Hurricane season may have ended Nov. 30, but the insurance lobby is still raising red flags about Florida’s ability to cover damages.

The Florida Insurance Council, a nonprofit industry lobbying group, continues to point to the Florida Hurricane Catastrophe Fund’s reliance on bonds to pay for damages as a $10 billion to $15 billion hole in the funding net.

”As it stands now, the Florida Hurricane Catastrophe Fund (Cat Fund) … remains unable to meet its full financial obligations,” according to a statement FIC released just prior to the end of hurricane season Nov. 30.

The fund’s current obligation is about $28 billion, most of which is tied to bonds. The state Board of Administration estimated the fund cited a $10 billion to $15 billion bonding capacity shortfall. The Florida Senate Banking and Insurance Committee recently released an issue brief raising the possibility of seeking alternative funding.

“It does seem to be pretty clear that the big property and casualty issue, at least one of the big ones, is going to be the Cat Fund,” said FIC spokesman Sam Miller of next year’s legislative session.

The Florida Legislature will have to, at a minimum, consider reverting to a more realistic exposure of $16.5 billion sooner than the end of the 2009 hurricane season, the current reversion date.

The move would mean rate increases across the board, which would be painful and necessary, Miller said.

“Even if the problems in the financial markets were to clear up overnight and the Cat Fund was to bond to its full capacity, all Florida taxpayers – those affected by a hurricane and those in areas unaffected by a storm — would be at risk of huge tax increases to pay off those bonds,” according to the FIC statement.

Gary Reshefsky, a principle at Coral Gables-based MDW Insurance Group, said insurance rates are likely to go up and capacity is likely to go down next year due in part to the hurricane that decimated Galveston, Texas. Companies that serve Florida have national footprints and paid out more than they took in to cover damages.

“Right now it’s a big hypothetical - we can always issue bonds to do it [cover damages],” he said. “But you don’t know what the bonding market is going to be like in the future. And it’s not an issue that is unique to the insurance industry.”

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