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Published: Saturday, 9/30/2006

Blowing off the coast

FROM Maine to Texas, coastal homeowners are being hit as never before. This time, though, the damage is being done not by more devastating hurricanes but by huge insurance bills.

Premiums running two, three, or even 12 times higher than last year are raising cries of price gouging from consumer advocates, although the insurance industry insists that it's only protecting itself against future risk.

Given the $57 billion tab the industry paid after the wrath of Hurricane Katrina in 2005, that view should have some credence. Then again, property and casualty insurers reported total profits of $43.2 billion last year, despite the Katrina hit.

Once again, we are struck by the seemingly contradictory situation of heavy losses in one part of the country and heavy profits overall. But, since insurance is all about the business of risk in a given area, the industry contends there is no other way to set premiums.

Tell that to the owners in a 36-unit condominium in Orange Beach, Ala., where, according to a New York Times report, the insurance bill has risen from $34,790 last year to $429,182 - an increase of more than 12-fold.

In any event, unexpected increases in premiums are causing some property owners to seriously question the wisdom - not to mention affordability - of living on the seacoast. And that's as it should be.

Coastal dwelling is a highly prized lifestyle, but its volatile costs in the event of natural disaster should not be subsidized by inland property owners or by government-run insurance programs fed by tax dollars.

It's a matter of equity. Too often in our nation's history have states or the federal government succumbed to the entreaties of influential real estate developers to help insure property in flood plains near rivers or in hurricane zones along the coast.

This does not mean that insurance companies should be free to gouge customers. The industry must be closely monitored to ensure that it is not taking undue advantage of homeowners, whether they live in West Toledo or a condo in Boca Raton.

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