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Credit Crunch Threatens State Homeowners, Insurance Chief Says

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The Associated Press

Published: March 5, 2009

TALLAHASSEE - Florida's insurance commissioner says the national credit crunch could lead to more home foreclosures.

That's because the Florida Hurricane Catastrophe Fund, which provides backup coverage for insurance companies, is having a hard time lining up financing, Commissioner Kevin McCarty told the Senate Ways & Means Committee on Thursday.

If the fund runs out of money, it sells bonds to cover remaining claims. It's unlikely the fund could sell enough bonds if a major hurricane should strike because the bond market is so tight, McCarty said.

The state is exploring other options including a line of credit from the federal government.

Committee Chairman JD Alexander, R-Lake Wales, said one alternative is to raise premiums.

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