The massive collapse of the hurricane insurance market for Florida businesses has morphed from an economic headache just weeks ago into a clear and growing threat to the region's economic vitality, experts say.
Among the troubling signs:
Ultimately, business leaders say, the lack of affordable windstorm insurance could do something no hurricane ever has done to South Florida: produce permanent, crippling economic damage.
''It is a crisis situation,'' said Frank Nero, head of the Beacon Council, Miami-Dade's tax-funded economic development agency. ``This is not just a case of companies making less money. It's not being able to stay here, or expand here, or move here. And that ultimately translates to fewer job opportunities.''
It isn't just a headache for business owners -- much of their higher costs are likely to ripple into consumers' pockets.
For instance, Michael Lefkowitz, who owns three Dunkin' Donuts shops in South Florida, had to raise prices when electricity costs soared earlier this year. Now his insurance is going up 60 percent, leaving him with two unappetizing prospects: raise prices again and risk alienating customers or absorb expenses that weren't built into his budget.
''I'll have to see what the market will bear,'' Lefkowitz said of price hikes. ``I may turn away customers who don't want to pay 15 to 20 percent more for a cup of coffee or a doughnut.''
Lefkowitz says the pain is going to get worse, because his landlords are also passing along higher insurance costs.
That represents the next phase of the situation, said William Holly, president of Holly Real Estate in Miami. The increases hitting building owners ''won't be felt by tenants until next year because pass-throughs are typically calculated at the beginning of the new year,'' Holly said.
Unlike homeowners, who can turn to the state-run Citizens Property Insurance, businesses have no Tallahassee-backed windstorm insurer.
Alarmed civic leaders are banding together to beseech Tallahassee and even Washington for relief. The Broward Alliance, for example, is polling its members on their specific problems in order to form a battle plan.
''Is it access? Is it cost?'' said Jim Tarlton, the Broward Alliance executive director.
Actually, at the moment it's both -- and more. Some insurers are leaving the state, others are hoisting premiums and some are pushing deductibles to levels that could themselves prove devastating if a business gets damaged.
And many business owners worry time is short, the efforts are fledgling -- as the most active period of the hurricane season looms.
Secure Wrap founder Radames Villalon is an example. The Miami firm, which provides baggage-wrapping services at airports, saw windstorm deductibles rise from $61,000 last year to a whopping $1.5 million this year.
''I already told them, I'm not going to take this policy,'' Villalon said.
But that, in turn, could put him into hot water with his bank, which requires adequate insurance on his mortgage and line of credit.
''I called the bank and told them they have to do something,'' Villalon said. But he is growing weary of dealing with it, and notes there's no compelling reason why he must remain in an increasingly costly South Florida.
''I can do my business from anywhere,'' he said.
So can Ted Platon, owner of EuroKitchen in West Miami-Dade. His insurance rose five-fold, but his bank threatened to close his line of credit if he didn't buy it.
Because his prices are locked in by long-term contracts -- EuroKitchen outfits the kitchens in luxury high-rise condos nationally -- he can't pass on the higher costs.
So he will expand staff at existing operations in Las Vegas, New York and Washington, D.C. ''Those are jobs I won't be adding in South Florida,'' Platon said.
Others say commercial real estate -- one of the key components of the South Florida economy -- is being undercut by a lack of insurance.
Recently, Ernesto Casal, a principal in Miami's Capital Commercial Group, had a $6 million warehouse deal fall through over insurance. The buyers' windstorm premiums had been expected to be about $50,000. They came in between $150,000 and $200,000.
''Insurance has always been a last-minute thing that came at the end of the equation,'' Casal said. ``It wasn't something that we truly worried about.''
To be sure, businesses had their windstorm problems going into this season.
For example, the DeSoto Ocean View Inn in Hollywood suffered $70,000 in damage last year. There was a $10,000 deductible, and the insurer paid only $27,000. So the hotel was in the hole for $43,000 altogether.
''Our rates go up, but is our coverage really better?'' asked Steve Welsch, the manager.
Earlier this year, ''insurance costs skyrocketed beyond logic,'' said Alan Ojeda, a developer preparing to start construction on what would be the biggest Miami office tower in two decades.
For some builders, it means assuming more risk themselves.
Related Group, the biggest condo developer in the country, took out just $75 million in coverage on its new ICON Brickell complex, a billion-dollar project, reasoning that it will only come out of the ground by the time hurricane season ends. Lender HSBC agreed.
But next year the developer plans to seek full coverage. It hopes insurers have returned to the market. ''We can't afford a busy hurricane season,'' said Matt Allen, Related's chief financial officer.
A GLIMPSE OF HOPE
Developers and builders got a small break Friday when Citizens, the state-run insurance pool, decided to continue writing builders' risk insurance, which covers ongoing construction projects. The potential lack of coverage had caused panic among some builders and developers.
Meanwhile, some property owners are ''going bare,'' or simply dropping coverage. Bobbi Zoberg, who owns three strip shopping centers, took this approach after the windstorm tab more than quadrupled. Since she owns these properties outright, she doesn't have to accommodate bankers, and her tenants couldn't afford it if she passed the increases along.
''I can't put all my tenants out of business,'' Zoberg said.
BANKS IN THE MIDDLE
Caught in the eye of the hurricane insurance crisis is the banking industry. They require business clients to carry adequate insurance.
But many customers say they can't obtain it. Although banks have the right to buy insurance in the client's name, many banks can't find it either.
''Some of our clients are getting 1,000 percent increases,'' said TotalBank President Bill Heffernan. ``The full impact hasn't been felt yet because a lot of policies don't expire until after hurricane season.''
Institutions are struggling for alternatives. Great Florida Bank, for instance, is assessing whether borrowers can self-insure against some damage, or carry less insurance if they keep a higher escrow on deposit.
It's a time-consuming effort, ''but it's how you build loyalty,'' said Mehdi Ghomeshi, Great Florida's president.
The Florida Bankers Association is heading to Washington next week to lobby Congress for some type of action, possibly a national catastrophe fund. But ''there are no easy answers to this,'' acknowledges Alex Sanchez, chief executive of the industry group.
Locally, the Greater Miami Chamber of Commerce has formed a windstorm task force it hopes will become a statewide movement.
''We are looking at what we can do with other chambers in Florida, and look at other states,'' said Barry Johnson, the chamber's president. ``It's clearly an issue whose time has come.''
Businesses have only until midnight Monday to participate in a state survey about the commercial insurance crisis. They should visit the Office of Insurance Regulation website -- www.floir.com -- and click on Hot Topics to take an online survey about the troubles they have been experiencing finding or affording insurance.
Business owners as well as insurance brokers, real estate professionals and bankers are frustrated about the lack of near-term solutions from regulators and legislators.
''The insurance department has dropped the ball on this crisis. By the time they finish talking, we could have been hit by a hurricane,'' says Carlos Allen, vice president of Pan American Assurance, a Miami insurance agency.
Kristy Campbell, spokeswoman for Gov. Jeb Bush's office, said Wednesday that ''the governor has no plans to call a special session regarding insurance.'' Bush created the Property and Casualty Reform Committee in June, Campbell said, to improve competition and create incentives for insurers to remain in the market. The committee's first report is due Nov. 15.
Can Florida wait that long? Ricky Arriola, president of Inktel Direct, is concerned. Arriola heads the Miami chamber's insurance task force.
''At some point, does it become cost prohibitive to stay in Florida?'' he asked rhetorically. ``Then you have employers leaving. You could have real problems.''
Miami Herald business writers Elaine Walker, Matthew Haggman, Jim Wyss and Niala Boodhoo contributed to this report.