- Florida’s emergency hurricane fund, which gives a monetary backstop to property insurers, will likely pay out round $10 billion to cowl losses this yr.
- While these funds can be found now, it might cut back the amount of money out there through the 2023 hurricane season, rising the chance to non-public insurers, which might lead to increased premiums for owners.
- The fund had $15.8 billion readily available to cowl potential losses, however lawmakers might want to determine what to do about subsequent hurricane season.
TALLAHASSEE — The Florida Hurricane Catastrophe Fund, a state program that gives important backup protection to property insurers, is estimated to have $10 billion in losses from Hurricane Ian, officers stated Wednesday.
The program generally often called the “Cat Fund” will have the ability to deal with Ian’s monetary hit, although it would go into the 2023 hurricane season with diminished quantities of money.
“We feel very confident that we can cover our obligations from Ian because going into this year we had a very healthy cash balance,” Gina Wilson, the fund’s chief working officer, stated throughout a assembly of the Florida Hurricane Catastrophe Fund Advisory Council.
The Cat Fund gives comparatively cheap reinsurance to carriers as a approach to assist stabilize the property-insurance market. Carriers additionally purchase non-public reinsurance, which serves as backup protection to assist pay claims in conditions reminiscent of hurricanes.
Under state regulation, the utmost potential legal responsibility of the Cat Fund this yr is $17 billion. The fund went into the hurricane season with $15.8 billion in money and proceeds of what are often called “pre-event” bonds.
Estimates of general trade losses from Hurricane Ian have diversified however are within the tens of billions of {dollars}. The agency Raymond James, which serves as a monetary adviser to the Cat Fund, offered a report Wednesday that stated a consulting actuary estimated the Cat Fund’s share of losses at $4 billion to $12 billion and projected a “conservative point estimate of $10 billion.”
“There is significant uncertainty regarding the ultimate loss amount, as losses are just beginning to develop,” the report stated. “Estimates are based on the output of models and are subject to significant uncertainty; therefore, there is no guarantee that actual losses will fall within the projected range.”
But Wilson stated the fund has acquired preliminary information that at the very least 82 corporations count on to get Cat Fund reimbursements, with 28 drawing their most quantities. By comparability, she stated, 9 carriers acquired most quantities after Hurricane Irma in 2017.
Ian made landfall Sept. 28 in Lee and Charlotte counties as a Category 4 storm earlier than crossing the state. Data posted on the Florida Office of Insurance Regulation web site Wednesday stated 410,251 residential property-damage claims had been reported from the storm.
While the Cat Fund expects to have the ability to deal with Ian losses, it would go into the 2023 hurricane season with considerably much less cash than it in any other case would have anticipated.
The Raymond James report stated the fund is projected to have “liquid resources” of about $7.4 billion. That contains a projected $2.3 billion in money left on the finish of this yr, $1.6 billion in premiums paid by carriers and funding revenue and $3.5 billion in pre-event bond proceeds. If essential, the report stated, the fund additionally would have the ability to concern as much as $8.4 billion in bonds after a storm.
Even earlier than Hurricane Ian, the non-public reinsurance market was tight in Florida, contributing to widespread monetary issues of insurers. Lawmakers throughout a May particular legislative session permitted spending $2 billion on a program to supply one other “layer” of reinsurance protection to carriers.
But Ian has raised considerations that non-public reinsurance will grow to be extra expensive and more durable to search out for carriers. As an instance, the reinsurance big Swiss Re final week estimated its claims from Ian at $1.3 billion.