"Instant insolvency is the potential landmine faced by a large number of insurers in the Florida property-casualty market without alteration of current accounting guidelines for treatment of FHCF assessments," said William Boyd, NAMIC's financial regulation manager.

"Current accounting for fund assessments does not distinguish between guaranty funds and the FHCF," Mr. Boyd noted. "In application to subject insurers, these two categories of fund assessments ought to be recognized as distinct. If more appropriate statutory accounting treatment is not developed for FHCF assessments, a severe weather event in Florida may result in solvency-threatening liabilities in many insurers' financial statements."

The FHCF assesses insurers in the Florida p-c market for amounts needed to service debt floated by the fund to raise capital for residential policyholders' claims resulting from severe weather. There is the potential for assessments to individual insurers to be 4 percent over 30 years.

"Putting the entirety of that future liability for assessments on the balance sheet at one time, as insurance accounting now requires, is irrational," said Mr. Boyd.

The FHCF, set up by 1993 legislation, has not been triggered yet, although occurrence of a weather event of sufficient magnitude to do so is understood as an actuarial certainty, the association said.

The change sought by NAMIC involves recognition that Florida law allows insurers to collect from policyholders amounts to cover future FHCF assessments and the fact that assessments in the more distant future cannot be reliably estimated.