TALLAHASSEE, Fla. (AP) — Florida's hurricane fund chief iswarning that the state-created fund used to help insurers pay offclaims after a big storm is in danger.

The state has relied on a hurricane fund ever since Hurricane Andrew devastated South Florida nearly 20 years ago.Insurers get help to pay homeowners if a hurricane — or a series ofhurricanes — results in widespread damages.

But Jack Nicholson, the chief operating officer of the fund, toldstate legislators on Wednesday that the fund is on "shaky ground."He said ongoing turmoil in the world financial markets is raisingquestions about whether the fund could borrow enough money to helpinsurers after a hurricane.

This year the fund is providing $18.5 billion worth of coverage,and while it has more than $7 billion worth of cash on hand, itwould still need to borrow another $11 billion.

"I think we are dangerously overexposed considering the currentreality of the marketplace," Nicholson said. "… It scares me todeath where we are."

Nicholson used the warnings as part of a pitch to statelawmakers to scale back the size of the Florida Hurricane Catastrophe Fund. That would likely causeinsurance premiums to rise but it has the backing of many keyRepublicans, including Gov. Rick Scott.

Every insurer currently in Florida is required to purchasecoverage from the "CatFund" as it also called. The fund provides a backstop toinsurers at a rate that is generally cheaper than reinsurance soldby private companies. Nicholson estimated that this low-cost optionprobably results in insurance premiums being about 25 percentcheaper.

If a storm causes enough damages the insurer can ask forreimbursements from the fund. But if the hurricane fund runs out ofcash due to a large storm, it borrows money to pay insurers.

The state pays off its debts with an assessment, or what somecall a "hurricane tax," that is placed on nearly every insurancepolicy in the state, including auto insurance policies. Right now,homeowners and drivers in Floria are paying off charges dueprimarily to Hurricane Wilma.

Nicholson, however, said he's less worried about future hikes inthe "hurricane tax" because right now he's not sure he can evenborrow enough money. He said the turbulence in the financialmarkets this summer has created "tremendous uncertainty."

The Republican-led Legislature – including then House SpeakerMarco Rubio – agreed with Gov. Charlie Crist to greatly expand the size of the fund back in2007 as part of an effort to lower insurance rates. Two years laterlegislators started whittling the fund back down but Nicholson saysmore needs to be done.

"The Cat Fund needs to be right-sized," Nicholson said. "It'stoo much when you are expecting to depend on 10 billion or greaterof debt."

State Sen. Alan Hays, R-Umatilla, said he considered it  "fraud"to force insurers to buy coverage from the fund if there is noguarantee the fund can pay for storm damages.

"We're taking a tremendous gamble which I find unacceptable,"Hays said.

But any move by state lawmakers to change the hurricane fundcould run into opposition from coastal lawmakers concerned aboutraising insurance rates during bad economic times.

"We need to go very slowly," said State Sen. Mike Fasano, R-New Port Richey. "I have great concerns of theramifications of what this will do to every property insurancepolicy holder in the state. We're not just talking abouthomeowners. We're talking about mobile home owners, condo ownersand small business owners."

The governor, however, agrees with Nicholson. He said he wouldprefer insurers to rely on other sources of help instead ofutilizing the state-created hurricane fund.

"I like free markets, I believe free markets work," Scott said."I believe free markets are efficient so I would like to downsizethe Cat Fund responsibly."