All insurers are required to purchase a mandatory layer
of reinsurance from the state-sponsored Florida Hurricane Catastrophe Fund (Cat Fund).
Best's analytical judgment, coverage provided by the FHCF's mandatory layer
will be reduced by 12.5 per cent in A.M.
The House's version is wholly voluntary, whereas the stricter Senate bill makes drain safety a mandatory layer
of protection nationwide.
Back in 2004, state lawmakers increased the size of the mandatory layer
from $11 billion to $15 billion.
Residential insurers in Florida are required to purchase at least some Cat Fund coverage, and many elect to purchase the maximum amount of limit possible from the mandatory layer
. Cat Fund coverage is therefore a critical aspect of a Florida residential insurer's reinsurance program and must be blended with traditional products.
The improving financial outlook means that the Cat Fund is finally in a position to handle all of its coverage obligations under the so-called mandatory layer
. This is the reinsurance that all carriers in Florida are required to purchase.
The fund consists of several layers of coverage: A mandatory layer
for all Florida residential property insurers, and an optional $10 million "drop-down" layer of coverage that it has offered to select insurers over the past few years.
The new bonding estimates released in May mean that the Cat Fund probably has nearly enough to cover the claims associated with the mandatory layer
of coverage that all carriers in Florida must purchase in order to sell homeowners' policies.