is running out of money to help:

The Florida Hurricane Catastrophe Fund, a fund insurers can tap to pay claims after the most costly storms, is facing a much larger deficit than previously reported.

Making up the now-projected shortfall of $1.35 billion will likely fall on every consumer, business and nonprofit entity in the state that hold an insurance policy of almost any type. Only medical malpractice and workers compensation policies are exempt from surcharges imposed by the CAT Fund.

The CAT Fund, which pays industry-wide hurricane losses above $4.5 billion, has provided stability to Florida's insurance market for more than a decade. Shoring up the fund is critical because, many experts believe, it is the reason many private insurers continue to write policies in the state. The reinsurance it provides is less expensive than coverage offered by private reinsurance companies.

This is a huge problem for homeowners all over Florida and the Gulf Coast region, and there aren't any clear solutions. And the next hurricane season is just around the corner.