The Florida Hurricane Catastrophe Fund (FHCF) was created in November 1993 during a special legislative session after Hurricane Andrew caused over $15 billion in losses. The purpose of the FHCF is to protect and advance the state's interest in maintaining insurance capacity in Florida by providing reimbursements to insurers for a portion of their catastrophic hurricane losses.
The FHCF is financed by several sources. Reimbursement premiums paid by participating insurers are the primary source of funding to cover FHCF's reimbursement obligations. In addition to these premiums, other sources of funds to pay FHCF claims include investment income, proceeds from pre-event bonding, recoveries from reinsurance and other risk-transfer transactions, and proceeds from post-event revenue bonds.
The State Board of Administration (SBA) oversees the fund. As of January 2022, the board had $253.1 billion under management, of which the FHCF comprised 5.1%.
Fourteen full-time equivalent employees manage the fund. A nine-member advisory council provides the SBA with information and advice in connection with its duties.
The SBA does not receive legislative appropriations for its activities related to the operations of the Florida Hurricane Catastrophe Fund. The cost of administering the fund is supported by reimbursement premiums collected from insurers.
The Florida Hurricane Catastrophe Fund's Fiscal Year 2021-22 total operating budget was $9,700,255.85.
Fiscal Year 2021-22 FHCF Fund Balance. For the 2021-22 contract year, the FHCF’s available liquid resources were impacted due to an increase in projected ultimate losses for Hurricane Irma, which is now projected to be $7.8 billion. Hurricane Michael’s projected ultimate loss to the Fund remained at $1.45 billion. As of December 31, 2021, the FHCF had an estimated fund balance of approximately $11.3 billion. The FHCF also had $3.5 billion in Series 2020A pre-event bond proceeds providing additional liquidity for the 2021 season. Regardless of this fund balance, the FHCF would still need to rely on post-event bonding and emergency assessments to pay claims if a storm or storms of sufficient magnitude impacted Florida.
Hurricane Catastrophe Fund Coverage. The 2022 Legislature enacted Ch. 2022-132, Laws of Florida, which, among other provisions, authorizes the State Board of Administration to provide Florida Hurricane Catastrophe Fund (Cat Fund) coverage to authorized insurers or Citizens Property Insurance Corporation (Citizens) for the policies of unsound insurers that the authorized insurer or Citizens assumes or otherwise provides coverage. The authorized insurer or Citizens may obtain Cat Fund coverage for such policies either through the authorized insurer’s or Citizens’ reimbursement contract with the Cat Fund or by accepting an assignment of the unsound insurer’s contract with the Cat Fund.
Annual Report of Aggregate Net Probable Maximum Losses, Financing Options, and Potential Assessments, Florida Hurricane Catastrophe Fund, February 2022.
2020 Annual Report, Florida Hurricane Catastrophe Fund, 2020.
2021-2022 Annual Regulatory Plan, Florida Hurricane Catastrophe Fund, October 1, 2021.
Websites of Interest
Gina Wilson, Chief Operating Officer, 850-488-4406