Tropical Gambling

There's an old poker players' expression. "If you look around the table and you can't tell who the sucker is -- then it's you."

Intrepid investigative reporter Paige St. John nails the Florida Office of Insurance Regulation today for gambling on the weather. The thing of it is, it looks like we're the suckers. The state is gambling with our homeowner's money but it won't tell us about it.

Rather than shut down insurers tottering from last year's hurricanes, Florida regulators are letting them grow with the riskiest policies in the state.

It's a gamble on the weather.

Florida homeowners are on the hook to pay if they lose. There's the promise of a healthier market and, maybe, competition to drive down rates if skies stay blue.

Yeah, right. Lower insurance rates. More like, 'heads you lose, tails they make bigger profits.'

Just last month, we warned of this by asking if Citizens Property Insurance had "depopulated you to a dog?" Now, evidence is surfacing that both state regulators and the state-owned Citizens Property Insurance Corp. have deliberately blinkered themselves against the growing number of Florida property insurance companies that cannot cover losses if there's another hurricane.

St. John explains:

State regulations require property and casualty insurers to have the larger of $5 million capital, or 10 percent of their liabilities. But 2004 storm losses emptied many of those accounts and parent companies and private investors have not put all of it back.

Financial records show at least five companies with thin capital, some under regulatory watch and others with assets inflated by future tax deductions and solvency ratings of "weak" and "marginal."

If companies fail, policyholders recover only losses up to $300,000 through Florida's Insurance Guaranty Association. Homeowners across the state would pay the bill through assessments added to already rising premiums.

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Among those in trouble is Florida's fifth largest insurance holding company, Poe Financial Group. All three of the Tampa-based company's insurance subsidiaries, Atlantic Preferred, Florida Preferred and Southern Family, have ceased allowing their books to be viewed by financial rating companies.

So how can you tell if Florida officials are gambling with your homeowner's insurance? You can't -- thanks to the state legislators you sent to Tallahassee. It's a "state secret."

The Florida Office of Insurance Regulation would not say how many companies fell out of compliance with solvency requirements after the hurricanes, or remain there still. Legislators have made such records confidential, hidden even to policyholders.

In other words, Florida legislators have created a system that even a Biloxi casino would envy. They gamble with your money while protecting what St. John calls "friends and family" insurance companies.

Whose "friends" and "family"? Why, the relatives and buddies of state legislators and insurance industry executives, of course -- as just about any property insurance agent in Florida will tell you.