SARASOTA (CBS4) – Despite the fact that Florida hasn’t suffered any damage from a major hurricane in the last five years, most homeowners can expect rate increases from their insurance company next year.

After three years of trying to control rates, state regulators have approved more than $700 million in rate increases. Insurance companies doing business in Florida claim they are still losing money because of what they have to pay to re-insurers for hurricane protection. This year they claim they lost more $100 million after paying the re-insurers.

The paper found that the figures hid profits in the form of payments to affiliated companies which were inflated and cost homeowners hundreds of dollars on their bills.

Since 2005, more than 2 million Florida families have been dropped by their carriers while the average statewide premium has increased 44 percent.

In coastal regions, rates have doubled and tripled.

Since 1998, Florida insurers have collected $20.5 billion more than they paid back in claims, $18 billion of that since 2005. Yet the industry still says it is losing money.

When seeking rate increases over the past year, insurers have cited sinkhole losses, mitigation discounts and increasing expenses for reinsurance, which is the coverage they buy from unregulated corporations that agree to pay their hurricane losses.

Because a request to increase rates 15 percent or more triggers a public hearing, insurers kept their requests under that benchmark and received their approvals, sometimes for even more, behind closed doors. The increases will note be meted out evenly. Homeowners who live along the coast could see a rate increase of 20 to 50 percent, far higher than the company’s inland customers.

The largest increased granted to a for-profit company was $88 million for Universal Property & Casualty.

State Farm’s rate hike is expected to generate an additional $73 million on top of a 29 percent rate increase it as granted last year.

The state-run Citizens Property Insurance was granted nearly $150 million in increases.

The insurance industry and its advocates also blamed the government for its attempts to control rates.

“When you charge artificially suppressed rates, it creates water behind the dam,” said former House insurance chairman Don Brown, an ardent supporter of rate deregulation and consultant to Gov.-elect Rick Scott. “It continues to pile up.”

A review of U.S. Securities and Exchange Commission filings found several companies that told investors they were profitable while telling state insurance regulators the opposite.

Universal Property and Casualty declared $11.3 million in insurance losses for its insurance company subsidiary. But after adding back in the money Universal pays itself for management services, the company told stockholders in SEC filings that it made $29 million before taxes the first half of 2010, the newspaper reported. The holding company was still posting profits in November when its insurance carrier asked for and received a 14.9 percent hike.

Most Florida-based insurance companies now are set up to pay sister companies for management services, claims adjusting or other tasks. These companies often have the same owners as the insurer and operate with no employees of their own.

Because payments to affiliates are set as a percentage of premium, any rate increase to homeowners is also an increase in what the affiliates get paid.

Source: Sarasota Herald-Tribune

(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)