Florida lawmakers are poised to consider restructuring the state-run property reinsurance facility by possibly lowering its mandatory annual capacity by billions due to concerns that one major storm could exhaust its resources and leave insurers without further coverage.
The Florida Hurricane Catastrophe Fund is statutorily responsible for providing property insurers up to $17.5 billion in coverage for a single storm season and another $11 billion for losses from a second storm.
Cat Fund Executive Director Jack Nicholson said the Cat Fund currently has $8.5 billion in cash and an estimated bonding capacity of $7 billion for a total of $15.5 billion. However, that still leaves it short by $1.5 billion to meet its first storm obligations and potentially on the hook for another $11 billion.
Nicholson said that is why he would like lawmakers to consider restructuring the fund so that its financial stability improves and it can help bring more stability to the state’s insurance market.
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