A recent report in the St. Petersburg Times says state-run Citizens Property Insurance has a $432 billion exposure to risk.

At the same time, it says Gov. Charlie Crist's legislation will cost the company, now the largest insurance provider in the state, $620 million this year, and that Citizens is making approximately $200 million a month.

A.M. Best, a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors, says Crist's measures have left the state exposed.

Attorney General Bill McCollum has been advising Crist, a former attorney general, on the insurance situation.

"A.M. Best views the recent legislative changes as weakening the business profile of companies with significant concentration of Florida business," a release from the company says. "In addition, the prospective capitalization of property insurance writers is weakened, as they carry the burden of potentially unrecoverable reinsurance in the event of a major catastrophic event."

Crist and the state Legislature successfully passed measures earlier this year that prevented insurance companies from dropping policyholders until after this year's hurricane season.

McCollum told LegalNewsline that a long-term solution is needed for the issue of reinsurance.

"I was in Congress for many years and authored a catastrophe insurance bill back after Hurricane Andrew," he said. "There appears to be a long-term insurance crisis, and there needs to be a solution that addresses reinsurance."

A catastrophe fund that helps pay for events that only occur "once in a hundred years," is what McCollum desires. That timetable, though, has been a problem. Insurers in Florida want to base their premiums on weather patterns of the previous five years (which include the hectic seasons of 2004-05), while the state government feels they should be based on the last 100 years.

Citizens Property Insurance is the largest insurer in the state. Without being able to raise premiums (there is also a freeze on increasing premiums), some feel private businesses will not be able to compete with Citizens.

Private insurers may draw from the Florida Hurricane Catastrophe Fund -- reinsurance provided by taxpayers.

"Insurers will not be willing to insure catastrophic events unless there is some reinsurance possibility," McCollum said.

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