Gov. Charlie Crist and the Florida Cabinet received a bit of encouraging news this week about the state’s tenuous hurricane catastrophe fund.
The head of the agency responsible for Florida’s investments told them a loosening credit market provides the ability to bond an additional $5 billion, if needed.
“That’s good news, very good news,” said Chief Financial Officer Alex Sink. “Three or four months ago they thought we’d maybe be able to get $3 billion worth of bonds.”
Ash Williams, executive director of the State Board of Administration, said Florida could financially withstand a severe storm like Hurricane Andrew in 1992, which would cost about $22 billion today.
The Florida Hurricane Catastrophe Fund was established after Andrew to back up insurers in the event of a particularly devastating hurricane, or a quick succession of smaller ones.
It now has an exposure of more than $28 billion with less than $8 billion on hand to pay claims. The six-month 2009 hurricane season starts in less than seven weeks.
“We’re almost running out of time,” Sink said.
Sam Miller of the Florida Insurance Council cautioned state officials to continue looking for other options to ensure the “cat” fund can meet its financial obligations.
“These include the Legislature’s initiative to reduce cat fund coverage and allow insurers to buy private reinsurance,” said Miller. “They also include Insurance Commissioner Kevin McCarty’s continued efforts to negotiate a backup with the U.S. Treasury Department.”
But Williams, who has traveled to Washington with McCarty, said that avenue looks closed without legislative intervention. Both men plan to return to the nation’s capital, where they will visit with Federal Reserve officials about the possibility of some type of guarantee to ease credit pressures.
U.S. Sen. Bill Nelson said last week he is considering legislation to provide some type of federal backup for the state.
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