For the insurance industry in Florida, the goal for 2006 will behelping state lawmakers walk the fine line between doing too muchand doing too little to help the state recover from its secondstraight year of major hurricane losses.

For insurers, the biggest question revolves around “whether ornot the legislature is going to commit itself to an energeticprivate market, or whether it will commit to an increasinglysubsidized public market,” according to William Stander, regionalmanager for the Property and Casualty Insurers Association ofAmerica. “We hope for the former.”

Many of the problems facing the property insurance market,explained Julie Pulliam, a representative for the AmericanInsurance Association, stem from the reaction of lawmakers to theseries of major hurricanes that buffeted the state in 2004, which“resulted in the legislature passing a law that put a lot ofmandates and requirements on the industry.”

While these requirements have been a problem, Ms. Pulliam saidthey seem to be part of what is becoming a steady diet of changesto insurance rules out of Tallahassee. “We don't need that,” shesaid. “The constant changing of the rules on an annual basis is nothelpful. We're urging the legislature to fight the urge to passbills that impose new burdens on the insurance industry.”

As result of the legislature's actions, Ms. Pulliam said,lawmakers have created a new problem for themselves and the peopleof Florida. The state's insurer of last resort–Citizen's PropertyInsurance Corp.–has grown beyond its intent and could become afinancial problem for the state, she contends. “The legislature isvery concerned about Citizen's and the fact that they are taking onso many policies and debt,” she noted.

Among the proposed solutions, she said, would be to increasepolicyholder responsibility for Citizen's through such means asincreased deductibles and less favorable policy terms for secondhomes. Such proposals, she added, would force policyholders to “puta little more skin in the game,” rather than simply relying onCitizen's and the state for coverage.

For other property insurers, however, Ms. Pulliam said theindustry would seek to be allowed to manage itself, by seeking therepeal of recent laws imposing requirements and restrictions oncoverage. “Companies need to be able to price their products tomatch the risk,” she said. “That's not happening in Florida.”