Senate Banking and Insurance Committee Insurance-Related Interim Report: Status of the Florida Hurricane Catastrophe Fund

The Florida Senate Banking and Insurance Committee has published the following insurance-related Interim Report (“Report”):

Status of the Florida Hurricane Catastrophe Fund (“FCHF”)

This Report provides a status on the FHCF regarding:

• Its estimated reimbursement premiums, payment capacity, and bonding capacity for the 2008 hurricane season
• Insurers’ selection of optional FHCF coverage
• The Florida State Board of Administration’s decision-making regarding the purchase of reinsurance or other risk transfer products
• New bonds issued to fund increased losses from 2005 and identification of reasons for such increased losses
• Summary of the rate filings made by insurers to reflect the savings of the expanded FHCF coverage

Notable findings in the Report include:

• The total liability of the FHCF could be up to $28 billion for a single season storm
• The FHCF has approximately $10.3 billion in liquidity, which includes the $4 billion “put” option.  The “put” option is the guarantee arrangement with Berkshire Hathaway approved by the State Board of Administration this summer
• The FHCF has “potential obligations that it cannot pay of approximately $14.5 billion in the event of a major storm”

To read the complete Report, click here.

Should you have any questions or comments, please do not hesitate to contact Colodny Fass.

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