Posted On: May 20, 2008, 9:54 am CDT

Posted By: Ratemaker

This article makes it sound like the Cat Fund and the Guaranty Association are the same entity.

The Florida Insurance Guaranty Association is the entity that pays the claims of insolvent companies, such as Poe. EVERY STATE has a similar organization. They serve to help make sure that the policyholders get most of what they paid for in the event of an insolvency.

The Cat fund is a reinsurance program that the Florida government mandates every insurer offering property coverage buy into. It provides reinsurance for hurricanes at discounted (read "inadequate") rates. The inevitable shortfalls are paid for be after-the-fact assessments. Were it not for the cat fund, the assessment Florida residents are paying now would have been paid for ahead of time. The total cost is the same, only the timing is different.

Oh, and Robin - all the money that insurers made in Florida on property lines in the years when there were no hurricanes was consumed in 2004 paying for those storms. Private companies and the Cat Fund both pay through the nose when a storm hits.