The Florida Hurricane Catastrophe Fund, a key reinsurance provider, has a shortfall of $18.5 billion, which could pose problems for some of the state's recent insurance startups, state officials indicated.
Jack Nicholson, chief operating officer for the state fund, said yesterday, prior to a briefing session with the State Senate Ways and Means Committee, that the fund under legislation approved last year is required to provide $29 billion in reinsurance, but may not be able to meet that obligation under today's bond market conditions.
In November of last year, Dublin, Ohio-based rating firm of Demotech Inc. put insurers on notice that "the potential inability" of the Florida Hurricane Catastrophe Fund to honor claims adversely affects the ratings of carriers dependent on the reinsurance it provides.
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