FLORIDA CAT FUND CHARGING TOO LITTLE, SAYS HANOVER RE’S GRÄBER

The Florida Hurricane Catastrophe Fund (FHCF) is undercapitalised and is charging only a third of technically sound rates, according to Jürgen Gräber, board member at German reinsurer Hannover Re. Cited in a Reuters report, Mr Gräber said that “the fund has too little cash to finance a medium-sized Florida catastrophe without approaching capital markets”. He estimated that a Category 3 hurricane causing $15bn to $20bn in damage would be sufficient. Torsten Jeworrek of Munich Re told Reuters that the insurance could become a significant issue in the US presidential elections if refinancing became necessary. “There would be a lot of political pressure on where the money would come from; tax increases, presumably”.