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Residual Markets
THE TOPIC

DECEMBER 2008

The residual market exists to ensure coverage is available when insurance companies in the regular market reject an applicant as too risky.

In a normal competitive market, insurers are free to select from among people applying for insurance those drivers, property owners and commercial operations they wish to insure. They do this by evaluating the risks involved through a process called underwriting.

Applicants who are considered "high risk" may have difficulty obtaining insurance through the regular “voluntary” market channels. (The term “high risk” applies to individuals or individual businesses with a poor loss record due to inadequate safety measures; certain kinds of businesses or professions where the nature of the work is hazardous or where the risk of lawsuits is high; and specific locations where the risk of theft, vandalism or severe storm damage is substantial.) To make basic coverage more readily available to everyone who wants or needs insurance, special insurance plans, known as residual, shared or involuntary markets, have been set up by state regulators working with the insurance industry.

Residual market programs are rarely self-sufficient. Where the rates charged to high-risk policyholders are too low to support the program's operation, insurers are generally assessed to make up the difference. These additional costs are typically passed on to all insurance consumers. However, in a few states, insurers are not able to recoup their residual market losses and political pressure prevents rates from rising to the level they should be actuarially.

The number of drivers and properties insured in the residual market fluctuates as lawmakers and regulators change laws or address availability, rate adequacy and other factors that influence underwriting decisions.
Related Information

RECENT DEVELOPMENTS

Property Insurance

  • National: Property plans have grown enormously over the last past few years. By year-end 2007, the latest data available, total exposure to loss in state-run property insurers had reached more than $670 billion and the number of policyholders insured was almost 2.9 million, almost triple the number in 2000.

  • Alabama: In April 2008 legislation was passed that allows the state’s Beach Plan, the Alabama Insurance Underwriting Association, to come under state law, enabling it to raise funds through the sale of bonds and to carry funds over from one year to the next. In October 2008 the state was considering setting up a captive insurance company to insure coastal residents. In this case the captive would be run by local governments for the benefits of coastal property owners to revitalize the residential construction industry in coastal communities. Captives are often formed as a way to stabilize rates.

  • Property owners who build their homes to the “Fortified....for safer living” construction standards of the Institute for Business and Home Safety are eligible for discounts on windstorm coverage from the Beach Plan. The size of discounts varies according where the home is located and the type of building construction. Homes made of reinforced concrete in the seacoast zone may receive a discount of as much as 56 percent. Discounts are also available for existing homes that are retrofitted to make them better able to withstand high winds. The Mississippi wind pool offers a similar discount program.

  • Connecticut: To increase the options available to homeowners living within 2,600 feet of the coast, the cut-off point in some insurers’ underwriting guidelines, the state’s insurance department has asked the FAIR Plan to set up a Coastal Market Assistance Plan (C-MAP). A C-MAP is a temporary program designed to encourage participating insurers to issue homeowners insurance policies beyond the scope of their underwriting guidelines on a voluntary basis. The C-MAP is administered by the FAIR Plan.

  • Currently in the voluntary market, when an applicant for insurance lives close to the coast, an insurer may require some type of storm protection to reduce the likelihood of damage, such as hurricane shutters or precut plywood ready to install in window openings or hurricane impact resistant glass. Coverage through C-MAP does not require such loss mitigation measures; however, the owner must meet other requirements, including the purchase of flood insurance.

  • Florida: SB 2860, the Homeowners Bill of Rights, was passed at the end of April 2008. It includes measures affecting Citizens Property Insurance Corporation, the state’s insurer of last resort that is now its largest insurance company. One provision extends the freeze on rate increases for Citizens’ policyholders for another year to the end of 2009, a proposal that Alex Sink, Florida’s chief financial officer, opposed because the pool is not self-sufficient. Filings for actuarially sound rate increases would begin July 15, 2009. Under 2007 legislation, pool rates are not required to be the highest in a given area, and earlier rate increases designed to put the pool on a sounder fiscal footing were repealed. But even if rates were actuarially sound, Citizens has a tax-exempt status, so it would still be able to set its rates well below those of private insurers. Currently, the 70 percent of the policyholders who are not insured by Citizens are subsidizing the 30 percent who are, Sink said. Some Citizens policyholders are paying as much as 50 percent less than they should.

  • SB 2860 also raises the value of homes that can be insured by Citizens from $1 million to $2 million. Citizens’ officials say that expensive homes provide the pool with an important source of income in that their owners file fewer claims but pay higher premiums. The bill creates an 11-member task force to analyze and report in January 2009 on how Citizens can return to its original role as insurer of last resort.

  • Despite moving many policyholders out of the pool to private insurers, as of November 2008, Citizens still had some 1,140,000 policies in force, a large portion of which cover high-risk properties in South Florida, the region most vulnerable to hurricane damage. Citizens has $20 billion in claims paying capacity, but some of this is dependent on the state’s Hurricane Fund which, in the event of a major hurricane, might not be able to pay all claims because of its inability to raise funds as a result of the crisis in the credit markets. To pay claims after a major storm, Citizens might have to impose surcharges. Assessments would be highest for Citizens policyholders, up to 45 percent of their annual premiums. Policyholders with private insurers could also be charged. They would pay up to18 percent.

  • In 2007 seven insurance companies, approved to assume Citizens’ policies, removed almost 248,000 personal residential policies from Citizens’ books. These policies had a potential exposure to loss of some $68 billion. Early in 2008, 10 “take-out” companies were approved and four additional companies were approved a few months later. Together, these insurers are expected to remove 500,000 policies by the end of the year. Beginning in May 2008, Citizens will send to these companies a list of all policies that meet certain requirements. To ensure that policyholders realize that they have the option to obtain insurance from a private insurer at or below their current premium, Citizens will notify the policyholder if his or her insurance agent refuses to allow the transfer. The depopulation process is on-going, with more companies already approved to take out batches of homeowners policies in January 2009.

  • Citizens has incurred deficits that must be paid off from past storms. Insurers fund the amount and then pass on the losses to their policyholders in the form of a surcharge. The base for assessments to pay for Citizen’ deficits has been expanded from property insurance to auto and other lines of insurance, with the exception of medical malpractice and workers compensation, thus placing the burden of paying for the next big storm on all Floridians.

  • Georgia: The state’s insurance department is considering setting up a separate state-run wind pool that would exist under the umbrella of the Georgia Underwriting Association to make insurance more available in the state’s coastal counties. Currently, such coverage is available from the Underwriting Association, which offers residual market coverage for properties anywhere in the state.

