For the past 13 years, Florida property insurers have been comforted knowing that no matter how many severe hurricanes hit the state, they always had a backstop of reinsurance through the Florida Hurricane Catastrophe Fund. Often known as the “crown jewel” of the post Hurricane Andrew reforms, according to most experts the Cat Fund has been responsible for sustaining a private market that otherwise may have fled the state, especially after the hurricane seasons of 2004 and 2005 that cost the industry over $33 billion dollars. But never before has the market and the state leaned so heavily on the fund's ability to prop up the market in the event of a major hurricane. All of which, leaves open the question of how much financial pressure can the Cat Fund take.

When Governor Charlie Crist was elected on the platform of lowering homeowners' rates, the Cat Fund became a major player in accomplishing that goal. Showing confidence in the Cat fund, lawmakers changed state law to have the fund pick up more risk, lessening the exposure of private insurance companies in an effort to lower the premiums homeowners pay for their wind damage coverage. The trade-off is that the catastrophe fund will be on the hook to pay more in claims from a large storm.

To get the Cat Fund in a better financial position to react to a major storm, Crist and state officials in charge of the Cat Fund sought to borrow about $7 billion from the capital markets so the state would have a total of about $12 billion available almost immediately after a storm. “The idea is to make sure that we have the money there,” Crist said after a cabinet meeting approved the idea in late July. “If we have a big storm, we've got the money to pay to make sure our people are covered.”