"I think we are dangerously overexposed considering the current reality of the marketplace," Nicholson said. "… It scares me to death where we are."

Nicholson used the warnings as part of a pitch to state lawmakers to scale back the size of the Florida Hurricane Catastrophe Fund. That would likely cause insurance premiums to rise but it has the backing of many key Republicans, including Gov. Rick Scott.

Every insurer currently in Florida is required to purchase coverage from the "Cat Fund" as it also called. The fund provides a backstop to insurers at a rate that is generally cheaper than reinsurance sold by private companies. Nicholson estimated that this low-cost option probably results in insurance premiums being about 25 percent cheaper.

If a storm causes enough damages the insurer can ask for reimbursements from the fund. But if the hurricane fund runs out of cash due to a large storm, it borrows money to pay insurers.

The state pays off its debts with an assessment, or what some call a "hurricane tax," that is placed on nearly every insurance policy in the state, including auto insurance policies. Right now, homeowners and drivers in Floria are paying off charges due primarily to Hurricane Wilma.

Nicholson, however, said he's less worried about future hikes in the "hurricane tax" because right now he's not sure he can even borrow enough money. He said the turbulence in the financial markets this summer has created "tremendous uncertainty."

The Republican-led Legislature – including then House Speaker Marco Rubio – agreed with Gov. Charlie Crist to greatly expand the size of the fund back in 2007 as part of an effort to lower insurance rates. Two years later legislators started whittling the fund back down but Nicholson says more needs to be done.

"The Cat Fund needs to be right-sized," Nicholson said. "It's too much when you are expecting to depend on 10 billion or greater of debt."

State Sen. Alan Hays, R-Umatilla, said he considered it  "fraud" to force insurers to buy coverage from the fund if there is no guarantee the fund can pay for storm damages.

"We're taking a tremendous gamble which I find unacceptable," Hays said.

But any move by state lawmakers to change the hurricane fund could run into opposition from coastal lawmakers concerned about raising insurance rates during bad economic times.

"We need to go very slowly," said State Sen. Mike Fasano, R-New Port Richey. "I have great concerns of the ramifications of what this will do to every property insurance policy holder in the state. We're not just talking about homeowners. We're talking about mobile home owners, condo owners and small business owners."

The governor, however, agrees with Nicholson. He said he would prefer insurers to rely on other sources of help instead of utilizing the state-created hurricane fund.

"I like free markets, I believe free markets work," Scott said. "I believe free markets are efficient so I would like to downsize the Cat Fund responsibly."