Now, Florida's lawmakers, regulators and the governor are demanding to know why, mounting an offensive with hearings under oath, subpoenas and a possible lawsuit against insurance companies that haven't complied with the new law that mandated insurance rate cuts.
''Our goal is to lower insurance rates. We're not trying to play gotcha'' with the insurance industry, says state Sen. Steve Geller, the Democrat from Hallandale Beach.
The core issue: During the special legislative session last January, lawmakers expanded the Florida Hurricane Catastrophe Fund to give insurers access to cheaper backup insurance, even though the state would be shouldering big losses if a massive hurricane hits. Then, insurance companies were to apply the savings to lower rates. However, many insurers haven't followed through.
Allstate Floridian executives will be the first in the hot seat. Tuesday and Wednesday, they will be grilled by the state's top insurance attorneys and actuaries on the company's requested 42 percent rate hike.
In the unprecedented inquiry, regulators will be examining Allstate's reinsurance program and how it deals with agencies that rate its financial strength and the companies that have developed sophisticated computer models to help gauge exposure to future losses.
Allstate Floridian and its sister companies operating in Florida are part of the largest publicly traded U.S. insurer. When asked about their rate request, Amy Moore, a senior communications executive for the company, said that Allstate ''works diligently'' to ensure that they meet all state laws and requirements.
The company has long advocated for a national catastrophe fund to augment Florida's own catastrophe fund. But it believes insurers in high-risk areas should be allowed to charge higher rates, a point it made in a half-page ad that ran in The Miami Herald and other newspapers on Monday.
Next, in hearings beginning in one week, Allstate officials will likely be among executives from several companies called to testify before a special Senate committee. If the executives fail to show, the senators say they will issue subpoenas to demand their appearances.
The Office of Insurance Regulation has already subpoenaed three other insurers, including State Farm Insurance of Florida, the state's largest private insurer of homes, demanding information about the companies' relationship with rating agencies, computer modeling firms and reinsurance.
CLASS-ACTION SUIT
And Gov. Charlie Crist has hired three top-drawer attorneys -- a former U.S. attorney, a Tallahassee lawyer who took on the tobacco industry and a prominent trial attorney from Fort Lauderdale -- to see if the state could file a class-action suit against the insurance industry on behalf of state residents.
Homeowners are growing impatient. Bich Nguyen, a physician in Coral Gables, has seen her homeowners premium more than triple in the past five years. ''A lot has been said, but nothing has really been done,'' she says.
In their inquiries, regulators and lawmakers want to know why many of the smaller, Florida-based companies are able to drop their rates while the large national companies that sell homeowners coverage in Florida can't. For instance, tiny Coral Insurance, based in Hollywood, recently reduced rates 43 percent.
In all, OIR reports that just 17 percent of the homeowners insurance market has seen rate cuts. But nearly 33 percent, or some 1.3 million consumers, have not seen relief. Their insurers either sought rate increases, or regulators believed the proposed rate cuts could have been larger. Twenty-four other filings are pending.
Both Allstate and Nationwide have asked for rate increases.
State Farm has agreed to provide a 9 percent rate cut to its million homeowners policyholders after initially seeking a 7 percent reduction. It reached a settlement with regulators on the rate cut, but it must still comply with the subpoena.
Ironically, both State Farm and Allstate say they buy a good portion of their reinsurance from their parent companies at a lower price than the Florida catastrophe fund could offer it.
''We have to figure out why what common sense tells you would reduce rates is working for some and it doesn't work for others,'' says Sen. Bill Posey, the Republican from Rockledge who heads the Senate Banking and Insurance committee.
''We don't know what the answer is. But we learned in medical malpractice that the answers change when people are under oath,'' says Posey, referring to the 2003 hearings that led to reforms in the state's medical malpractice insurance laws.
To be sure, the industry has made handsome profits in the past two years in Florida -- in part due to the absence of hurricanes.
For 2007, property insurers nationwide should post an estimated $65 billion in after-tax profit, a shade lower than the record $67 billion earned in 2006. The bottom line in Florida: the industry projects a $3.4 billion profit for 2007.
TOUGH TACTICS
Could Florida lawmakers' tough tactics backfire?
''I absolutely think this is the only way to handle the insurance industry. They are bullies,'' says Harvey Rosenfield, an attorney who led a consumer charge in 1998 to pass a rate rollback on property and auto insurance in California.
The law, known as Proposition 103, turned the insurance industry on its ear, requiring rate changes to be approved by regulators and eliminated insurers' exemption from the state's antitrust laws.
Robert Hartwig, chief economist for the Insurance Information Institute, an industry trade group, has a different view.
``It's difficult to see how threatening CEOs with jail time and fines would lead to an environment that will improve the insurance marketplace in Florida.''
Hartwig notes the numbers kicked about initially by lawmakers -- including a possible rate cut averaging 24 percent due to the new bill -- weren't supported by statistics or actuarial facts.
''Ultimately, these numbers couldn't be supported. The reality is that only a share of the premium is attributable to reinsurance,'' Hartwig says.
Chris Neal, a State Farm spokesman, agrees. ``At some point, economic realities have to set in. We are committed to serving as many customers as our resources will allow us. [But] we have to live within our means.''
Although State Farm has been severely restricting the number of new policies that it writes in the state's coastal areas for many years, it will not many renew policies for the first time this year. It will eventually cut 50,000 policies.
Robert Hunter, director of insurance for the Consumer Federation, applauds what Florida is doing.
Insurers often threaten to leave a state when the regulatory scene isn't to their likening.
''No one left California after Proposition 103 was passed. The same will happen in Florida. Insurers all want a part of Florida's auto insurance market,'' said Hunter, referring to a new provision of the state law that requires insurers who provide auto in Florida to also provide homeowners if they provide it in other states. ``No one is going to pull out.''
