I recently saw a startling weather statistic: 95% of hurricanes occur after Aug. 1.

The traditional June 1 start date notwithstanding, the 2007 Atlantic hurricane season has had very little activity. Practically speaking, this year's hurricane season has just begun.

My concern is that states with the greatest exposure aren't prepared for major storms. Florida is a prime example of one that appears to be taking steps backward. With more than $1.9 trillion of property exposure on its coastline and a long history of hurricane activity, the Sunshine State should seek to increase the number of private insurers underwriting there.

But in fact the opposite is occurring. Seemingly concerned more about the present cost of insurance than its longer-term availability, Florida lawmakers have expanded a state-run property insurer, Citizens Property Insurance Corp., as well as a reinsurance program that backs Citizens.

I'm familiar with Citizens because an aunt of mine has windstorm insurance written by it. I considered her hurricane deductible and premium to be quite reasonable given the location of my aunt's home, yet we both were surprised when, this spring, Citizens sent out a refund of premium--after legislators approved rate cuts. By statute, Citizens must use "actuarially sound" rates.

Providing affordable coverage to more than 1.2 million residents--many of them, like my aunt, retired and living on fixed incomes--is a noble goal, but I have to wonder whether the light catastrophe year in 2006 hasn't lulled many into a false sense of security that the wind won't blow again soon. Citizens Property Insurance Corp. ought to be planning for the windy and rainy day. Is cutting rates and offering refunds the right thing to do in a state where private insurers can't seem to charge enough?

Florida Gov. Charlie Crist has taken private insurance companies to task for not offering competitive rates to homeowners, citing Citizens' ability to do so. Market competition is a sore point for private insurers, which contend that Florida is artificially suppressing rates and allowing Citizens to undercut other underwriters in the state. Not surprisingly, some insurers that can't get rates commensurate with the hurricane risk are withdrawing.

Florida's state-run insurer can compete on price as long as hurricanes avoid Florida. But what will occur if another Andrew strikes Homestead or Miami's South Beach? What will happen if 2004 repeats itself and four--or more--major hurricanes crisscross the state?

Some observers have suggested that a massive windstorm would make Citizens insolvent, exhaust Florida's reinsurance program, trigger assessments on the private market and force the state to seek federal aid.

Ultimately this would all fall back on the taxpayers, potentially damaging Florida's credit rating. That is a bigger problem than many lawmakers appear to realize. Without a solid credit rating, the state, its counties and cities will have a much higher cost of capital--potentially at a time when their only option for funding infrastructure projects is to issue bonds.

There is a certain amount of opportunism in rate increases following catastrophes, but generally underwriters link rates to perceived risk. Looking at 2004 and 2005 alone, Florida is a very risky place to write property insurance. Charts in the Aug. 6 Business Insurance catastrophe management report show that virtually all of the costliest hurricane losses have occurred in Florida.

I am hopeful that the wind won't be as severe this year in Florida, but if it is, a lot of people there are in for a rude awakening.