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Stock Market Woes Could Make It Hard to Sell State Catastrophe Fund Bonds

October 7th, 2008 by flanews

The instability of the stock market could make it harder for Florida insurance companies to pay claims in the event of a major hurricane. The states catastrophe fund relies partly on the sale of bonds to back insurance companies in the wake of a disaster. With investors questioning the stability of the market, bonds could be hard to sell. Chief Financial Officer Spokeswoman Tara Klimek said even if the state sales the bonds, Floridians would still have to cough up some cash to help rebuild.

If we have to dip into the hurricane catastrophe fund and bond in order to pay claims, that results in assessments on insurance consumers throughout the state, consumers and businesses. And if we had to bond for the full 28 billion dollars it would be 1.8 billion dollars a year, every year for 30 years. Thats hidden taxes and thats just not right, said Klimek.

Next Tuesday the States Catastrophe Fund Advisory Board will meet to reevaluate the funds capacity.

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