The Consumer Federation of America is attacking home insurers for holding too much capital and avoiding business in risk-prone regions, charging that property-casualty companies have "hollowed out" catastrophe coverage.

In response, the head of the major industry trade group charged that CFA is dead wrong and is ignorant of all that happened in 2011 when it comes to storm coverage.

The back-and-forth is part of a long-running debate about what insurers should be required to cover, at what price and under what conditions.

The Consumer federation issued a report this week saying insurers in the property-casualty industry decreased their financial responsibility for hurricanes and other catastrophes, in part by by implementing deductibles as high as 5 percent of a home's value, and by increasing premiums.

The CFA report also criticizes insurers for being over capitalized. The report suggests that even if all of the top ten catastrophic events in history — including Sept. 11, 2001, terrorist attacks, the Northridge, Calif., earthquake and eight top hurricanes — the total damage in 2010 dollars would be $162 billion. After paying that, the industry's surplus would still be $418 billion, CFA contends.

Catastrophes remain a major problem for insurers and leave the companies under significant risk, said Robert P. Hartwig, an economist and president of the Insurance Information Institute, a trade group.

"Seemingly, the CFA is the only organization in the world that has been living under a rock over the past year," Hartwig said. "To somehow assert that catastrophes are kind of a problem of the past for insurers flies in the face of all recent experience."

Insurers paid about $35 billion in insured losses last year, one of the top five most expensive years ever.

In the wake of Tropical Storm Irene last year, there was some confusion about why higher "hurricane deductibles" were applied to damage on homes when Irene had been downgraded to a tropical storm before it barreled into Connecticut. Homeowners were facing out-of-pocket expenses that would have been thousands of dollars more than if their standard deductible applied.

Insurers were allowed under state insurance guidelines to write policies that would put in place higher deductibles for hurricanes — even up to 24 hours after they are downgraded to lesser storms. However, there's a huge range in the way different insurers handle the so-called hurricane deductible, which left some homeowners protected from the higher out-of-pocket fee while others were not.

Most insurers waived the hurricane deductible in Connecticut after Irene. Connecticut Insurance Commissioner Thomas B. Leonardi changed the guidelines in September. Now, higher deductibles apply if the National Weather Service declares a hurricane and there are recorded sustained hurricane force winds – 74 miles per hour or more – anywhere in the state.

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