Central and South Florida have seen four straight hurricane-free years. With that in mind, you would think insurance companies would be operating deep in the black — raking in premiums during these storm-free times.

According to insurers’ 2009 annual reports, however, “50 out of 70 Florida-based companies posted losses on their insurance business for the year; 31 of the companies reported a drop in reserves — the money insurers set aside to pay claims.”

These Florida-based companies, many of them small, write about 52 percent of the residential homeowners insurance in the state. The rest is written by Citizens Property Insurance, the state-run company; State Farm Florida Insurance, the largest private carrier; and several dozen companies based outside of Florida.

The dreary financial reports coincide with a push in Tallahassee to pass legislation that would free up insurance companies to raise their rates at will — as much as 5 percent initially and as much as 15 percent in the future. Right now, any rate increase requires state approval.

It’s obviously a bit puzzling when you try to make sense of so many insurance companies losing money when they’re only bringing in premiums and not paying out claims. Alex Sink, the state’s chief financial officer is asking for answers from Insurance Commissioner Kevin McCarty. The status report is due Wednesday.

Florida insurers say they have been left vulnerable by a number of factors, including:

• The state’s determination to hit the brakes on rate increases. Numerous rate hike requests have been whittled down or rejected.
• The rise in the cost of “reinsurance” — backup insurance that companies buy to limit their exposure in the event of a disaster.
• The state’s schedule of wind mitigation discounts, which grants major rate cuts to homeowners who buy shutters and pay for other improvements to make their homes more hurricane-ready. Companies complain the discounts are overly generous.
• The reopening of Hurricane Wilma claims as policyholders put in for additional losses — often at the insistence of public adjusters, who represent homeowners.
• As in the case of Southern Oak, the payment of overly generous commissions to affiliated companies that drain revenue from the insurer and leave it with little income or sometimes even losses.

As we approach the start of the 2010 hurricane season, it’s scary to think what would happen if a hurricane does in fact strike Central or South Florida. How would these insurers pay out claims?

Moves are being made in Tallahassee to remedy this problem. One such remedy is a proposed bill that would require each property insurer operating in the sunshine state to boost its reserves to $15 million — a sizable hike from the current requirement of just $4 million.

This, along with other proposed changes, will hopefully change the current state of affairs for Florida insurers. If not, the next hurricane to strike the area could leave many property owners in the dust, literally and figuratively.