October 21, 2011
By: Jana Bell
Financial experts presenting to a state panel in Florida this week said that the state's hurricane fund currently has a multi-billion-dollar funding shortfall.
Analysts say that the Florida Hurricane Catastrophe Fund - otherwise known as the "Cat Fund" - has a shortfall of $3.2 billion, according to The Associated Press.
The fund was created in the 1990s after the destruction brought about by Hurricane Andrew. It's intended to assist homeowners insurance companies in paying residents' claims if a massive hurricane hits the state.
It is currently providing more than $18 billion in coverage, according to the AP, but will have just $7 billion available by the end of the year and would need to borrow money to cover costs in the event of an incident. Officials say that the state-run fund safeguards insurance companies while allowing them to charge residents lower property insurance rates.
Financial issues for the fund are nothing new. Last month, Jack Nicholson, its chief operating officer, said that the Cat Fund was on "shaky ground" and "dangerously overexposed."
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