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By Jim Saunders<\/div><\/div>\n

The Florida Hurricane Catastrophe Fund \u2013 essentially an insurer for insurance companies \u2013 says it can handle the loss but now has limited funds heading into 2023.<\/span><\/span><\/p>\n<\/div>\n

TALLAHASSEE, Fla. \u2013 The Florida Hurricane Catastrophe Fund, a state program that provides critical backup coverage to property insurers, is estimated to have $10 billion in losses from Hurricane Ian, officials said Wednesday.<\/span><\/span><\/p>\n

The program commonly known as the \u201cCat Fund\u201d will be able to handle Ian\u2019s financial hit, though it will go into the 2023 hurricane season with reduced amounts of cash.<\/span><\/span><\/p>\n

\u201cWe feel very confident that we can cover our obligations from Ian because going into this year we had a very healthy cash balance,\u201d Gina Wilson, the fund\u2019s chief operating officer, said during a meeting of the Florida Hurricane Catastrophe Fund Advisory Council.<\/span><\/span><\/p>\n

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.<\/span><\/span><\/p>\n

Under state law, the maximum potential liability of the Cat Fund this year is $17 billion. The fund went into the hurricane season with $15.8 billion in cash and proceeds of what are known as \u201cpre-event\u201d bonds.<\/span><\/span><\/p>\n

Estimates of overall industry losses from Hurricane Ian have varied but are in the tens of billions of dollars. The firm Raymond James, which serves as a financial adviser to the Cat Fund, presented a report Wednesday that said a consulting actuary estimated the Cat Fund\u2019s share of losses at $4 billion to $12 billion and projected a \u201cconservative point estimate of $10 billion.\u201d<\/span><\/span><\/p>\n

\u201cThere is significant uncertainty regarding the ultimate loss amount, as losses are just beginning to develop,\u201d the report said. \u201cEstimates 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.\u201d<\/span><\/span><\/p>\n

But Wilson said the fund has received initial information that at least 82 companies expect to get Cat Fund reimbursements, with 28 drawing their maximum amounts. By comparison, she said, nine carriers received maximum amounts after Hurricane Irma in 2017.<\/span><\/span><\/p>\n

Ian made landfall Sept. 28 in Lee and Charlotte counties as a Category 4 storm before crossing the state. Data posted on the Florida Office of Insurance Regulation website Wednesday said 410,251 residential property-damage claims had been reported from the storm.<\/span><\/span><\/p>\n

While the Cat Fund expects to be able to handle Ian losses, it will go into the 2023 hurricane season with substantially less money than it otherwise would have expected.<\/span><\/span><\/p>\n

The Raymond James report said the fund is projected to have \u201cliquid resources\u201d of about $7.4 billion. That includes a projected $2.3 billion in cash left at the end of this year, $1.6 billion in premiums paid by carriers and investment income and $3.5 billion in pre-event bond proceeds. If necessary, the report said, the fund also would be able to issue up to $8.4 billion in bonds after a storm.<\/span><\/span><\/p>\n

Even before Hurricane Ian, the private reinsurance market was tight in Florida, contributing to widespread financial problems of insurers. Lawmakers during a May special legislative session approved spending $2 billion on a program to provide another \u201clayer\u201d of reinsurance coverage to carriers.<\/span><\/span><\/p>\n

But Ian has raised concerns that private reinsurance will become more costly and harder to find for carriers. As an example, the reinsurance giant Swiss Re last week estimated its claims from Ian at $1.3 billion.<\/span><\/span><\/p>\n

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\nAuthor: kerrys<\/p>\n","protected":false},"excerpt":{"rendered":"