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After Hurricanes Charlie, Frances and Ivan knocked Florida for more than a loop, major insurers are believed capable of absorbing the losses, insurance and regulatory sources have said. 

The industry and the state worked out ways to reallocate financial risks after Hurricane Andrew devastated Florida back in 1992, these experts said.  The developments included setting up a state-sponsored reinsurance company--a separate company which is now Florida's second-largest property insurer--which was established to insure property against wind damage in the most vulnerable areas.  

"We think the insurance industry will hold up well overall," said Bob Lotane, spokesman for Florida's Office of Insurance Regulation.  "Larger carriers and carriers that have been here awhile still should have adequate reserves."

It is estimated that the three hurricanes--Charlie, Frances and Ivan--have caused at least 15 billion dollars in losses.  Adjusted to 2003 dollars, the insured loss from Hurricane Andrew totaled $20.3 billion.

Eleven smaller insurers became insolvent and were unable to pay claims, recalled economist Bob Hartwig of the New York-based Insurance Information Institute.  Other insurers were downgraded by ratings agencies.  Hundreds of thousands of policies were cancelled or threatened with cancellation.  To cap the debacle, insurers refused to write new policies in coastal areas. 

"Obviously it was something we needed to address head-on," Hartwig said.

The industry and the state regulators had to completely reassess the fundamentals of risk.  In the state with 1,100 miles of coast fronting two huge bodies of water and squarely in the path of Atlantic hurricanes, here were some of the resulting changes:

• Formation of the Florida Hurricane Catastrophe Fund, the reinsurance company.  Companies looking to limit risk have paid into the fund since 1993, and it now holds about $6 billion; this will be the first year it has been tapped.  The industry pays the first $4.5 billion in damages from a hurricane and then the fund takes over.  If the cash reserve runs out, the fund is authorized to issue as much as $9 billion in bonds that would be repaid by assessing all Florida property owners. 
  
  
• Creation of Citizens Property Insurance Corp., the company that provides windstorm insurance and other coverage to people in high-risk coastal markets who can't obtain it from private insurers.  CPIC has about 10% of the premiums in Florida's homeowner market, second to State Farm Florida Insurance Co., which has a 21% share. 
  
  
• Change in the deductibles that policyholders must pay before their insurance kicks in. Instead of a fixed amount, most now pay a percentage of the damages, typically 2%, in deductibles.  The change will save insurers "hundreds of millions of dollars" this year, Hartwig said.  Despite the changes, regulators believe that a few smaller insurers may run into trouble, "but no companies you would have heard of in California," Lotane said.