Florida Catastrophic Storm Risk Management Center Study Explores Right-Sizing the Florida Hurricane Catastrophe Fund
Dec 4, 2013
Alternative methods for managing the size of the Florida Hurricane Catastrophe Fund (“FHCF”) was the focus of a report submitted on December 1, 2013 by the Florida Catastrophic Storm Risk Management Center (“Center”) to Florida Governor Rick Scott, the Florida Cabinet, the Florida Senate President and Speaker of the House.
Directed by a 2013 Legislative appropriation, the Center focused on re-assessing how best to balance the FHCF’s “capacity-stability” mission. Along with granting statutory responsibility for managing the FHCF’s size to the State Board of Administration (“SBA”) Trustees or an independent panel of experts, other possible methods discussed in the report include a “formulaic approach” or conservation of subsequent season capacity.
“Combination Approaches” were suggested that could include:
- A legislative and independent expert panel that would share authority for the determination of overall payout limit, combined with an SBA “Emergency Release Valve”
- An independent expert panel authorized to determine the payout limit, subject to a SBA Trustees-defined minimum for the subsequent season
- A payout limit based on a method to conserve for the subsequent season, with an independent expert panel to determine shortfall financing
The study also explores the potential use of reinsurance and/or alternative risk transfer.
A later section in the report delves into public policy parameters relating to the FHCF that could impact property insurance rates, the amount and frequency of future emergency assessments and the impact on outside capital.
Colodny Fass& Webb will further analyze the report and provide a complete review.
The Center’s 81-page report is attached.
Should you have any questions or comments, please contact Colodny Fass& Webb.
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