Despite recent attempts to stabilize its financial health, questions remain about the state's backup insurance fund's ability to pay off claims in the event of a major storm in the coming months. While the financial outlook for the Florida Hurricane Catastrophe Fund (Cat Fund) has improved since last fall, its advisory council has concluded that it still cannot meet all of its obligations.
The state-created reinsurance fund can probably borrow up to $8 billion to cover claims, leaving it with a potential shortfall of $11.5 billion. The fund, which provides low-cost reinsurance to private carriers and to Citizens Property Insurance Corp., is expected to have exposure of close to $28 billion during this year's hurricane season.
"There is still a significant amount of uncertainty that the Cat Fund would face in the financial markets after a large event,'" said John Forney, the fund's financial advisor from Raymond James & Associates.
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