Now to the issue at hand: It stands to reason that if people cannot pay their mortgages, they will have a difficult time paying their insurance premiums. But the Age of Reason seems a long-ago era when it comes to insurance issues in Florida. Ancient history aside, blaming insurers for home foreclosures is like blaming the dog for eating your homework. No one believes it, but having someone (anyone) to blame helps an individual feel less burdened by unfortunate circumstances.

Let's start by addressing the “hearsay” claim that the cost of hurricane insurance is causing foreclosures. Florida's average annual insurance premium for an HO-3 policy is $1,386, according to the latest data available from the National Association of Insurance Commissioners. That ranks the state as second in property insurance costs, behind Texas. To get the lowest annual homeowners' insurance premiums in the country would require a move to Idaho, where an annual policy is about $477. So, the range between Florida's rates and the least costly state for property insurance is just over $900 a year, or an additional $75 a month. Yes, that amount may be significant for some people, but in and of itself, it seems an unlikely foreclosure catalyst.

RealtyTrac's data states that Florida had a foreclosure rate of one in every 135 homes, while the national per-capita rate is one in 374. No relief is in sight, as lenders continue to feel the pressure to clean up poor-performing assets. Resetting of adjustable-rate mortgages and rising unemployment are significant factors in the increasing numbers of foreclosures, not insurance costs.

People want a reason for getting little rate relief after three years with no hurricanes, and here it is: There is no money to refund and insurance rates have not increased in several years. It is not the answer people want to hear, but it is the truth. A few storm-free years cannot make up for the many years with huge losses. Operating in Florida means small profits most years and enormous losses in others. Most years, wind and hail are responsible for the largest percentage of claims across the U.S.

Explaining the role of profits is an important element in improving the public's understanding of the insurance industry. Amazingly to those of us in the industry, news reports about insurers' profits often have a negative tone, as if profits are distinct from the ability to pay claims. “The industry is fundamentally strong,” we say. “We can handle what nature dishes out.”

We must explain that this is how it is supposed to work! We also should point out that when news articles allude to profits, they often use national data that lump all lines of business in all states into the same profit pot. Only industry insiders know that profits in one state cannot be used to offset losses in another state. The people who pay the low rates in Idaho do not want to share our risk. (It is also prohibited by law.) Similarly, insurers are prohibited from using profits in one line of business to offset losses in another line. That is definitely need-to-know information for policyholders and we should be sharing it.

Lynne McChristian is the Florida representative for the Insurance Information Institute. She may be contacted at 813-480-6446, [email protected]. Also, see www.InsuringFlorida.org for her insurance blog, “Straight Talk.”