  • Louisiana: Vowing not to follow Florida’s lead, lawmakers passed legislation in 2007 designed to make the state more attractive to insurers while at the same time helping property owners deal with increased property insurance costs. Among other things, the legislation allows Louisiana Citizens Property Insurance Corporation to solicit bids from private insurers to take over its policies. In addition, the state is providing financial incentives to new insurers who enter the homeowners insurance marketplace on the condition that 25 percent or more of their new business consists of policies taken over from Citizens. The pool had become the state’s third-largest homeowners insurer. Where Citizens has 50 percent or more of the market and the insurance commissioner has declared that there is little competition, the pool is no longer required to impose the 10 percent surcharge on premiums intended to give the private market an opportunity to compete with the state-run entity. In these areas Citizens’ rates can be equal to those of the largest insurers in the area or at a level that is actuarially sound.

  • The insurance department announced in April 2008 that five companies had been awarded $29 million in grants under the incentive program and another two were in the process of applying for $10 million in grant money. The program is expected to result in transfers of about 30,000 policies to private companies, or about 20 percent of Citizens’ total. The legislature has authorized a third round of take-out incentives, which will run from October 31 until December 31, 2008. The goal of the program is to reduce Citizens’ policy count to about 100,000, down significantly from the pre-Katrina number of 165,000 and to focus attention on the insurance opportunities in the state.

  • A Citizens rate increase is expected to further reduce the pool’s policy count. To maintain its financial health as required by law, the pool is seeking an average rate increase of 14 percent, about $230, effective February 2009.

  • Massachusetts: On the Cape, which is the region in the state most vulnerable to storms, the FAIR Plan is the largest insurer with about 40 percent of the market there, in part because until recently its rates were very low relative to the risk it was assuming. The Massachusetts FAIR Plan is one of only six such plans that offer coverage almost comparable to a homeowners insurance policy. The Plan also offers a form of guaranteed replacement cost, a coverage no longer available from most private insurers, that pays up to $1 million to rebuild a home. Most companies now provide extended replacement cost coverage, which usually adds up to 20 percent of the policy limit in the event that reconstruction costs soar after a widespread major disaster.

  • A bill that would have allowed the FAIR Plan to substitute the essentially unlimited coverage with coverage closer to that offered in the private market failed to pass at the end of the session. Earlier, the Plan’s request for an average increase of 13.2 percent was rejected by the insurance commissioner. Had it been approved, some residents of the Cape would have faced increases of as much as 25 percent. In 2006 rates were raised an average of 12.4 percent. Meanwhile, the FAIR Plan has raised deductibles for many of its policyholders to bring its policies in line with those in the private market. Although coastal area policyholders will have to pay more out of their own pockets in the event of a bad storm, they are seeing a reduction in premiums to compensate for the fact that insurers will have to pay out less because policyholders are assuming more risk themselves. Deductibles may be lowered or eliminated by installing storm shutters and other devices to reduce the risk of wind damage.

  • Mississippi: Wind pool premiums for homeowners and businesses will drop on policies issued after June 2008. Homeowners will see an average decrease of about 11 percent and some commercial rates could be reduced by as much as 37.6 percent, according to the state’s insurance commissioner. Recently, the legislature approved a transfer of $25 million from the state’s tax coffers to the fund, part of an $80 million package approved in 2007 that helped pay for reinsurance, boosted the pool’s reserves for windstorm damage claims payments and allowed it to use state insurance premium tax revenues for four years to reduce policyholder premiums until the market stabilizes. The goal is to allow the pool function like an insurance company–paying out in bad years and building up funds in good ones. The bill also granted credits against the payment of state insurance premium taxes to insurers that write new wind and hail insurance policies in coastal areas. In addition, policyholders statewide can now be surcharged for the cost of selling bonds to raise money in an emergency and for pool deficits, which after Hurricane Katrina, were more than two and a half some companies’ annual premiums.

  • Prior to passage of the law, insurers were assessed for pool deficits but could not pass on the cost to policyholders directly, as they can in other states. The measure also required new construction, including additions or remodeling, to meet applicable building codes, thus helping to reduce the risk of damage from windstorms. As insurers pull back from writing coverage along the coast, the pool’s policy count has grown from about 1,600 in 2006 to more than 36,000.

  • New Jersey: A study of New Jersey’s FAIR Plan by the Property/Casualty Insurers of America shows that the number of policies issued by the Plan has declined by 35 percent over the last five years, rates have been adequate and it has not had to file for a rate increase since 2004. The study includes some recommendations that could reduce costs and the size of the residual market even further, among them retrofitting buildings in areas particularly exposed to windstorms; creating a state-sponsored study committee to develop appropriate land use policies; and developing a program to make available loans to help policyholders pay the bills for damage when there are higher deductibles.

  • North Carolina: In July 2008 the legislature passed a bill (HB 2431), which calls for various legislative study committees, including one to examine how the state’s Beach Plan or Insurance Underwriting Association would fare in the event that a major hurricane hit the state. The committee must report its findings by February 1, 2009.

  • A study by Milliman, an actuarial consulting firm, commissioned by the Property Casualty Insurers of America confirms the already precarious financial condition of the state’s Beach Plan. Among the study’s key findings are that the pool, which is growing by about $1 billion a month due to its below cost rates, insures $70 billion worth of property but only has only the capacity to pay $1.5 billion in claims; Beach Plan rates need to increase by 76 percent to cover its losses and expenses; the underfunded pool threatens the availability and affordability of property insurance for all policyholders (as evidenced by the withdrawal of one major insurance company which cited the potential for huge assessments which are very difficult to estimate and plan for). The Beach Plan could face a $6.2 billion deficit in a season with a large storm, according to the study. Even a small storm could leave it with $1.4 billion in the red.

  • If a major storm should occur, insurers could be assessed for much more than the amount of premium they collected. Some small insurers could become insolvent even though they may not insure coastal property because assessments are imposed on all property insurers doing business in the state. There is no law mandating actuarially sound rates for the Beach Plan and the insurance commissioner is under political pressure to keep rates down.

