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The Florida Hurricane Catastrophe Fund (“Cat Fund”) is a state program that provides backup coverage to property insurers. The Cat Fund provides relatively inexpensive reinsurance to carriers as a way to help stabilize the property insurance market. Carriers also buy private reinsurance, which serves as backup coverage to help pay claims in situations such as hurricanes.
The maximum potential liability of the Cat Fund this year is $17 billion under Florida state law. “Pre-event” bonds provided the fund with $15.8 billion in cash and proceeds going into the hurricane season.
The fund’s chief operating officer, said that at least 82 companies expect to get Cat Fund reimbursements, with 28 drawing their maximum amounts. By comparison, nine carriers received maximum amounts after Hurricane Irma in 2017. It is estimated that the Cat Fund’s share of losses at $4 billion to $12 billion and projected a “conservative point estimate of $10 billion.”