Long before March 3, when the Florida Legislature convened what would become its 67-day session, legislators who follow insurance issues knew they and their colleagues would face three challenges. In all three cases, unanticipated events had upset well-settled understandings.

The three challenges were:

Property Insurance. The collapse of the global credit markets dramatically reduced the ability of both the Florida Hurricane Catastrophe Fund (Cat Fund) and Citizens Property Insurance Corp. to honor their obligations. The Cat Fund promises to provide up to $29 billion in hurricane reinsurance for Florida residential property insurers, and Citizens is the state-created residual market property insurer that has become the largest property insurer in the state and one of the ten largest in the nation. For both, the ability to pay claims depends largely on the ability to issue billions of dollars in debt backed by assessments on property and casualty premiums. At the start of 2009, credit market conditions were such that the Cat Fund would have been able to borrow only approximately $3 billion, leaving a shortfall of up to $18.5 billion after a major hurricane; by April 2009, improving credit market conditions had reduced the shortfall to approximately $13.5 billion. Rating agencies have indicated that the weakness of the Cat Fund may require changes to the ratings of Florida residential property insurers.