A backlash against insurers is building in several coastal states where homeowner premiums have increased sharply despite several years of rising industry profits and an uneventful hurricane season in the East.

In Florida, where back-to-back hurricanes have helped some rates more than double since 2004, the state legislature yesterday approved a measure aimed at reducing homeowner premiums offered by private insurance companies by 5% to 25% or more. The legislature has been meeting since last week in a special session specifically aimed at addressing the state's insurance crisis. The measure now goes to Republican Gov. Charlie Crist, who has made insurance-rate cuts a top priority since taking office this month.

That comes after several large insurers in California recently agreed to roll back homeowner insurance rates by as much as 20%, or a total of $439 million. The cuts, by insurers including Farmers Insurance Co., State Farm Mutual Insurance Cos. and Safeco Corp., came in response to the state insurance commissioner's efforts since last summer to force down rates in the state. Premium rates rose substantially in California in the early part of the decade, and many homeowners lost their coverage after devastating wildfires in 2003.

Insurance companies are regulated by the states, and officials in Connecticut and Georgia recently rejected some requests for further insurance-rate increases. Also, regulators in both states are investigating whether insurance companies are maneuvering to circumvent rules aimed at making sure that homeowners in all areas, including riskier coastal zones, can get coverage. Florida regulators also late last year turned down requests by some insurers to raise rates further by as much as 40%.

Last year, home insurance rates along the Atlantic and Gulf coasts rose between 20% and 100%, or more. Homeowners also are paying more for less, because insurers are dropping policy coverage for wind, hail and mold damage in many states. By contrast, rates outside of coastal areas last year rose between 2% and 4% nationally, according to the Insurance Information Institute, an industry research group, and are expected to rise modestly in 2007.

Efforts to rein in rates are meant to help people like Arline Lafferty Wallace, 68, a real-estate agent in Marathon, Fla., in the Keys. Ms. Wallace says her windstorm policy premium soared from $5,500 two years ago to $21,000 last year on a home with an insured value of $775,000. Ms. Wallace says she has never filed a windstorm claim in the 30 years she has lived there. By increasing the deductible to 25%, and getting assistance of a consumer advocacy group, Ms. Wallace managed to cut her bill to $9,000. "It is absolutely unbelievable that this kind of thing can happen," she says.

The backlash comes as the insurance industry has had three straight years of rising profits, despite 2005's devastating Hurricane Katrina, the country's costliest ever. Property and casualty industry profits rose to $68.1 billion in 2006 from $49 billion a year earlier, according to A.M. Best, a ratings concern.

Insurance officials say the high profits essentially reflect the industry making hay while the sun shines. In most years since 1980, insurance companies have barely broken even or have paid out more in claims than they collected, says Julie Rochman, senior vice president of the American Insurance Association, a trade group. "It's a good idea that insurers have good years so that we are around for exceptionally bad years like 2005," she says.

Analysts and insurers say that if states force insurers to take on risks they don't want or to price their policies too low, then companies might withdraw from unprofitable markets, creating shortages, or be unable to pay claims.

The Florida measure would require private insurers to cut homeowner rates an average of 5% to 25%. Devastating hurricanes in 2004 and 2005 made insurance rates unaffordable for many state residents. Insurers also dropped coverage for many homeowners, driving thousands of people into the state's high-risk pool, Citizen's Property Insurance Co.

The Florida bill also would require insurers who write home and auto policies in other states to offer home insurance in Florida, or else be banned from selling any other line of insurance in the state. Avoiding riskier lines of business, commonly known as "cherry picking," also has come under pressure in other states because it reduces the availability of homeowner insurance. The bill also would allow Citizen's Property Insurance to lower its rates to compete on price with private insurers, which is expected to inject greater competition into the marketplace.

Florida plans to ease some of the pain the measure may cause insurers by boosting contributions to its hurricane catastrophe reinsurance fund. The fund, which is intended to bail out insurers if claims run too high, allows insurance companies to purchase reinsurance at cheaper rates than the companies can buy in the open market.

"The bottom line is that Florida has just reinforced its reputation as one of the most overregulated insurance markets in the country," says Cecil Pearce, vice president, Southeast region, for American Insurance Association, an industry group.

In June, the California insurance commissioner ordered several insurers, including Allstate Corp., State Farm, Farmers and Safeco Insurance, which combined insure over half the state's homes, to justify their rates. The move followed release of a study that showed the insurers were paying out less than 50 cents in claims on each dollar of premium they took in. Insurers historically have paid 65 cents to 75 cents on claims for every dollar in premiums, excluding expenses, according to the Consumer Federation of America. Safeco says a 20% rate reduction amounts to an average annual saving of $190 per household. Combined with reductions in automobile insurance rates, California overall has won rate cuts totaling $1.6 billion since the summer.

"We will be monitoring our costs in California closely, but we hope we will be OK," a State Farm spokesman says. The company expects the reductions, which are awaiting approval, to take effect as early as April.

In Connecticut, the attorney general has opened an antitrust investigation into attempts by some insurance companies to require homeowners to install storm shutters at a cost of $50,000 or more as a condition of continuing coverage on properties near the Long Island Sound. Critics say the steep added cost could make it impossible for some homeowners to obtain insurance.

Georgia's insurance commissioner says he plans to hold hearings next month on whether St. Paul Travelers Companies Inc. is discriminating against coastal homeowners by cutting independent agents' commissions in six coastal counties by about one-third, but not in the rest of the state. State law forbids insurers from writing business in the interior but not on the coast. "This appears to be a backdoor way around the law," says Commissioner John W. Oxendine.

"We understand the commissioner's concerns, and we remain committed to the Georgia insurance market," says a St. Paul spokeswoman.

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Pushing Back

• Insurers are under pressure to cut homeowner rates in a number of states. 	
  	

• A new Florida measure would reduce homeowner premiums from private insurers by 5% to 25%. 		
  	

• Several insurers in California agreed with state officials to roll back their rates by as much as 20%. 		 	
  	

• Regulators in Connecticut and Georgia recently rejected some rate-hike requests and are investigating several insurers' business practices.  
  	

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