Without sufficient capital -- essentially money reserved to pay future claims -- there are few options for insurers: Raise rates to build capital more rapidly, borrow money and pass the costs on to consumers, write less business, or cease operations in Florida.

''The risk is so much greater now,'' said George Grawe, general counsel for Allstate Floridian, ''because there is no capital in this state'' for insurers.

Hurricane Andrew in 1992 took Florida's insurers by surprise because they were not set up to handle a catastrophe of that magnitude.

Since then, insurance companies have put mechanisms in place to deal with major storms, such as adding adjusters and mobile assistance centers to help policyholders and improving claims handling and tracking.

But the crisis is worse this time because companies are tapped out. Also, the state's economy and population are larger, and consequently, the need for insurance coverage is greater.

As a consequence, 22 insurers have dropped more than 560,000 policies or are refusing to write new policies. That is forcing many homeowners into Citizens.

Meant to be a last avenue for insurance, Citizens is on the verge of becoming the state's largest insurer of houses, apartments, mobile homes and high-rise condo buildings.

ISSUE OF NONRENEWAL

No wonder homeowners like Karen Drouin of Miami Lakes are miffed.

Her insurer for nearly 10 years, Vanguard Fire & Casualty, won't renew her policy. Yet, she has never filed a claim and even paid for some repairs herself after Wilma.

So, why is Vanguard dropping her policy? The company is reducing its exposure in Florida because of the risk.

''It's more than a little frustrating,'' said Drouin, who shopped around for another company to cover her town house. She found only one, besides Citizens.

Another big problem is that some smaller companies still willing to operate in this state are having a hard time finding reinsurance -- that's insurance for insurers to help cover claims after a catastrophe.

Without the reinsurance, these insurers might have to cancel some policies, leaving homeowners without insurance as the hurricane season begins, or they could cease operations in Florida.

Some industry officials and lawmakers advocate allowing these smaller firms to buy more of the $15 billion of available reinsurance at an affordable rate from the state's catastrophe fund.

But some larger insurers oppose the idea because they fear that there would be less coverage for other firms to buy.

''It's not like there is a good choice out there,'' said Kevin McCarty, the state's insurance commissioner.

He added that these firms need to line up reinsurance coverage before the hurricane season starts June 1.

Meanwhile, Sen. J.D. Alexander of Lake Wales has long advocated allowing the catastrophe fund to build its reserves more rapidly by charging insurers more for its reinsurance. The insurers would pass on the cost to their policyholders.

''The Legislature hasn't wanted to go along with it because it would push up rates,'' said Mark Delegal, a lobbyist for State Farm.

Lawmakers also are looking at ways to reduce exposure for Citizens.

About half of its 800,000 policies are in high-risk Miami-Dade, Broward and Monroe counties.

OPTIONS CONSIDERED

Limiting the number of high-value homes covered by Citizens is one option. The Senate bill would require these homes to pay a 25 percent surcharge; coverage would be eliminated in five years.