An insurance advocacy group last week urged creation of aprivately run state insurer to remove the private sector fromproviding hurricane insurance in Florida.

Americans For Insurance Reform issued a report asserting thatwith increasing numbers of carriers leaving the state, othersthreatening massive cancellations and skyrocketing prices, the timefor fixing the current system has passed.

The group proposed creation of a privately run state insurer forthe hurricane wind portion of homeowners' insurance coverage, withall of the wind business written by this entity.

“This would end low-risk cherry-picking by the insurers,” thereport said.

Also, by competitive bids an insurer, or multiple insurers,would service the policies and would be responsible for claimsadjustment after a hurricane occurred, the report said.

Private insurers would still sell homeowners coverage, excludinghurricane wind coverage, to wrap around coverage sold by theprivately run state insurer.

“If writing only the hurricane wind portion of the coverageproves too narrow a spread, consideration should be given to usingthis approach to write the entire homeowners' insurance policy forall Floridians,” the report stated.

Sam Miller, executive director of the Florida Insurance Council,said that while his organization has taken no position on a statetakeover of the hurricane business, the idea has been around forsome time.

In general, he noted, the industry has said that the financingresources Florida has in place for hurricane losses at the momentwould not generate sufficient funds to cover all Florida hurricanelosses.

“Several insurers, during a workshop with House Democrats lastmonth, said the concept might be a sound one, but many months ofwork would be necessary to determine if it actually would work,”Mr. Miller said.

A state commitment to charge actuarially sound rates would be atop prerequisite for a successful state-run plan, he added.

Joseph Annotti, senior vice president for the Property CasualtyInsurers Association of America, said that his initial reaction wasthat the AIR plan appears based on an “oversimplified 'governmentknows best' concept, one that has failed consumers around theworld.”