Most of us do not want to talk about the Florida homeowners insurance. Although the market for home insurance in Florida is still in a state of chaos, we prefer to only pay the bill for this and not think about it again until the next year.So it is not surprising that, home mortgage new, when a history of racing means Florida earlier this year, about two major rating agencies (AM Best and Demotech) threatening to downgrade the ratings of dozens of business owners in Florida Insurance if nothing was done about the catastrophe of Florida Hurricane deficit Fund, no one paid any attention.

If these rating agencies continued to downgrade their, home mortgage new, assessments, home mortgage new, of the threat Insurance Company Florida Home, the effect would be disastrous for all owners in the state.Let start looking at how this situation threatened Florida, home mortgage new, Hurricane Catastrophe created.The Fund (Cat Fund) all costs, home mortgage new, of insurance home in Florida, a reinsurance premium – which is insurance for insurance companies. This is a simple mechanism that allows insurance companies to be reimbursed by the Cat Fund, when the claims of an event of great Florida hurricane of some levels.

Faced with increasing home insurance premiums in Florida, the Florida legislature, in, home mortgage new, 2007 has increased the, home mortgage, home mortgage new, new, size and financial responsibility of the Fund for losses in Florida Hurricane Cat another $ 12 billion compared to previous levels. This has increased Cat Fund directly responsible for up to 28 billion dollars in losses and led to a slight decrease in home insurance rates.The changes in the Florida Cat Fund seemed the right thing to do for time, but there were problems with this, home mortgage new, approach.

The Cat Fund is based on faith and credit of the State of Florida to be able to issue bonds, home mortgage new, at reasonable interest rates to cover the costs of major storms. The borrowing capacity is what allows the Cat Fund to pay less for reinsurance that insurance companies would pay in the private market for such protection – and at least in theory, lead to lower insurance rates.If our, home mortgage new, bond markets do not are currently in a state of agitation, this approach may have worked well for a long time.

However, our current financial, home mortgage new, crisis has changed everything. Even the most creditworthy governments around the country can not borrow everything they need on the bond markets. Florida Cat Fund is exception.As cat looks Fund 28 billion, home mortgage new, U.S. dollars of exposure to face, has publicly acknowledged a deficit of accountability against a deficit of 18 million estimated billion.That means that it is very likely that after your company's home Florida insurance have fulfilled their obligations as principal after a hurricane, can not rely on the Florida cat fund to pay losses, home mortgage new, in excess of these levels.

In simple terms this means that some owners of hurricanes in Florida will not pay their fashion.So in a timely manner because the rating agencies worried about the shortfall? When the rating agencies issue opinions on the business of insurance in Florida home, They know that both you and your bank is based on these, home mortgage new, Assessments help to predict the financial viability of your insurance company to pay for your claim and, home mortgage new, satisfactory QUICKLY. Among the many things that the, home mortgage new, rating agencies in their ratings of these factors is the quality of reinsurance contracts – regardless of whether the reinsurance contracts are bought on the private market, home mortgage new, , home mortgage new, or government agencies such as Florida Fund.

When rating organizations evaluate the Cat deficit of 18 billion dollars in Florida Cat Fund, question the reliability of reinsurance and, home mortgage new, know that, home mortgage new, there is greater likelihood that the insurer will be unable to perform obligations. So, have threatened to downgrade the ratings of all insurance companies in Florida that are based on Cat Fund.So what is happening in, home mortgage new, , home mortgage new, May 2009 when the downgrade happens? You will face nothing less than a disaster – even if you pay for mortgages on time every month.

Here shocking is how this scenario would play if it does nothing to address this.The Florida Legislature fails to close the deficit of the Fund