Most Florida politicians, Citizens Insurance policyholders and state residents understand that property insurance is expensive, and that the state’s insurer of last resort does not generate enough income to pay damages in the event of a major hurricane that hits a highly populated area.

A recent study by Florida TaxWatch attempts to clarify that cost.

In the event of a major hurricane – one slated to occur once every hundred years – TaxWatch says that “$18 billion dollars would have to be borrowed in the open market (if possible) to pay the claims, … (and) nearly all of Florida’s policyholders would be assessed for decades to repay the debt.”

TaxWatch says that Citizen’s policyholders would take a major hit following a big storm: The average homeowner assessment would be $9,400, with $1,200 due the first year and the rest paid off over 30 years. Businesses and condo associations would also pay. If current premiums run $150,000 to Citizens and $50,000 in other premiums, a post-hurricane assessment could be nearly $600,000, with $80,000 of that due in the first year.

While study authors say their primary goal was to explain the problem simply, it concludes with seven recommendations for fixing the problem:

1. Educate taxpayers and policyholders. “We must learn that, at the root, we do not have an insurance problem; we have a hurricane problem,” the study says.

2. Return Citizens to an insurer of last resort.

3. Fund and/or shrink the CAT Fund. Florida’s CAT Fund is a backup insurer for insurers. However, it doesn’t make enough money. TaxWatch first advices a tax increase to boost the CAT Fund; if that’s unworkable, it recommends shrinking the fund.

4. Make Florida more insurer-friendly. TaxWatch suggests that the state stop regulating rates and allow them to “float to their natural, market-driven level as quickly as is politically possible.”

5. Require private insurers to be adequately capitalized. This step minimizes the risk of company failure following a major storm.

6. Strengthen building codes – and enforce them.

7. National reinsurance backstop? TaxWatch likes the idea of a national disaster insurance policy, but notes that “Florida has more catastrophe exposure than all of the other (eastern) coastal states … combined. If we can get the rest of the states to pick up our tab, I am all for it. But in this economy, that appears doubtful.”