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Randi Schuknecht worried that her longtime, established insurance company was about to leave Florida — and leave her without a homeowner’s policy. So she found a new insurer — one she wouldn’t have to worry about if a big storm struck the state and damaged or destroyed her home.

But that switch from State Farm Florida to Florida Farm Bureau is costing the Tallahassee elementary school teacher about $400 more annually. It was the best deal Schuknecht could find with a company she was confident was solvent.

“I was afraid that if you waited too long and State Farm did pull out, you would sort of be at the mercy of the insurance companies with so many people needing insurance at the same time,” she said. “All the other quotes I was getting from the Web site were double and some were triple. I didn’t want to get caught in that.”

When the Legislature convenes March 2, it will again try to solve the state’s insurance puzzle – how to make policies more affordable while making sure that the companies are profitable and able to cover claims if a major hurricane hits the state? Because if the companies can’t pay, the state could be on the hook for billions. It also needs to get more customers off the state-backed, underfunded insurer of last-resort, Citizens Property Insurance Corp.

“It’s like a kaleidoscope,” said Rep. Bill Proctor, a St. Augustine Republican who is spearheading an effort in the House to pass legislation this spring he believes will help companies — and the state — become solvent. “You think you see (the solution) one minute and the next minute it’s different.”

“We have a long way to go,” concedes Senate President Jeff Atwater, R-North Palm Beach. “How we get there, I don’t know.”

This should be a profitable period for the insurance companies — no major storms have hit the state since the devastating years of 2004 and 2005, when eight struck. But many of the companies claim to be losing money.

“The thing that’s worrisome is you see that 102 of them are reporting losses when you’ve had no storms,” Proctor said.

A handful of proposals have already been introduced, including one similar to a measure vetoed last spring by Gov. Charlie Crist that would largely leave premium rates up to the insurers. Currently, the rates have to be approved by the state.

“It’s time, we’re going to have to come to grips with the reality we’re going to pay rates equal to the risk,” Proctor said.

Atwater, however, wants to reduce the risk for worried homeowners like Schuknecht.

And while luck has been on the side of property owners and insurers in recent hurricane seasons, Florida’s $2.1 trillion exposure dramatically exceeds any available insurance coverage.

“Florida taxpayers remain on the hook for potentially billions of dollars of claims following a major catastrophe,” said Sam Miller, executive vice president of the Florida Insurance Council, an industry association. He noted that many of the newer, small companies — that make up roughly half the market now — would likely go bankrupt if a cataclysmic event happened. The state would have to step in.

“It is not all OK,” said House Speaker Larry Cretul, one of thousands of Floridians whose homeowners policy was canceled by his carrier. Cretul, however, was able to pick up a replacement policy for a slightly lower rate.

Lawmakers and many consumers breathed a sigh of relief in December when State Farm reached a truce with state regulators and will continue to do business in Florida despite Crist’s animosity toward the multibillion dollar company that continues to trim its exposure.

State Farm, which insurers slightly more than 700,000 homeowners in the state, isn’t taking on much new business and will shed another 125,000 policies in the next 18 months.

“It’s very limited,” State Farm spokesman Justin Glover said. “It’s basically folks who are already customers of ours who move from one area of the state to another.”

The possibility of deep pocket insurers like State Farm pulling out of Florida also created an industry ripple that sent homeowners scurrying.

“I started getting kind of scared and started looking around,” said Sandy Payne, a Tallahassee resident who switched her family’s insurance to Tower Hill at about $100 more annually and lost a discount she had with State Farm on auto coverage for multiple policies.

And after 16 years without a claim during her stay with State Farm, Payne had pipes burst in her attic and filed a $3,000 claim with Tower Hill in her first few months as a customer.

“It’ll be interesting to see what my rates will be in June when my renewal comes up,” she said.

While big national companies like State Farm and Allstate have substanitally reduced their stake in Florida, creating space for more new competitors, it’s a risky business for everyone involved and costs are likely to increase despite the politics.

“Competition is what drives prices down,” said Sen. Garrett Richter, a Naples Republican who chairs the Senate Banking and Insurance Committee. “It’ll be important for us to continue to work on property insurance reform with the goal to increase competition in the state.”

Topics Florida Carriers Homeowners