  • South Carolina: As a possible solution to the question “was the damage caused by wind or water?” the state has been requiring wind pool policyholders to purchase flood insurance since the beginning of 2008. Without it, they may not receive reimbursement for the full replacement cost of repairing storm damage. About 70 percent of wind pool policyholders already had flood coverage and, as a result of the new law, several thousand additional policyholders are now covered for flood damage. Wind pool officials say the new mandate is designed to avert disputes about the exact cause of damage, a situation that may have held up some claim settlements after Hurricane Katrina. Most of the state is susceptible to flooding, they say. A structure does not have to be in a federal flood zone to suffer flood damage. Between 30 and 35 percent of flood claims are filed by policyholders living outside designated flood zones, according to the National Flood Insurance Program.

  • Texas: The Texas Windstorm Insurance Association (TWIA) has lowered its estimate for the cost of Hurricane Ike claims to $2.7 billion from $4 billion earlier. However, it cautions, the figure could change. Insurance companies are being assessed $430 million, of which $230 million will be offset or recoupable through credits on premium tax, the state tax all insurers are assessed in every state, based on their premiums written in that state. Funds are also being transferred to the TWIA from the Catastrophe Reserve Trust Fund ($370 million). Together, these funds will reach the threshold or provide the retention needed before the TWIA can access its reinsurance. All of these funds total $2.1 billion. This assessment follows an earlier one of $100 million after Hurricane Dolly, which is expected to cost about $280 million, some $230 million in commercial losses. Insurers may be assessed again in 2009 to cover any outstanding claims. The Texas FAIR plan has up to $300 million available and does not expect to assess insurers.

  • The once-every-other-year legislative session came to an end in May 2007 without an agreement on a new funding mechanism for the state’s Windstorm pool. However, in July 2007 the insurance commissioner approved the purchase of $1 billion in reinsurance coverage and $1.5 billion in coverage in 2008. Texas Windstorm Insurance Association’s (TWIA) liability, or exposure to loss, is about $65 billion, according to officials. Insurance premium taxes are a major source of income for the state. If insurers become exempt from taxes for a period of time, taxpayers will have to offset the loss.

  • The TWIA covers 14 coastal counties and part of Harris County. About 25 percent of the state’s population lives along the coast. Increasing development, together with a reduction by some insurers of the number of coastal policies they will issue, is pushing up the pool’s policy count and its exposure to loss.

  • TWIA rates will increase 12.3 percent, effective February 1, 2009. By law, rate increases are capped at 10 percent, but the insurance commissioner can override the cap after catastrophic losses such as occurred as a result of Hurricane Ike. Earlier increases had been less than requested, despite the need to increase the pool’s financial health. The insurance commissioner said that the increases were the first steps in a multiyear effort to strengthen the financial condition of the pool. In 2005 the payment of some 11,000 Hurricane Rita claims resulted in a deficit and a $100 million assessment on insurance companies. The pool grew from almost 69,000 policyholders at the end of 2001 to more than 229,000 by October 2008. Almost half of the TWIA’s residential properties are in Galveston County. Earlier in the year, the TWIA had recommended bond issues of $800 million to supplement its reinsurance and the state’s Catastrophe Reserve Fund.

Auto Insurance

  • National: Nationally, the residual market’s share of total cars insured dropped 7.5 percent between 2005 and 2006 to 1.2 percent, the most recent data available. This is well below the 1995 figure of 4 percent. In most jurisdictions the percentage was well below one percent. In the three states with the most vehicles in shared market plans, the number of cars fell by 28.3 percent in New York to 153,241 and 19.5 percent in Massachusetts to 198,644. But in North Carolina, which has a reinsurance facility, see Background section, the number of cars insured in the residual market rose 2.4 percent to 1.58 million, almost a quarter of the total cars insured in the state.

  • The residual market can be viewed by share of cars insured or by premiums. In 2006 nationally, more than $1.6 billion of premium was written in the private passenger auto insurance residual market, representing about 1.0 percent of the total private passenger auto insurance premium. (The commercial residual auto insurance market represents about 2 percent of the total commercial auto insurance premium.) New York State had less than 1.7 percent of its cars insured in the pool in 2006, a fraction of North Carolina’s 23 percent, but New York ranks third in premiums because auto insurance is generally more expensive in New York than in North Carolina. In 2006 North Carolina topped the list with $692.0 million in private passenger residual market written premium, compared with $254.0 million in New York. Massachusetts, which has since changed its residual market system, was second with $299.3 million.

  • California: In California, the low-cost auto insurance program administered by the state’s assigned risk plan has been expanded to the entire state. By law, the commissioner can expand the program to additional counties if he sees a need. The program has been enlarged several times. First established in Los Angeles and San Francisco in 2000 as a pilot program, it provides basic liability and uninsured motorist coverage and $1,000 in medical care payments to low-income drivers with good driving records, see report on Urban Issues.

  • North Carolina: The state with the highest percentage in the private passenger residual market in 2005, the latest year for which data are available, was North Carolina, at 23 percent, followed by Massachusetts, at 6 percent. However, in Massachusetts, about one quarter of all commercial auto insurance premiums ends up in the residual market. In North Carolina, a considerable number of drivers are insured in the residual market because the state’s current auto insurance regulatory system does not allow insurers the flexibility to charge a rate that reflects true risk. Those drivers believed to be too risky for the rate allowed are ceded or transferred to the shared market.

  • Massachusetts Following the report of a study group appointed by Governor Deval Patrick that found that the state should consider moving toward a more competitive market by using a flex rating system, the new insurance commissioner, Nonnie Burnes, said that the state would adopt an assigned risk plan along with the change to a system of “managed competition.“ See report on rate regulation modernization.

  • The assigned risk plan is taking over from the current residual market program known as CAR (Commonwealth Automobile Reinsurers) over a three-year period, starting in April 2008 when auto insurance companies began using the new rates they have filed. CAR now insures both high-risk drivers and drivers who may have a good driving record but live in an area where the state-mandated rates are insufficient to support the risk assumed in providing insurance. Since CAR is a reinsurance facility, policies are issued by a regular insurer and the policies that cover bad “risks” are reinsured through CAR. Under Massachusetts law drivers insured in the residual market must be offered the rate filed for the residual market or the appropriate rate in the voluntary market, whichever is lower. Now that managed competition has taken effect, there is an incentive for insurers to offer low-risk CAR policyholders coverage in the voluntary market, ultimately reducing the residual market’s size. To protect drivers who cannot find coverage in the voluntary market from sudden, large premium increases, rates in the assigned risk plan are capped. Where policies are underpriced as a result, losses will be borne by the voluntary market.

