A Florida state agency is selling municipal bonds to backstop the state’s homeowner’s insurance industry after a surge of claims and litigation drove some insurers to shutter, Bloomberg News reported. The Florida Insurance Guaranty Association, which handles the claims of insolvent insurers, plans to borrow $600 million of bonds, according to preliminary offering documents. It is the first time in three decades the agency has tapped the municipal bond market to help support insurance claims. The borrowing provides the agency with needed liquidity. “Our funding sources are somewhat limited,” said Corey Neal, FIGA’s executive director. Historically, the agency has used investment income and the assets of liquidated companies to cover payouts. The last time FIGA sold a muni bond for such purposes was in 1993 after Hurricane Andrew devastated South Florida, causing an estimated $27 billion in damages.
