Bermuda accounts for approximately 50 percent of the reinsurance sold to Florida insurance companies and most of that money never returns to the state, according to a report which appeared on the Florida Realtors website.

The report, which described the Island's regulatory regime as "light" and helping to "minimise competition and encourage price-fixing", said that in the event that a hurricane does not hit the state the money goes into private hands as corporate profit and if it does the reinsurers use the event as a reason to raise the cost the cost of reinsurance and eliminate the riskier policies.

"If a major hurricane hits the US, these reinsurers see it as an opportunity to increase the amount the charge, reduce overall risk, and make more profit for investors," the report stated.

Furthermore the report added that the Bermuda Monetary Authority (BMA) was supposed to be independent with an oversight board, yet many of its members also owned the reinsurance companies that the BMA was supposed to be regulating.

"Many of these reinsurers tend to follow their competitors' leads after a major hurricane, and it follows a pattern," the report found. "First, they increase the cost of reinsurance citing the recent losses and the overall greater risk caused by global warming.

"Some types of policies may go away, or become unavailable. The tactics vary, but the result is the same: reinsurance becomes more expensive."

At the same time, the report said that a number of new and smaller insurers in Florida had a greater need for reinsurance to stay solvent and, as a result, the state's insurance firms had to pay what the reinsurance market demanded and then pass the costs onto Florida homeowners.

The report claimed that since 2006, Florida's reinsurance costs for hurricanes have tripled and are currently the highest in the US, rising to $20 per $100 in exposure from $9.90. It said that the average home premium is up 80 percent - with increases as high as 300 percent on the coast, where more than 300,000 residents have lost private coverage.

In response to an article which appeared in the Sarasota Herald-Tribune entitled 'The new insurance game: Sending billions overseas', the same article which was used as a source by the Florida Realtors, Christian Cámara, director of the Florida Insurance Project at The Heartland Institute in Tallahassee, pointed out that Florida insurance premiums had fallen 15 percent since 2007.

He said that during the last bad storm season, Floridians and residents of other Gulf Coast states collected more than $20 billion in payments from Bermuda reinsurers alone, adding that without offshore reinsurance, it was unlikely that private homeowners' insurance would exist at all in the state.

"The problems of Florida's homeowners' insurance market aren't the result of rapacious offshore reinsurance companies but, rather, a system that has persistently overregulated the rates that insurers charge and mandated their purchase of underfunded taxpayer reinsurance from a state agency, while abdicating the state's responsibility to ensure that those same insurers remain solvent and able to pay claims," he said.

"Florida's insurance system is badly broken, but offshore reinsurers aren't the problem."