It's been nearly eight years since Hurricane Wilma raked the southern end of Florida and caused billions in damages, the last of eight hurricanes to hit the state in 2004 and 2005.
Yet even as the state has been spared from additional hurricanes since that time Florida's fragile property insurance market has resulted in nearly year after year of steadily rising insurance rates for homeowners.
“We have no choice to continue to pay it,” said Henry Kempf, a customer with state-created Citizens Property Insurance Corp. who owns a home in New Port Richey. “We will have to afford it in order to have the peace of mind.”
Annual reports prepared by Florida's Office of Insurance Regulation show that the department has been approving more than 100 rate hike requests a year since 2009 - including requests to hike rates by double-digits.
That includes increases for Citizens, the state's largest residential property insurer with nearly 1.3 million policyholders. A report released in January by Florida State University concluded that homeowners in the state paid nearly $8 billion in premiums in 2011.
And sometimes the financial impact doesn't just come from rate increases. The state-created Citizens, for example, has tightened its policies to cut down on discounts it offers or raised deductibles connected to sinkhole coverage. Citizens is supposed to be for property owners who can't get private policies.
For Kempf the whole situation is frustrating: “No one is watching out for the people of Florida. Everyone has their own agenda.”
Hurricane storm season officially starts Saturday and federal forecasters predict it will likely be more active than an average hurricane season. The prediction issued last week calls for 13 to 20 named Atlantic storms, seven to 11 that strengthen into hurricanes and three to six that become major hurricanes.
This storm season, however, may prove even more crucial than ever for homeowners in the Sunshine State. That's because some are predicting Florida may be finally reaching the end of a volatile period for insurance rates — if the state can avoid disaster this year.
“There are some early signs we have reached price equilibrium,” Florida Insurance Commissioner Kevin McCarty said last week.
Locke Burt, chairman and president of Security First Insurance, the state's fourth-largest residential insurer, predicted his company will likely not ask for a rate hike in the coming year.
The reasons for Florida's steadily-increasing rates are varied and have triggered endless argument especially among state lawmakers and others in the last two decades.
The biggest expense remains the cost of “reinsurance” — which is the money an insurer spends with an out-of-state or foreign company to provide the company financial backing in case of major claims.
Other causes that have been cited include millions in other types of losses such as sinkholes. A Pulitizer Prize-winning series in 2010 by the Sarasota Herald-Tribune pointed out how insurers paid out millions in bonuses to company executives or had large overhead costs compared to the rest of the nation.
Plus, McCarty conceded all rate filings are allowed to include some percentage of profit for private insurers.
Sean Shaw, the former insurance consumer advocate for the state, put the blame on the Florida Legislature for siding too often with the insurance industry.
“The senior citizen living on a fixed income simply can't keep paying increase and increase with no real explanation,” said Shaw, who is now an attorney with a Tampa firm that represents policyholders. “When will the consumer stop taking it on the chin and when will the Legislature say enough is enough?”
Insurance industry officials argue insurers in the past did not charge adequate rates to deal with the real risk of covering homes in hurricane-prone Florida. The fragile nature of the market has been exposed by storms such as Hurricane Andrew in 1992, a Category 5 storm that destroyed much of the South Florida city of Homestead, and the series of storms that battered the state in 2004 and 2005.
Burt, using data collected by McCarty's office, contends that while the average premium has gone up since 2007 that the actual coverage provided to homeowners has also gone up. Burt said that means the average premium per $1,000 in property value has actually gone down during that time period.
Insurance companies, by law, cannot raise rates in order to recover money paid out during a storm.
But practically speaking, a large hurricane can still trigger rate hikes. Large storms and huge damages can prompt reinsurers based outside the state to raise their rates, which translates into higher costs for the insurers covering homeowners.
“If there are no hurricanes, those guys are happy, happy, happy,” said Burt, whose Ormond Beach-based company has about 180,000 policyholders.
Burt added that insurers need to purchase adequate reinsurance each year to make sure they have the resources in a case a big storm strikes the state.
“We don't want to be a thinly capitalized Florida company that is going to blow away when the wind blows,” he said.
The reason Burt and McCarty predict rates may stabilize is that reinsurance costs declined this year.
But that may not be enough for the roughly 1 in 5 residential policyholders who belong to Citizens.
Citizens insures older homes as well as homes in hurricane risky coastal areas. Citizens has also pretty much become the only insurer available in sinkhole prone areas such as Hernando and Pasco counties said John Reddin, who runs an insurance agency in Spring Hill.
A big debate this past legislative session centered on whether Citizens is charging enough to cover its risk.
Citizens' rates — for most types of coverage but not all — cannot go up more than 10 percent a year. Some legislators such as Sen. David Simmons argued that Citizens rates are distorted and that the law needed to be changed to allow rates to go up higher for some customers.
In the end, the sweeping legislation pushed by Simmons was not adopted. But Citizens will likely file for another series of rate hikes later this summer that will take effect in 2014.