Bloomberg reports that small companies have taken up a large portion of Florida’s home insurance business after the giants, disliking their losses during 2005 when many storms hit Florida, pulled back.

This is a subset of the ‘Fireproof Hotel’ problem that RtO has so often commented on.

You can make a lot of money with a bit of luck — an investment in Universal Insurance Holdings since 2005 has returned several times what an investment in Apple would have. However, eventually the unprotected hotel burns down and you’re left with nothing. (See

People in Hawaii have forgotten, for the most part, but that’s what happened in 1992. HEI had written a huge portion of local hurricane insurance. After Iniki, it simply refused to pay.

Universal claims it has resources and reinsurance to cover any losses. I have not looked at its books, but I can recognize a company violating normal boundaries of prudence in insurance underwriting, and I am ready to bet that will turn out not to be correct. (See