Five years since Hurricane Katrina and with no major hurricane making U.S. landfall in 2010, the assumption might be that the residual property market in hurricane-exposed states would have reduced significantly in size and regained financial equilibrium.

However, this year’s report by the Insurance Information Institute (I.I.I.), like the reports of the last two years, records the ongoing growth in the exposure base of the residual market property insurers along with the still-precarious financial condition of some plans.

According to the newly updated paper, total exposure to loss in the residual market (FAIR and Beach/Windstorm plans) rose from $419.5 billion in 2005 to $703.0 billion in 2009 – an increase of 68 percent – and since 1990 exposure to loss in the plans has surged by 1,184 percent.

Arguably many of the plans have become home for the most highly exposed, wind-only risks – in other words the least attractive types of business. In some cases, this has left plans with huge concentrations of risk, the I.I.I. study notes.

Consequently, it is not surprising that many of the plans experience severe financial difficulties in certain years.

Further, because most of these plans do not charge rates that reflect the true cost of risk, demand for the coverage they provide remains high.

As long as the plans continue to grow, state finances will remain under threat and ultimately taxpayers, many of whom live nowhere near the coast, will continue to face the prospect of increased assessments in the years ahead, according to the I.I.I.