  • The initial move to an assigned risk plan was stalled for several years while insurers who opposed the change-over challenged the commissioner’s power to make such a decision in the courts. In August 2006, in a unanimous decision, the Massachusetts Supreme Judicial Court confirmed her authority to revamp the state’s residual market for auto insurance.

Workers Compensation

  • Positive trends in the workers compensation residual market are continuing. Estimated residual market premiums in 2007 for the pools serviced by the National Council on Compensation Insurance (NCCI) declined from $1.2 billion in 2006 to an estimated $1 billion in 2007. The residual market's share of the total workers comp market also decreased, falling from 10 percent of the total in 2006 in the states for which the NCCI collects data to an estimated 8 percent in 2007.

  • Ten percent fewer employers nationwide were insured in the residual market in the first quarter 2008, compared with the first quarter a year ago, according to NCCI figures. The drop was steepest for large employers who have been moving to the voluntary market, partly as a result of revised NCCI pricing and safety incentive programs. Residual market premiums bottomed out at $300 million in 1999. In the early part of the 1990s it was a considerable burden on the voluntary market, which has to pay for the residual market’s losses, accounting for more than one-quarter of total market premiums in NCCI states.

  • While the workers compensation residual market share dropped, the combined ratio, a measure of profitability, rose, moving from 110 in 2006 to an estimated 112 in 2007. This means that insurers paid out about $112 in claims and expenses for every $100 in premium collected in 2007. The combined ratio had been more or less stable for the past three years.

BACKGROUND

Insurance is a mechanism through which individuals and businesses can transfer risk to another entity: an insurance company. Many different programs have been established to assure that insurance is available to individuals and businesses having difficulty obtaining coverage in the "voluntary market," that is the risk that insurers voluntarily assume. The business that insurers do not voluntarily assume is called the residual market. Residual markets may also be called “shared,” because the profits and losses of each type of residual market are shared by all insurers in the state selling that type of insurance, or involuntary, because insurers do not choose to underwrite the business, in contrast to the regular voluntary market.

The Automobile Residual Market: The first of the residual market mechanisms for automobile coverage was established in New Hampshire in 1938. As states began to pass laws requiring drivers to furnish proof of insurance, having auto liability insurance became a prerequisite for driving a car. Today, all 50 states and the District of Columbia use one of four systems to guarantee that auto insurance is available to those who need it. All four systems are commonly known as assigned risk plans, although the term technically applies only to the first type of plan, where each insurer is required to assume its share of residual market policyholders or "risks." (The term "risk" is used in the insurance industry to denote the policyholder or property insured as well as the chance of loss.) Commercial auto insurance is also available through the residual market.

1) Automobile Insurance Plans—The assigned risk plan, the most common type, currently found in 42 states and the District of Columbia, generally is administered through an office created or supported by the state and governed by a board representing insurance companies licensed in the state. Massachusetts began a three-year process of changing over to an assigned risk plan, beginning in April 2008.

When agents or company representatives are unable to obtain auto insurance for an applicant in the voluntary market, they submit the application to the assigned risk plan office. These applications are distributed randomly by the automobile insurance plan to all insurance companies that offer automobile liability coverage in the state in proportion to the amount of their voluntary business. Thus, if on a given day the plan receives 100 applications from agents around the state, a company with 10 percent of that state's regular private passenger automobile insurance business will be assigned 10 of those applicants and will be responsible for all associated losses.

Generally, each insurer services the policyholders assigned to it just as it would the policyholders it insures in the voluntary market. However, there are exceptions. For example, five states have set up a service center to carry out all administrative and service functions, except handling claims. In many jurisdictions, companies that prefer not to service the policies of policyholders assigned to them can make arrangements for a fee to have them serviced by others, either the Plan or by “servicing companies,” insurers that service other companies’ business as well as their own. A few states allow such service arrangements in the commercial auto residual market, especially large commercial accounts such as taxis and corporate-owned fleets.

Assigned risk policies usually are more restricted in the coverage they can provide and have lower limits than voluntary market policies. In addition, premiums for assigned risk policies usually are significantly higher, although not always sufficiently high to cover the increased costs of insuring high-risk drivers.

2) Joint Underwriting Associations (JUAs)—Automobile JUAs, found in four states, Florida, Hawaii, Michigan and Missouri, are state-mandated pooling mechanisms through which all companies doing business in the state share the premiums of business outside the voluntary market as well as the profits or losses and expenses incurred. To simplify the policyholder distribution process, insurance agents and company representatives are generally assigned one of several servicing carriers (companies that have agreed for a fee to issue and service JUA policies). They submit applications to that company, which then issues the JUA policy. In Michigan, however, agents submit applications directly to the JUA office which then distributes them to the servicing carriers. Coverages offered by JUAs generally are the same as those offered in the voluntary market but the limits may be lower. Although rates may be higher than in the voluntary market, they may not be sufficient for the JUA to be self-sustaining. State statutes setting up the JUA generally permit it to recoup losses by surcharging policyholders or deducting losses from state premium taxes. (JUAs may be set up for other lines of insurance, including homeowners insurance. JUAs for commercial insurance coverage, such as medical malpractice and liquor liability, may operate somewhat differently in some states, see below.)

3) Reinsurance Facilities—Reinsurance facilities exist in North Carolina, New Hampshire and Massachusetts. (In Massachusetts, the reinsurance facility which is known as Commonwealth Automobile Insurers, or CAR will gradually be disbanded as the new ”managed competition” regulations take effect.) An automobile reinsurance facility is an unincorporated, nonprofit entity, through which auto insurers provide coverage and service claims. After issuing a policy, an insurer decides whether to handle the policy as part of its regular “voluntary business” or transfer it to the reinsurance facility or pool. An insurer is permitted to transfer or “cede” to the pool a percentage of its policies. Premiums for this portion of business are sent to the pool and companies bill the pool for claims payments and expenses. Profits or losses are shared by all auto insurers licensed in the state.

4) State Funds—Maryland established a state-funded residual market mechanism in 1973. Private insurers do not participate directly in the Maryland Automobile Insurance Fund (MAIF) but are required by law to subsidize any losses from the operation, with the cost being charged back against their own policyholders. In years that the fund has a loss, all Maryland insured drivers, including MAIF drivers, help offset the deficit through an assessment mechanism.

