FHCF Provides Early Look at 2018 Capacity
The Florida Hurricane Catastrophe Fund continues to project that its single-season limit of $17 billion is available for reimbursements this year, some of which will be eroded by Hurricane Irma losses. According to current estimates, Irma reimbursements could range from $3 billion to $6 billion, with $5.1 billion being the current point estimate.
As the 2017 Atlantic hurricane season approaches its final months, insurers might begin to evaluate how much capacity will be available from the FHCF in the 2018 hurricane season. Currently, after taking into account this year’s Irma losses, the FHCF expects that its actual claims-paying capacity for the 2018 hurricane season will be $11.2 billion, or about two-thirds of the statutory limit. This would include post-event bonding in the 12-month period following an event next year, which would trigger an estimated assessment of 1.84% of premiums in most property and casualty insurance lines of business in Florida.
This projection would leave the FHCF $5.8 billion short of the $17 billion statutory limit for 2018. However, the FHCF points out this shortfall potentially could be funded through additional bonding in the 12-24 month period following an event. This would require an additional assessment estimated at 1.06%. The potential assessments in the one-year and two-year periods following an event remain far below the FHCF’s statutory assessment capacity.