The Florida Hurricane Catastrophe Fund (FHCF) has been approved to transfer up to $2.2 billion in risk to the private reinsurance market, with Bermuda potentially reaping the rewards.
The chief executive officer of FHCF, Jack Nicholson, has been approved by the State Board of Administration to assess options for private risk transfer. He will then bring back any information regarding options and pricing to the cabinet to seek approval.
“ABIR’s members are global leaders in property catastrophe protection. Florida is an important market for us and we have paid more than $35 billion in re/insurance payments to our US catastrophe insurance customers in the last 14 years – we’ve made good on demonstrating our value to our customers,” said Brad Kading, president of the Association of Bermuda Insurers and Reinsurers (ABIR).
“The Florida Cat Fund now has authorisation to search the market for private reinsurance protection. If they find a good economic bargain they may buy reinsurance coverage for the first time. If they do so they would be making the same sound economic decision made by the California Earthquake Authority, The Texas Windstorm Insurance Association, the UK Pool Re, and the New Zealand Earthquake Commission.”
Kading said that reinsurance provides good value to consumers, saying that for a premium the industry takes on risk that others don’t want.
“We help Florida avoid use of bond debt which has to be paid back with interest,” he said. Florida has just finished paying off nine years of bond debt and billions in interest costs. Reinsurance can help avoid the assessment of such future hurricane taxes on Florida citizens.”
“Kudos to the Governor, the Cabinet and the Cat Fund staff for being willing to search the market and put together a deal that will save Florida’s taxpayers billions in future interest costs.”
Bermuda, Reinsurance, The Florida Hurricane Catastrophe Fund, North America, Jack Nicholson, Brad Kading, ABIR,