Together, residual market programs insured about 2.2 million cars in 2006, the latest data available, about 1.2 percent of the total market and a 7.5 percent drop from 2005, according to the Automobile Insurance Plans Service Office, which tracks such data. In 1990 the residual market served 6.3 percent of the total market. In 2004, in a major change from much of the 1990s, only one state, North Carolina, had more than a million cars insured through the residual market. At 1.6 million, the pool insured more than 23 percent of the state's total insured vehicles. In South Carolina, which enacted sweeping reforms in 1998, the residual market dropped from 38 percent of all insured cars in 1996 to close to zero- two cars—in 2006.

The North Carolina residual auto insurance market is unusual in that the laws governing the North Carolina Reinsurance Facility, the state’s auto insurance residual market pool, have produced a complex system of subsidies that keeps the pool’s population high. Drivers with traffic violation points on their record and inexperienced drivers in the pool do pay higher rates, but some of those in the pool because of some lesser risk pay the same as the highest rate charged good drivers. All rates are highly regulated.

Voluntary market rates in North Carolina are kept low. As a result, auto insurers send business that is not expected to be profitable to the pool and the pool loses money each year. This shortfall is offset by surcharges incorporated into premiums, spreading the loss across all drivers. Supporters of the system say the subsidy system makes it easier for more people to buy insurance—North Carolina is among the states with the lowest percentage of uninsured drivers. Critics say that good drivers should not have to pay more so that others can get a good deal.

Other states have seen their residual market fluctuate, depending on conditions in the voluntary market such as the regulatory environment and rate adequacy. For example, in 1987, close to 1.8 million drivers were insured in the New Jersey shared market compared with about 97,300 in 1993. But gradually, this number crept up again as insurers began to withdraw from the state because of the overly harsh regulatory system. Market reforms passed in New Jersey in recent years have brought more auto insurance companies into the market, increasing competition and reducing the need for drivers to seek coverage in the residual market. A 2004 study of residual markets by the Property Casualty Insurers Association of America found that in states where competition is the primary regulator of price, the residual market tends to be small.

JUAs For Other Lines of Insurance: JUAs are not limited to automobile insurance. At various times, there have been JUAs for residential insurance. Florida’s residential JUA became part of its Citizens Property Insurance Corporation in 2002. Florida also has a workers compensation JUA, which was established in 1993. A number of states have medical malpractice JUAs, most of which were set up in the 1970s or 1980s when the line was beset by high losses. However, in the 1990s, the market for medical malpractice insurance softened, as in other commercial sectors, and several JUAs were dissolved. Some states have provided extra protection in the form of a state-subsidized layer of “excess” medical malpractice coverage in addition to the JUA or separately, either to reduce the cost of additional coverage or to make it more readily available. In a number of states rising costs in the early 2000s forced several insurers to leave the medical malpractice marketplace, which in turn diminished the amount of medical malpractice coverage available. Some of the excess programs set up by states were short-term solutions to the most recent crisis and have sunset clauses. These require the entity to cease operations unless conditions warrant its continued existence.

In some states, medical malpractice JUAs operate in a fashion similar to JUAs for automobile insurance, through servicing insurers. In others, such as South Carolina, the medical malpractice JUA serves as an insurance company, collecting premiums, issuing policies in its own name and adjusting losses. Depending on the state, if the medical malpractice JUA runs into financial difficulties, the shortfall is picked up by the state’s insurance companies, its medical care providers or some form of financing that ultimately is paid for by taxpayers. When the insurance industry is assessed, assessments are spread over as broad a base as possible, sometimes the entire liability insurance market. Each company contributes in proportion to its share of the liability market, which may include personal and commercial automobile liability, general and professional liability and, in some states, workers compensation as well.

In many states, the insurance commissioner has been given standby authority to set up a JUA whenever marketplace conditions for any type of insurance require such a move. When it became obvious that insurance was becoming more difficult to obtain in parts of Florida, following the disastrous hurricane seasons of 2004 and 2005, the state set up a statewide commercial JUA to provide commercial property insurance.

Market Assistance Plans (MAPs): A MAP is a temporary, voluntary clearinghouse and referral system designed to put people looking for insurance in touch with insurance companies. They are organized when something happens to cause insurance companies to cut back on the amount of insurance they are willing to provide. MAPs are generally administered by agents' associations, which assign insurance applications to a group of insurers doing business in a state. These companies have agreed to take their share of applicants on a rotating basis. In the mid-1980s, MAPs were set up for liability insurance. At that time, some businesses like ski resorts and bars, as well as municipalities, were having trouble finding liability insurance because of the increase in lawsuits filed against them. When the liability insurance market eventually adjusted and liability insurance became readily available once again, most liability insurance MAPs were dismantled.

Increasingly, MAPs are being created to deal with property insurance problems. In New Jersey, for example, where insurers are concerned about potential storm losses, the insurance department established a MAP in the 1990s, known as WindMAP. Insurers representing 70 percent of the state's homeowners insurance market participate. Some 20,000 residents in 92 ZIP codes are eligible to apply to the plan for coverage.

MAPs may be organized for a single line of insurance, such as day-care liability or homeowners insurance, or for a broad range of liability coverages. Recently, homeowners insurance MAPs have been formed in several East Coast states, including Connecticut and Texas, and medical malpractice MAPs have been created in states such as Washington, where the medical community had difficulty finding malpractice insurance.

Pools—FAIR Plans, Beach and Windstorm Plans, Workers Compensation Assigned Risk and Others: A pool is an organization of insurers or reinsurers through which particular types of insurance coverage are provided. The pool acts as a single insuring entity, as opposed to some JUAs and assigned risk plans where the policyholder deals directly with an individual insurance company. Premiums, losses and expenses are shared among pool members in agreed-upon amounts. The range of activities handled by the pool varies. Some pool operations are limited to redistributing premiums and losses, while others have broader functions similar to an insurance company. Some pools use specific insurers as servicing carriers.

In pools composed of primary companies (as opposed to reinsurers), business is placed directly with the pool by the agent. (In a reinsurance pool, a member company underwrites the risk, issues the policy and reinsures the business in the pool, see below.) Pools may be mandated by state legislation or established on a voluntary basis.

Pools assure that insurance is available to property owners in high-risk, generally urban or coastal areas. Among the best-known primary pooling arrangements are property insurance plans, which insure owners of properties vulnerable to severe storm damage.

