As big insurance companies back away from insuring homes along the hurricane-prone coast of Florida, some small, nimble insurers are rushing in - at least until the next big storm.

The biggest insurance companies pulled back in Florida after a string of big storms in 2004 and 2005 caused billions of dollars in insured losses. The vacuum caused by a shortage of insurers, along with state programs to help build capital, has persuaded around 30 property insurers to come to the state since 2006.

But if a big storm does come along, some of these companies could be in for a tough lesson, said Amit Kumar of Fox-Pitt Kelton.

"The new companies have gained, but it is difficult to say if they would be profitable if you have successive hurricanes," Kumar said. If an expensive storm season occurs again, "it is difficult to say if they would survive."

One newcomer is Homeowners Choice Inc. (HCII) of Clearwater, Fla., which reported gross premiums of $36 million before reinsurance in the second quarter and net profit of $7 million.

It is important for insurers of Florida homeowners to build up profits in the storm-free years against the inevitable storms to come, said Paresh Patel, chairman of Homeowners Choice.

"If you are not starting from a profitable base when bad things happen to you, things will get worse," Patel said in an interview. "What we have done is made it an objective to make money and pay taxes, so that in the event of a loss, we get those tax credits back."

Another startup is Privilege Underwriters Reciprocal Exchange LLC, or PURE, which operates on a mutual-type structure and specializes in insuring high-end homes located near the coast. It insures around 5,000 families from Florida to Connecticut, wrote $32 million in premiums before reinsurance in 2008 and had an operating loss of $3.8 million, despite the lack of big hurricanes.

Ross Buchmueller, president and chief executive officer of PURE, also worked for high-net-worth homeowners insurance operations of Chubb Corp. (CB) and American International Group Inc. (AIG) before launching PURE. He says his company benefited from knowledge about hurricanes gained during the big storm years and from the ability to set rates before he took on new business, which might have helped the startup win higher rates than old-line carriers that "might be burdened by their existing books of business."

Insurers that were around for the big storms have struggled to win regulatory permission to boost rates on existing customers, but for startups without any customers, setting rates could be a little smoother.

"All these companies, if they had a chance to do it again, would do business differently," Buchmueller said.

The biggest insurer in the state is Citizens Property Insurance Corp., the state-run insurer of last resort, which could turn to the state for funds if a big storm hits.

The largest private insurer in the state, the Florida unit of State Farm Insurance Cos. with just under one million policies, has said it will begin pulling out of the state after being rebuffed in its efforts to raise rates.

Allstate Corp. (ALL), the second largest homeowner insurer in the U.S., stopped writing new policies in the state years ago, but agreed with Florida's insurance office last year to take on 50,000 new homeowner policies and 50,000 new renters of condominium policies by November 2011. Currently, Allstate's Florida unit has around 225,000 homeowner, renter and condominium policies.

Despite the relative lack of big storms in the last four years, the "sheer size of the exposure" and expectations of active storm cycles to come have made insurers leery of taking on exposure, said Sam Miller of the Florida Insurance Council, a trade group.

At a Tuesday meeting of the Florida Senate's Committee on Banking and Insurance, Florida Insurance Commissioner Kevin McCarty said some insurers could become insolvent even without a big storm in Florida, due to routine claims and high reinsurance costs, according to an Associated Press report.

-By Lavonne Kuykendall, Dow Jones Newswires; 312-750 4141; lavonne.kuykendall@dowjones.com