MIAMI — THE insurance industry's safety net in Florida split open after Hurricane Andrew, and it will take an act of the Legislature to sew the $500 million hole shut.
A fund that for 21 years successfully covered the losses of failed insurers has gone broke trying to pay 18,000 hurricane claims filed by the clients of six bankrupt companies. A seventh, Nova Southern Insurance Company of Miami, folded Dec. 7, leaving 9,300 more policyholders in the lurch.
The industry-funded, nonprofit Florida Insurance Guaranty Association is still writing checks for $1 million a day by dipping into funds reserved for other lines of insurance, but only hardship claims and living expenses are covered.
The association has paid $142 million on hurricane claims but needs $300 million to $350 million more, said association general manager Jerry Service.
In a special session that begins Dec. 9, the Legislature will be asked to lift a 2 percent cap on industry assessments and approve a bond issue to fill the gap.