As mentioned in the previous article, legislations such as FUWA are enacted when government feels that the private insurance companies are overstating the cost of hurricane damage. Also some private insurance companies charge their more “exposed to hurricanes” customers a high premium and over the years they accumulate a high amount, this amount they may be tempted to use for giving bonuses and dividends. When a big hurricane strikes they may actually not have the money to reimburse claims.

Hurricane Andrew of 1992 is a good example; it caused a total damage of around $25 billion of which $16 billion was insured. The insurance costs broke the back of eleven insurance companies and left the Florida Insurance Guaranty Association and other insurance companies to foot the claims of these eleven insurance companies. The remaining insurance companies did a rethink on the extent of cover they were offering; they drastically reduced the cover and also the number of policies they were offering.

The State of Florida had to step in to ensure that not too many companies cancelled too many policies or else many Florida natives would be left facing risks that would ruin them financially. The state passed a law that limited the number of policy cancellations to 5% per annum at the state level and 10% per annum at the county level. It put restrictions on the extent of premium increase that the insurance companies could force on to the home owners.

And yet, insurance companies still managed to wriggle out of the situation; for example the “Allstate Insurance Group” reduced its market share from around 21% in 1992 to around 11% after eight years. What was worrying was that the customer reductions were concentrated in the high-risk areas. The state stepped in after Hurricane Andrew and formed the "Florida Residential Property and Casualty Joint Underwriting Association" (JUA). Its objective was to offer insurance cover at reasonable prices to those people who were unable to get such insurance from the private sector insurance companies.

The FWUA and the JUA covered exposure worth $180 billion by 1996; the absence of a major hurricane for some years saw renewed optimism amongst private insurance companies who chose to add to their portfolio. As a result by the year 2000 the JUA portfolio had fallen to below to 10 billion USD.