History of Property Pools: The first urban area plan, a forerunner of FAIR Plans, see below, went into effect in 1960 in Boston. Following a spate of fires in some inner-city neighborhoods, insurers began to withdraw from these communities, making it difficult for some Boston residents to obtain fire insurance. The Massachusetts legislature drafted a bill that called for a state-operated assigned risk plan for fire insurance. Insurers were against the proposal, pointing out that an assigned risk plan for auto liability insurance has a very different goal from the proposed property insurance plan. Assigned risk plans in auto insurance were established to protect third parties from having no financial recourse if they were struck by a car driven by a driver who had been refused coverage in the voluntary market. A fire insurance assigned risk plan would enable the owner of a property which had been rejected for coverage to buy insurance to protect his own assets.

The industry set out to find a better way to make coverage available, pledging that no property would be denied insurance unless it was inspected and found uninsurable. Where property was deemed in too poor a condition to insure, owners were told what to do to bring it up to insurable standards. A special fire hazard inspection office was established and charged with carrying out the program which became known as the Boston Plan. Fire losses in these neighborhoods subsequently declined and insurance became more readily available. The success of the Boston Plan led to similar programs in other cities and by 1967 there were 10 urban plans.

In 1967 riots broke out in many cities across the nation. As property insurers withdrew from inner-city neighborhoods, citing huge losses, insurance departments and insurance industry leaders were called upon to expand existing urban plans and create new ones which eventually led to the establishment of FAIR Plans.

Beach and Windstorm Plans had a different genesis. Just as Hurricane Katrina drew attention in 2005 to the weaknesses of the federal government’s flood insurance program and to the private insurance industry’s exposure to loss along the coastline of the Gulf and Atlantic states in what appears to be a new period of increased hurricane activity, so Hurricanes Camille (1969) and Celia (1970) drew attention to the industry’s exposure 35 years ago. This led to pooling arrangements in coastal sections of seven southern states. Four of these states provide coverage for wind and hail damage only, hence the term Beach and Windstorm Plans.

FAIR Plan: As of November 2008, 32 states and the District of Columbia had property insurance plans known as FAIR, an acronym for Fair Access to Insurance Requirements Plans. The concept of FAIR Plans was established following passage by Congress of the Housing and Urban Development Act of 1968, a measure designed to address the conditions that led to the 1967 urban riots. This legislation made federal riot reinsurance available to those states that instituted such property insurance pools. One of the plans, Arkansas’ Rural Risk Plan, was created in 1988 to provide a market for property insurance in rural areas where fire protection is poor or nonexistent. Mississippi’s Rural Plan which offered fire, extended coverage and vandalism, see below, was expanded to cover the entire state in 2003. (The state’s windstorm pool offers wind and hail coverage in coastal counties to the Plan’s policyholders.) Georgia's FAIR Plan also provides windstorm and hail coverage in coastal counties as do Plans in Massachusetts and New York. In most states where FAIR Plans are in operation, they are mandatory, see below for a list of jurisdictions.

Originally, most plans provided protection only for "perils” outlined in the federal statute: fire, extended coverage (which includes windstorm and hail damage) and vandalism and malicious mischief. Coverage for fire is available as a “stand-alone” policy. Almost half the Plans now offer some form of homeowners insurance policy – homeowners insurance always includes liability coverage. In New Jersey insurers can now use "wraparound" policies to turn FAIR Plan policies, which provide limited coverage, into typical homeowners policies. Some FAIR Plans also offer commercial package policies and some miscellaneous optional coverages such as crime, earthquake and sprinkler leakage. But while broader coverage responds to homeowners needs in one respect, it also pushes up the cost of coverage.

In theory, rates for FAIR Plan coverage were to be set at break-even level. In practice, in most states, there is a subsidy so that rates are lower than they would be in the voluntary market for the same level of risk. FAIR Plans, like many other residual market programs, historically have lost money over the long term, although in a specific year they may be profitable. To cover losses, FAIR Plan members are assessed according to their share of the voluntary property market. Losses are then passed on to policyholders in the plan in the form of higher rates and in some states to policyholders in the voluntary market as well. Some states prohibit the consideration of residual market results when setting rates in the voluntary market. A number of states allow insurers to recoup losses through rate surcharges, which are itemized on a policyholder’s premium bill.

Owners of properties failing to meet basic levels of safety, typically older houses and commercial establishments, may be required to make improvements as a condition for obtaining insurance. Such improvements may include upgrading the electrical wiring, heating and plumbing and ensuring that the roof is sound, for example. Where deficiencies are not remedied, FAIR Plan administrators may deny insurance as long as hazards are unrelated to the neighborhood location or to hazardous environmental conditions beyond the applicant's control, such as being located adjacent to a fireworks factory.

In all states except California, residents in any part of the state can apply for insurance through the FAIR Plan as long as they meet Plan criteria. In California, applicants for fire coverage must live in areas specifically designated by the insurance commissioner. These include not only urban communities and some entire counties but also certain areas that are prone to wildfires.

Beach and Windstorm Insurance Plans: Counterparts to the FAIR Plans are Beach and Windstorm Insurance Plans, operated by property insurers in states along the Atlantic and Gulf Coasts to assure that insurance is available for both residences and commercial properties against damage from hurricanes and other windstorms. Established between 1969 and 1971, Beach and Windstorm Plans operate in a manner similar to FAIR Plans, except that properties must be located in a designated area to be eligible for insurance under the Plans.

In 2001 there were seven pools, but Florida’s windstorm pool merged with the joint underwriting association in 2002 to create a new type of residual market entity, see below. In a similar move in 2003, Louisiana merged its FAIR Plan with its coastal pool in 2003. The Plans are mandatory in all of these states with the exception of Alabama. (In addition, hail and windstorm coverage for homes in coastal counties is available through some FAIR Plans, see above and the WindMap in New Jersey.) Windstorm Plans in Mississippi, South Carolina and Texas offer only wind and hail coverage. Plans in Alabama and North Carolina offer coverage for fire as well. In South Carolina, since January 2008, Plan policyholders must buy flood insurance also.

To encourage insurers to offer coverage on a voluntary basis to properties in Beach and Windstorm Plan areas, these Plans allow for a company to "buy out" of the Plan by providing insurance in the pool area equal to its share of the voluntary market. In Texas, however, buyouts are limited to 80 percent of a company's share in the Windstorm Plan market, so that some of the potential burden of insuring the least desirable risks is spread over all companies offering property insurance in the state.

