The Florida Hurricane Catastrophe Fund (FHCF) is a tax-exempt state trust fund that provides reimbursements to residential property insurance companies for a portion of their catastrophic hurricane losses in Florida. The FHCF is under the direction and control of the State Board of Administration (SBA) and operates exclusively for the purpose of protecting and advancing the state’s interest in maintaining insurance capacity in Florida.
 
Participation in the FHCF is mandatory for all residential property insurance companies doing business in Florida, and each company is required to enter into a reimbursement contract with the FHCF. The coverage provided by the FHCF is similar to private reinsurance (with several significant differences) but at a lower cost than private market prices. In general, the FHCF covers a percentage of the company’s insurance losses in excess of their “retention” (similar to a deductible), up to a maximum payout.

The FHCF is designed to be self-supporting (except in extraordinary situations) and funded only with premium revenues paid by residential property insurance companies, investment income, and in some circumstances, revenue bonds backed by emergency assessments on most types of property and casualty insurance premiums.

In addition, the FHCF is responsible for staffing the Florida Commission on Hurricane Loss Projection Methodology and administering the SBA’s Insurance Capital Build-up Incentive Program.