Bermuda reinsurers could benefit after the Florida hurricane catastrophe fund yesterday backed the transfer of $2.2 billion in risk to the private sector.

And Brad Kading president of the Association of Bermuda Insurers and Reinsurers (ABIR) said: “ABIR’s members are global leaders in property catastrophe protection.

“Florida is an important market for us and we have paid more than $35 billion in reinsurance and insurance payments to our US catastrophe insurance customers in the last 14 years — we’ve made good on demonstrating our value to our customers.”

The Florida move means that — for the first time — the state-backed catastrophe fund can go to the markets with reinsurance brokers and assess options for private risk transfer, including traditional reinsurance and new players like insurance-linked securities (ILS) and other alternatives.

Approval to go to the market came despite a bid by Florida state politician Frank Artiles to block the plan.

Republican Representative Mr Artiles said that transfer of the risk would be “corporate welfare” and claimed it would lead to higher premiums for Florida residents.

And he said that going to the private market would mean “the only beneficiaries would be the reinsurers themselves, mostly based in Bermuda”.

He added: “These are people who actually hope for catastrophes so that they demand higher rates and larger profits.”

But the Florida State Board of Administration, headed by Governor Rick Scott, ignored Mr Artiles and backed the proposal from state Cat Fund chief Jack Nicholson.

Mr Nicholson had earlier argued that the proposal was designed to boost the state’s ability to pay claims in the event of a major hurricane.

And his stance was backed by a range of Florida bodies, including the Florida Consumer Action Network, the Florida Chamber of Commerce the American Consumer Institute and Florida TaxWatch.

Mr Kading said: “The Florida Cat Fund now has authorisation to search the market for private reinsurance protection.

“If they find a good economic bargain they may buy reinsurance coverage for the first time.

“If they do so they would be making the same sound economic decision made by the California Earthquake Authority, The Texas Windstorm Insurance Association, the UK Pool Re, and the New Zealand Earthquake Commission.”

Mr Kading added: “Reinsurance provides good value to consumers, for a premium we take on risk that others don’t want. We pay our claims quickly. We help Florida avoid use of bond debt which has to be paid back with interest. Florida has just finished paying off nine years of bond debt and billions in interest costs. Reinsurance can help avoid the assessment of such future hurricane taxes on Florida citizens.”

And he said: “Kudos to the Governor, the Cabinet and the Cat Fund staff for being willing to search the market and put together a deal that will save Florida’s taxpayers billions in future interest costs.”