Last spring, the Florida Office of Insurance Regulation issued permits to three new companies that will join other carriers in taking out more than 370,000 policies from Citizens Property Insurance Corp., the state's home insurer of last resort. "Despite the unprecedented string of catastrophic hurricanes, it is reassuring to see a continued interest from new investors," said Insurance Commissioner Kevin McCarty.

But is it enough? Robert Hartwig, chief economist for the Insurance Information Institute in New York, has calculated that the state will need an injection of $500 million in new capital just to keep up with demographic growth, as well as heightened risk perception. "My expectation is that homeowners' rates will continue to rise in Florida with greater demand and greater perceived risk," he said. "There will be more pressure to expand the capacity of the alternative and residual markets…"

Mr. Hartwig has some quibbles with the idea there is a "homeowners insurance crisis" in the state. "From the perspective of insurers it has a meteorological crisis for which it is not sufficiently well-prepared."

Regulators and legislators lacking the "stomach" for allowing the kind of rate hikes to match the level of risk have contributed to what may be a capital shortage this year, Mr. Hartwig asserted.

And he doesn't hold out much hope for the new entrants. "There will be some opportunistic entry by cherry-pickers for the next few years, but this will really be no more than nibbling around the edges."

Florida has what may seem at first glance a relatively insurer-friendly "use and file" system, in which carriers can start charging new rates, subject to regulatory disapproval within 30 days. But industry representatives such as Neal Alldredge of the National Association of Mutual Insurance Companies said the fact that carriers must then offer rebates for any disapproved rates means the state has for all intents and purposes a prior approval system.

That much was evident earlier this year when Allstate put forth a 28 percent homeowners' rate hike, subject to disapproval. "This filing undermines recent legislation allowing policyholders the ability to provide input and comments at a public hearing prior to a rate increase," said Sen. Rudy Garcia, R-Hialeah.

In July, the commissioner turned down a 36.7 percent rate hike from the Cincinnati Insurance Company after an independent review from the state Consumer Advocate and analysis from the actuarial staff.

Mr. Hartwig said to expect a great deal of "insurer bashing" as the 2006 state elections approach.

Sen. Steve Geller, D-Hallandale Beach, got an early start this spring when he and fellow Democrats introduced a measure that would, among other things, repeal the industry's antitrust exemption and expand the duties of the state's Public Council to include citizen input into rate filings.

"While property and casualty insurance company profits are soaring, consumers are suffering," Sen. Geller said. "The insurance industry is raking in profits while Floridians are being raked over the coals."

Mr. Hartwig said the major homeowners carriers will still have to make some tough decisions whether to inject more capital into their Florida subsidiaries. "For many insurers, it is just the classic case of pouring good money after bad," he said.

That apparently was part of the calculus in the minds of Nationwide and Allstate executives. Nationwide spokesman Joe Case said further changes could follow the decision not to take on new clients in what he termed an overall review of its business strategy in the state. "And rates are only one piece of the puzzle," he said.

Last month the state granted a 21 percent rate hike for the company's nearly 300,000 policyholders, which constitutes the fourth-largest block in the state.

Earlier this year, Allstate announced it would be dropping about 90,000 of its 758,000 policyholders whose coverage would be picked up by an A-rated Sarasota company–Universal Insurance Company of North America. In addition, the company said it was injecting $375 million of additional capital for one year.

Still, the company faced a lot of heat for its rate-hike proposal. Allstate Floridian President Phil Lawson noted the company's activism in working with lawmakers to carve solutions to keep insurers in the state and said there is much work to be done.

Caption For Hurricane Shot:

Despite a grand slam of four major hurricanes that hit Florida last year, legislators are skeptical about the need for higher homeowners rates. "The insurance industry is raking in profits while Floridians are being raked over the coals," said one state senator.