Commentary: Florida is right to worry about financial impact of big storms

Most Floridians haven't had much reason to worry about windstorm insurance lately — out of sight, out of mind. But the mild hurricane season of 2009 — thus far — should not conceal the fact that the system for insuring homes and businesses against disaster remains badly flawed.

The disappointing numbers disclosed by State Insurance Commissioner Kevin McCarty last week offer a sobering view of the weakness of the state insurance industry. A financial catastrophe could ensue when a major hurricane hits one of the more developed areas along Florida's exposed coastline.

According to Mr. McCarty, 84 companies writing hurricane and other property insurance coverage recorded underwriting gains in the first six months of the year while 102 recorded losses. More companies lost money from the insurance side of the business (as opposed to investments and so forth) than the companies that made money, and that suggests the rate structure needs to be adjusted to raise more revenue.

Commissioner McCarty doesn't cry wolf. He has not hestitated to take on the insurance industry when he thought consumers were being scalped. His views on the weakness of the private insurance market, as expressed to the Florida Cabinet, deserve to be taken seriously. They are a warning that, for as much as we hate to say it, rates have to be raised.

To read the complete editorial, visit The Miami Herald.