The new law--passed in a special legislative session called specifically to provide rate relief for property owners--seeks to achieve its goal by increasing competition among insurers and rolling back planned rate increases, such as a rate hike due the state's insurer of last resort, Citizens Property Insurance Company.

However, the law also gives Citizens increased authority to make assessments and eliminates restrictions that barred it from competing with private carriers.

This could have a significant effect on producers, according to the Florida Association of Independent Agents. As the state's residual market, Citizens' policies require more work than those with private companies, and pay substantially smaller commissions, reported FAIA's executive vice president, Scott Johnson.

"It could put agents in a difficult position financially," he said, adding that while typical private company policies offer commissions between 10- and 15 percent, Citizens' policies provide commissions in only the 6-to-7 percent range.

In debating the legislation on the floor of the state House of Representatives, Rep. Ron Reagan, R-Sarasota, who identified himself as an agent, said, "Insurance agents are going to take it on the chin on this one," but he also suggested the issue could be revisited in March.

Citizens is required to submit for the regular legislative session a business plan detailing how it will manage its newly increased operations, and Mr. Johnson noted that the company has promised to address the compensation issue.

Insurers have been critical of the law, including a provision allowing primary carriers to buy additional reinsurance from the state's catastrophe fund at a reduced cost--provided those savings are passed directly to consumers.

While the law will cut reinsurance costs, it only delays payment for recovery after a major storm, according to Cecil Pearce, vice president of the Southeast region for the American Insurance Association.

"If no hurricanes hit Florida in the next few years, all the state gains is a false sense of security," he said. "And if, as predicted, Florida experiences major storms that exhaust the cat fund and Citizens, all policyholders will be assessed for years to come to repay deficits.

"The bottom line," he added, "is Florida has just reinforced its reputation as one of the most overregulated insurance markets in the country. While providing some immediate rate relief to policyholders...[it] does nothing to encourage insurers to invest additional private capital in Florida, which should be the ultimate goal of public policymakers."

In an analysis of the bill, an equity research analyst at the Bank of America, Tamara Kravec, noted that the changes being made to the cat fund could affect demand for reinsurance, prompting reinsurers that previously focused on Florida to begin to look elsewhere for business.

The Reinsurance Association of America--whose members will feel the effects of the law most directly as primary companies opt for the lower prices being offered by the state--called the measure a "gamble" that could ultimately do more harm than good.

RAA President Frank Nutter said lawmakers essentially bet that 2007 will mirror the calmer hurricane season of 2006, charactering the law as a "pray now, pay later" measure.

"This new law replaces the system of financing insurance protection based on risk to which the insured is exposed with a regime that will cover losses with taxes and policyholder assessments," Mr. Nutter said.

"Legislators can change the law of the state, but they cannot change the laws of nature or the laws of economics. The wind will blow and cause billions of dollars of damage. Someone will have to pay for the resulting losses," he added.

The premium levels mandated in the new law, Mr. Nutter said, "fly in the face of sound risk management" and will not cover losses inflicted during a storm-heavy season such as those occurring in 2004 and 2005.

Lloyd's, which as a market sustained some of the largest losses from 2004's Florida hurricanes, said in the wake of the new law's passage that while the goal of ensuring affordability and availability is understandable, there are concerns.

Although it remains to be seen what the immediate impact of the new law will be, Lloyd's said it worries about any legislation "that may have the unintended consequence of limiting the risks that go to the private insurance market," which "is best equipped to handle natural catastrophe risk."

"Insurers don't mind competition but oppose creating an environment where the state does not have to play by the same rules and can undercut the private market, as provided in this legislation," said Jeff Brewer, a representative for the Property Casualty Insurers Association of America. "These actions do not encourage insurers to come back into already troubled market."

Insurers did count at least one victory among the new law's provisions--the removal of an exemption from the state's building code that had been in effect for the Panhandle region.

In addition, insurers were relieved lawmakers declined to pass some of the more onerous provisions in the original bill, including language that would have barred the formation of Florida-only subsidiaries (known as "pup" companies) and that would have required the state Office of Insurance Regulation to factor in a carrier's national profits in considering rate requests.

Despite those concessions, insurers were far from satisfied. "Although the legislature stepped away from the abyss and did not enact the most damaging reform proposals that were on the table during the special session, the legislation does not resolve the critical problems in the Florida insurance marketplace," said PCI's Mr. Brewer.

While Florida's policymakers said they are not blind to the potential for trouble inherent in the new law, the prevailing view within the government was that the immediate need justified the potential liability.

Adelaide "Alex" Sink, Florida's chief financial officer, said in a statement she was "pleased" the legislature considered both the immediate need for rate relief and the state's long-term fiscal health. "Should we encounter truly devastating storms in the future, we must protect Floridians from being held liable for astronomical and unaffordable assessments," she said.

Tara Klimek, a representative for the Department of Financial Services, said the statement reflected Ms. Sink's concerns over earlier versions of the legislation that would have put the state on the hook for virtually all losses above a certain threshold, with no limit. Such a proposal would have put an enormous burden on future taxpayers, she said, and could also have affected the state's bond rating.

Ms. Klimek said the department bore no delusions regarding the financial risks a major event in the near future could pose to Citizens, the cat fund and policyholders throughout the state, but added that the costs of recovering from a storm would have to be borne regardless of when it occurs.

"It's a question of pay now or pay later," she said, adding that many homeowners had to deal with numerous assessments in the wake of the 2004 and 2005 storm seasons.

"You can't just legislate that insurance is going to be cheaper, so they tried to balance the need for rate relief and the need to protect the long-term future," she said.