He said the fund sold more than $18 billion in coverage this year. It has more than $7 billion in cash and it would need to borrow $11 billion in a worst-case scenario after a major hurricane. Nicholson said he’s unsure if that much can be borrowed.
Sen. Alan Hays, R-Umatilla, said “it’s fraud” for the state to offer coverage it may not be able to pay. He said when he was young, he was told, ” ‘Don’t let your big old alligator mouth write a check that your little Tweetie bird butt can’t cash.’ And I think that’s what we’ve done with the cat fund.”
Nicholson agreed: “It scares me to death…The cat fund is on very shaky ground.”
The committee asked him to come up with a proposal to either raise more cash or “right-size” the fund. If it’s shrunk, insurers would have to buy more private reinsurance, triggering rate hikes.
Updated Thursday. Photo: Roofer Fred Jackson secures a tarp on a home in Fort Lauderdale before a tropical storm to prevent further damage. (Sun Sentinel, file)