Florida Catastrophe Fund facing serious financial troubles
It is no secret that Florida is prone to hurricanes and flooding disasters. This is one of the reasons many property insurers have chosen not to offer coverage in some parts of the state. In 2010 and 2011, Florida was pummeled by powerful storms that caused widespread damage to homes and businesses. Because many insurers were not liable to pay claims associated with damage they do not cover, consumers had to turn to the Florida Catastrophe Fund. Now, information is coming to light that suggests the Florida Catastrophe Fund will not be able to account for the claims it continues to receive.
Fund aims to provide financial support to storm victims
The Florida Catastrophe Fund is mean to provide a safety net for the state’s homeowners and provide them with financial support if they fall victim to natural disasters. Many consumers have come to rely on the fund because they are unable to find appropriate coverage from some of the state’s insurance companies. Even those relying on Citizens Property Insurance, the state-run insurance group, find themselves relying on the Catastrophe Fund from time to time. Florida officials claim that the fund may not have enough money to pay off the claims associated with hurricanes and other powerful storms.
State panel suggests fund will fall short $1.5 billion
State officials claim that the Florida Catastrophe Fund is expected to fall short of its financial obligations to consumers by approximately $1.5 billion. These estimates are provided by a state panel that has been tasked with examining the issues permeating the fund. The panel is expected to convene this week to provide final approval for its estimates after a period of research regarding the matter.
State may need to borrow federal money in wake of natural disasters
According to the new estimates from the state panel, Florida would likely have to borrow $7 billion in federal money in the wake of a strong hurricane or other natural disaster. This loan would be repaid using money collected through a surcharge imposed on every auto and property insurance policy in the state. Legislators have not yet found a way to solve the problems facing the Florida Catastrophe Fund.