"Much more needs to be done to mitigate the hurricane risk through construction improvements and retrofitting," he said.

But without recognition of the true expected costs of hurricanes and a regulatory willingness to allow this cost in the approved rates, insureds may find themselves without adequate incentive to invest in such upgrades.

Sean Devlin, chief actuary for direct reinsurance, GE Insurance Solutions, said that after the past two hurricane seasons, insurers need to "alter the way they think of loss costs."

He noted that "it is important for insurers and reinsurers to know what you are covering, what your models are covering, and what your risks are."

Alice Gannon, senior vice president, USAA, said that overall, the Florida Hurricane Catastrophe Fund has worked well providing insurers with a form of financial backstop. She noted that the FCFH retention was lowered for third and subsequent events, starting in 2005.

Ms. Gannon said that if hurricane risk was priced accurately the resulting underwriting profits would be large enough to attract additional investment capital. This, in turn, could lead to competition that could drive down prices for some individuals.

"There may never be enough discipline to assure you keep adequate rates in the highest risk places," she said.