Florida legislation approved over the weekend to cut propertyinsurance costs could mean policyholders and taxpayers will bear afinancial burden if a major hurricane hits this year, according toindustry critics.

The measure is expected to be signed into law by GovernorCharlie Crist.

Among the means to provide rate relief for property insurancepolicyholders in the bill is a provision to allow primary insurersto purchase additional reinsurance from the state catastrophe fundat cheaper prices than they would see from a private reinsurer.

Additionally, the legislation eliminates restrictions on thestate's insurer of last resort, Citizens Property InsuranceCompany, which forbade it from directly competing for business withprimary insurers.

However, because lawmakers sought to ensure the legislationwould not be accompanied by a tax increase, no upfront funding wasmade available for the increased exposure faced by the CatastropheFund or, potentially, Citizens.

Instead, lawmakers expanded the ability of Citizens to makeassessments after a catastrophe, allowing the company to makeassessments against property and casualty and auto lines, exceptingworkers' compensation and accident and health coverage.

As a result, while lawmakers touted a reduction in premiums ofbetween 5- and 20 percent, industry groups noted that a major stormwould still put the burden on policyholders.

"If no hurricanes hit Florida in the next few years, all thestate gains is a false sense of security," said Cecil Pearce, vicepresident of the Southeast region for the American InsuranceAssociation.

"And if, as predicted, Florida experiences major storms thatexhaust the funds of the Cat Fund and Citizens, all policyholderswill be assessed for years to come to repay deficits," hepredicted.

Adelaide "Alex" Sink, Florida's chief financial officer, said ina statement that she was "pleased" the legislature considered boththe immediate need for rate relief and the long-term fiscal healthof the state.

"Should we encounter truly devastating storms in the future, wemust protect Floridians from being held liable for astronomical andunaffordable assessments," she said.

Tara Klimek, a spokesperson for the Department of FinancialServices, said the statement reflected Ms. Sink's concerns overearlier versions of the legislation that would have put the stateon the hook for virtually all losses above a certain threshold withno limit. Such a proposal would have put an enormous burden onfuture taxpayers, she said, and could also have affected thestate's bond rating.

Ms. Klimek said the department recognized the financial risks amajor event in the near future could pose to Citizens, the Cat Fundand policyholders throughout the states, but added that the costsof recovering from a storm would have to be borne regardless ofwhen it occurs.

"It's a question of pay now or pay later," she said, adding thatmany homeowners had to deal with numerous assessments in the wakeof 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 toprotect the long-term future."