Florida Catastrophe Fund to Borrow $2.8B to Back Up Insurers
The Florida Hurricane Catastrophe Fund has received approval to borrow $2.8 billion in case it has to back up insurers during the hurricane season. The fund was created after Hurricane Andrew and provides reinsurance, basically insurance for insurance companies.
Gov. Jeb Bush and other members of the fund's board approved the borrowing, saying it needs cash because private insurance is too hard for property insurance companies to buy in Florida.
Without the fund, "we wouldn't have a private insurance market right now after the last two seasons, it has been a lifesaver," Bush said.
Approval already had been given to sell $1.5 billion in bonds to cover a shortfall after last year's hurricanes. Floridians will pay a 1 percent assessment on insurance policies for a decade to repay the bondholders.
The bond issue approved Thursday won't require new assessments, at least for now. The money will be invested unless it is needed to cover future hurricane claims.
The fund had about $7 billion before the 2004 hurricane season, but it has been drained by eight hurricanes over the last two years.
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