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Overview of the Florida Hurricane Catastrophe Fund (FHCF)

Following Hurricane Andrew, problems associated with the residential property insurance market developed. Reinsurance capacity contracted and many insurers were forced to re-evaluate their exposure in Florida. State action was deemed necessary to stabilize the market.  The FHCF was created in Section 215.555, Florida Statutes with the purpose of providing a stable and ongoing source of reimbursement to insurers for a portion of their catastrophic hurricane losses in order to provide additional insurance capacity for the state. The FHCF acts as a state administered reinsurance program and is mandatory for residential property insurers writing covered policies in the state of Florida.  Covered policies are residential property insurance policies that provide wind or hurricane coverage on structures located in Florida, including their contents and additional living expenses.  Certain collateral protection policies covering personal residences are also considered covered policies if they meet the requirements of Section 215.555 (2)C, Florida Statutes.

The FHCF supports a public-private partnership that preserves the private sector’s role as the primary risk bearer. The FHCF is financed by three sources, 1) reimbursement premiums charged to participating insurers, 2) investment earnings, and 3) emergency assessments on Florida property and casualty insurers.