Property owners who live in areas covered by Beach and Windstorm Plans may be insured for windstorm losses by the Plan or by an individual insurance company. If an insurer has accepted all the windstorm risk it is prepared to assume, an applicant for homeowners insurance may purchase a policy that excludes windstorm coverage from the homeowner's insurance company and pay a separate premium for windstorm coverage to the Plan. In the states whose Beach Plans offer fire coverage, a policyholder may purchase a basic fire policy from the Plan, or in some states a homeowner's policy that offers more comprehensive protection, including liability coverages. Where there is flood damage and the policyholder is insured through the federal government's National Flood Insurance Program, the policyholder's homeowners insurance broker or agent generally coordinates the claim settlement process.

One disadvantage of Beach and Windstorm Plans, and the National Flood Insurance Program, is that the availability of insurance encourages development of coastal areas where construction otherwise would not be feasible and where tax money must be spent to protect against continuous erosion to preserve the property, see also Catastrophes report.

In the past there was a clear delineation between coastal and urban plans with coastal properties insured under Beach and Windstorm Plans, and urban properties under FAIR Plans. Increasingly, the distinctions are blurring. FAIR Plans are acting as an insurer of last resort for residents who live in shoreline communities in states that do not have a Beach and Windstorm Plan, such as New York State. Beach and Windstorm Plans in some states are being merged with FAIR Plans or joint underwriting associations, as in Florida and Louisiana, or are administering new FAIR Plans, as in Texas. As a result, it is difficult to compare the number of properties insured under any Plan with numbers from earlier years. FAIR Plans have almost doubled in size, pushed up in large part by these mergers and the increase in coastal properties in such states as New York and Massachusetts, but also by more stringent underwriting standards on the part of insurers in the voluntary market.

Residual Market Plan Mergers: The first state to decide that one entity should run its residual property insurance market was Florida. In 2002 the state’s two residual market organizations, the JUA and the Florida Windstorm Underwriting Association, merged to become the Citizens' Property Insurance Corporation (CPIC). The JUA was established by the Florida legislature in 1992, following Hurricane Andrew, to provide homeowners insurance to those unable to find coverage in the voluntary market. The Florida Windstorm Underwriting Association (FWUA) was formed in 1970. (Homeowners continued to purchase fire, theft and other homeowners coverages from a regular insurance company.) Over its more than 30 years of operation, the windstorm pool grew in geographical size as well as in the number of property owners it insured. Windstorm coverage is now available from the pool for part or all of 29 of Florida's 35 coastal counties.

The Florida CPIC, known as Citizens, has a tax-exempt status. This feature enables it to finance loss payments in the event of a major disaster by issuing tax-exempt bonds that carry low interest rates, thus reducing financing costs over the years by hundreds of millions of dollars.

The enabling legislation required that Citizens reduce its probable maximum loss, the greatest loss it is expected to sustain, by 25 percent by February 2007 and by 50 percent in 2012. For this to happen, Citizens had to shrink rather than grow. However, legislation passed in 2007 spurred its growth in order to reduce the cost of insurance and increase its availability for the state’s property owners. In addition, legislation that required its rates to be actuarially sound has been put on hold until 2009. Nevertheless, the state is succeeding in gradually reducing the size of the residual market through financial arrangements with private insurance companies, mostly small Florida- based companies, to assume batches of Citizens policyholders.

In an effort to reduce its potential exposure to loss, Citizens offers policyholders financial incentives to invest in hurricane-resistant home improvements. Premium discounts range from 3 percent for roof gable and garage door bracing to as much as 18 percent for improvements that reduce the likelihood of materials such as glass shattering when hit with flying debris.

At one time, rates for wind risk were based on factors associated with fire and other hazards, as if the coverage were part of a regular homeowners policy. To rate wind risk more accurately, the Florida windstorm pool reclassified each home based on risk of wind damage, applying premium credits for features that decreased the likelihood of damage, such as shutters, and surcharges for those that increased it. For example, two-story structures are more vulnerable to damage than one-story dwellings. Citizens’ rates are based on the revised classification.

In Louisiana, following Florida’s model, the FAIR Plan and the Coastal Plan became the Louisiana Citizens Property Insurance Corporation in 2004. The enabling legislation required the new plan’s rates to be actuarially sound and to be 10 percent higher than average rates charged in the voluntary market to ensure that it is truly a market of last resort. (In 2007, however, legislation was passed that allowed the surcharge to be dropped in some coastal areas where there was little competition and the pool had 50 percent or more of the market.) The enabling legislation also set up a system allowing funds to be set aside tax free for catastrophes and allowed insurers to recoup losses incurred by the Plan from all property insurance policyholders in the state. Lack of a recoupment process is one reason why so many insurers had withdrawn from the state, leaving it with only 20 companies competing for homeowners insurance business before the law was revamped. Other measures passed in 2007, including financial incentives, were designed to shrink the size of the pool by encouraging more insurers to enter the marketplace and to take over pool policies, see report on Catastrophes. These measures have been successful in returning the pool to its pre-Hurricane Katrina size.

Workers Compensation Assigned Risk Plans and Pools: The mechanism used to handle the residual market varies from state to state. In the four remaining states with a monopolistic state workers compensation fund (West Virginia switched to a competitive market in July 2008), all businesses are insured through that fund. In most states with a competitive state fund (an entity that competes for business with private insurers), the fund accepts all risks rejected by the voluntary market, thus eliminating the need for assigned risk plans. In states without a competitive fund, insurers may be assigned applicants based on their market share and service those employers as they would employers that came to them through the voluntary market, through a system known as direct assignment. They may also participate in the residual market through a reinsurance pooling arrangement.

In most states, between 80 and 90 percent of residual market plan business is assigned to the pool. In a few states the pool is the only option. The pool hires servicing companies, generally insurers, which receive a fee to issue policies and settle claims. All insurers doing business in the state that elect to participate in the pool rather than direct assignment share in the profits and losses in accordance with their share of the state's workers compensation market. In some states, the assigned risk plan is administered by the National Council on Compensation Insurance, which also administers the largest of the pooling arrangements, the National Workers Compensation Pool (NWCP). The term "national" is a misnomer. The NWCP shares some administrative functions across state lines but operates a separate pool in each of the states for which it is responsible.

There are also other mechanisms for dealing with the residual market. Florida, for example, established a JUA to serve the workers compensation residual market. Unlike assigned risk plans where insurers subsidize the plan, JUAs are supported by assessments on self-insured employers and employer groups as well as traditional insurers. Minnesota is an exception to the competitive fund rule. The state has a competitive fund but also has an assigned risk plan. The competitive fund is assessed, based on its market share, like any other workers compensation insurer doing business in the state. Several other states have residual market programs in which the state fund shares in the financial results.

