Overview:
The Florida Hurricane Catastrophe Fund (CAT Fund) was created in 1993 in response to Florida's property insurance crisis resulting from Hurricane Andrew. The purpose for this program is to provide a stable and ongoing source of reimbursement to insurers for a portion of their catastrophic hurricane losses in order to provide additional insurance capacity in the state. The CAT Fund is financed by reimbursement premiums charged to participating insurers, investment earnings, and emergency assessments on property and casuality insurers.
Because of the need to disburse funds on short-notice, the investment strategy for the CAT Fund emphasizes highly liquid, relatively short-term investment strategies. Private Capital Insurance in Florida
The SBA acts as investment advisor for the Fund to:
- Through investment earnings, help the Fund provide highly economical coverage for insurers who write residential property insurance in the state.
- Invest in accordance with Florida Statutes, using instruments such as certificates of deposit, commercial paper, U.S. government agency notes, U.S. Treasury bills, and others.
- Invest in relatively low-risk, highly liquid fixed-maturity securities.
- Enhance the Fund's investment income while maintaining liquidity.
Investment guidelines include:
- Money market instruments must be of the highest applicable rating, while other eligible securities must be investment grade.
- Most securities will have a maturity of less than 3 years, although 2% may mature within 3 to 5 years.
- The weighted average maturity of the portfolio shall not exceed 365 days.