BY LLOYD DUNKELBERGER
THE NEWS SERVICE OF FLORIDA
TALLAHASSEE – The Florida Hurricane Catastrophe Fund is in its strongest financial position ever as the state heads into the annual storm season next month.
But state officials may bolster the fund, which helps private insurers pay claims if Florida gets hit by a major hurricane, with a purchase of $1 billion in private reinsurance.
“We had a sobering reminder last year of the perils that Florida faces every year,” Ash Williams, executive director of the State Board of Administration, told Gov. Rick Scott and the Cabinet on Tuesday.
Few claims paid out
But with relatively minimal damage from Hurricane Hermine and a fortunate glancing blow from the more-powerful Hurricane Matthew in 2016, Williams said the so-called “Cat Fund” was largely untapped last year, “which means we come into the current season in the strongest financial position we’ve ever been in.”
The 2017 hurricane season starts June 1 and will last through Nov. 30.
The fund has $14.9 billion in cash, with an additional $2.7 billion in funding from “pre-event” bonds. With a total of $17.6 billion, it has more than enough money to pay its potential $17 billion maximum liability.
The fund has grown because it has been able to collect premiums from private insurance companies, which rely on its backup insurance, for more than a decade without having to make a major payout because of the lack of storms.
The financial health of the Cat Fund is important because the state can impose a surcharge on most insurance policies, including auto insurance, if the funding is depleted. That happened after the 2004 and 2005 hurricane seasons, with consumers paying a surcharge, also known as a “hurricane tax,” through 2015.