The New York Times reports that a special Florida State Senate committee is conducting hearings this week to investigate the soaring cost of hurricane insurance.  After the 2004 and 2005 hurricane seasons, insurance companies complained about huge cost increases because of rising prices of reinsurance, the coverage they purchase for catastrophic events.  Last year, state lawmakers passed legislation to lower costs for insurance companies by doubling the state’s reinsurance program, the Florida Hurricane Catastrophe Fund.  The fund provides money from which insurers can draw to pay claims from major storms.

     Legislators expected the insurance companies to lower rates for policies issued to homeowners, but most companies have not reduced rates.  Some, such as Allstate, have tried to increase rates.  Allstate Floridian Insurance, a subsidiary of Allstate Insurance Company, testified the 2004 and 2005 hurricane seasons had nearly bankrupted their company and several other insurers.  Allstate Floridian said it paid out $1 billion more in claims in those two years than it made in premiums.  Only a bailout from the parent company saved it from bankruptcy.