Hurricane Coverage May Also Fall Victim to Credit Crunch

[flashl]

The mortgage crisis has created yet another concern that could directly impact homeowners and, strangely enough, it is Mother Nature.

A.M. Best Company, a full-service credit rating organization for the financial industries has raised speculation that the credit crunch may affect the ability of insurers and reinsurers to cover claims resulting from coastal disasters.

The company issued a special report this week, quoted extensively in Insurance Journal in which it said that investors are showing "a limited appetite for capital-market offerings designed to raise cash for claims payments" should a major hurricane strike the coastal U.S. this year.

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State-backed insurance pools such as exist in Florida, Louisiana, and Texas may be at most risk. Florida's largest insurer and its state-backed reinsurer depend on bond sales after a disaster to cover any shortfall and may be unable to immediately pay all claims from a major disaster.

MortgageNewsDaily

There is no news here that will surprise many on the Gulf Coast. Many unmet claims are yet to be settled from up to 4 hurricanes ago.

Homeowners in Florida are asking "what risk" to non-profit state/taxpayer-backed insurance? Florida's taxpayer-backed insurer, Citizens, is still fighting homeowner claims from hurricane Ivan after a court order to pay.