Before a firm can be offered workers compensation coverage through the assigned risk plan, in most states the applicant must have been rejected in the voluntary market by two insurers. The firm's application for coverage is sent directly to the plan's administrator, which either assigns the business to one of the direct assignment insurers or insures it in the pool.

Workers Compensation Second Injury Funds: Second injury funds were created to encourage businesses to hire workers who are physically handicapped by congenital defects or the residual effects of an accident or illness but due to other laws that now protect the physically handicapped worker, such as the Americans With Disabilities Act, some states are disbanding their fund.

Second injury funds have played an important societal role. Before the protection afforded by the American Disabilities Act such workers might have had difficulty finding jobs because if they were injured in the workplace, the employer would have been liable for compensation for the total disability, not just the work-related injury. Where second injury funds still exist, in most states, if a person already handicapped in some way suffers an injury, the current employer's insurance company pays only the benefits associated with that workplace injury. The second injury fund pays the difference between the workplace injury benefits and those that the worker would receive for the total disablement—the initial handicap combined with the subsequent injury on the job. The funds operate on a pay-as-you-go basis instead of establishing reserves for liabilities anticipated as a result of claims that have been transferred to them.

Initially, second injury funds were limited to cases where the combined injury resulted in permanent and total disability. In addition, to be compensated, an employer had to prove that he or she was aware of the worker's preexisting condition at the time that person was hired. However, many states relaxed these rules. As a result of this broadened eligibility, fund obligations in some states grew dramatically and some accrued substantial unfunded liabilities.

Following the passage of the federal Americans with Disabilities Act, which provides protection for disabled workers similar to second injury funds, states began reassessing the need for such funds and many passed legislation abolishing their second injury funds. Second injury funds receive money from insurance companies and employers as well as from legislative appropriations. Insurance company payments may be based on a percentage of total compensation paid, premiums collected or the nature of the specific injury. The second injury funds may be administered by the state Workers Compensation Commission, Industrial Board or Department of Labor.

Nuclear Energy and Other Voluntary Pools: The use of nuclear fission for peaceful purposes brought with it a demand for limits of liability insurance significantly higher than individual companies alone were able to provide. The nuclear energy pools were voluntarily organized by the insurance industry in response to this demand. There are three nuclear energy pools in the United States today that provide liability and property damage coverage for nuclear reactors and fabricators and transporters of reactor fuels. Each pool issues identical policies and reinsures its business with the other two pool members. In addition, the pools purchase reinsurance from Lloyd's and other alien (not domiciled in the United States) insurers. Policies are issued in the name of the pool, showing each member company's participation.

Reinsurance Pools: There are two basic types of reinsurance pools. In the first, an individual member company underwrites the risks and issues the policy to the policyholder. The member then automatically reinsures the risk with the pool in accordance with the pooling agreement. In the second type, the pool functions as a general reinsurer, underwriting reinsurance policies for primary companies regardless of whether they are members of the pool. Examples of reinsurance pools include the Registered Mail Insurance Association, which covers currency, securities and other valuables transported by registered and first-class mail, and shippers of property transported by armored cars; and the Excess Bond Reinsurance Association, which offers fidelity coverage (protection against employee fraud) to commercial banks.

State Funds and Other Pooling Arrangement: Unsatisfied Judgment Funds exist in three states—Michigan, New York and North Dakota—to compensate victims of auto accidents (with the exception of uninsured vehicle owners) who cannot collect the damages awarded them, generally because the defendant had no insurance or assets with which to pay the judgment.

Unsatisfied Judgment Funds are administered differently, depending on the state. In two states—Michigan and South Dakota—they are administered by the state and in New York by insurers alone. New Jersey began to phase out its fund in 2003. Like residual markets, these funds are partially subsidized or totally paid for through assessments against insurance companies. To be eligible for state funds, accident victims must be residents of the state and have been injured in an accident that occurred within state boundaries. Out-of-state residents usually are eligible if their home state provides a similar program. There are few standard provisions. Each state has its own set of rules which determine deductibles, maximum compensation available, minimum size of losses covered, coverage for property damage and so on.

Pools have been set up by states to insure medically high-risk individuals who often have difficulty obtaining health insurance in the voluntary market. Most are similar to JUAs and FAIR Plans in that they assess insurance companies for claim costs in excess of the premiums collected. Most set premiums at a level that is lower than the price these individuals would have to pay if they could obtain health insurance through normal channels.
© Insurance Information Institute, Inc. - ALL RIGHTS RESERVED
INSURANCE PROVIDED BY FAIR PLANS BY STATE, 2007 (1)


 
Number of  
 
 

State
Habitational policies
Commercial policies
Exposure ($000)
Direct written premiums ($000)
California177,83811,034$48,095,190 $76,867
Connecticut 4,207232746,1214,464
Delaware2,679101281,229789
D.C.733180206,384818
Florida (CPIC) (2)1,457,64282,875485,073,2313,717,970
Georgia (3)26,5902,0994,402,70918,368
Illinois8,235169642,2446,048
Indiana3,17098195,8231,646
Iowa1,1274575,902722
Kansas10,09568449,6654,557
Kentucky11,633761207,9737,126
Maryland7,210146630,2832,894
Massachusetts233,71287079,533,541303,939
Michigan55,4211,6987,383,50856,659
Minnesota           8,361 31,575,3946,085
Mississippi12,789(4)730,2138,422
Missouri7,685450374,1742,755
New Jersey37,2841,3304,378,94117,279
New Mexico11,983365650,3173,656
New York (3)59,9206,62813,487,46535,280
Ohio49,9661,1249,091,98425,781
Oregon3,664159280,5631,678
Pennsylvania33,2462,3401,890,14211,471
Rhode Island20,9841744,941,89625,337
Texas125,242(4)15,538,48473,058
Virginia35,7158283,896,82015,121
Washington824427,116157
West Virginia1,11910742,355721
Wisconsin3,920125NA1,713
Total     2,412,252   114,053 $684,829,667$4,431,381
(1) Does not include the FAIR Plans of Arkansas, Hawaii, North Carolina and Louisiana Citizens.
(2) Citizens Property Insurance Corporation, which combined the FAIR and Beach Plans.
(3) Includes a wind and hail option for any dwelling including those in coastal communities.
(4) The Mississippi and Texas FAIR Plans do not offer a commercial policy.

NA=Data not available.

Source: Property Insurance Plans Service Office (PIPSO).

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