State-run beach and windstorm plans in some states provide unintentional incentives for economic development in areas vulnerable to severe wind damage, according to a new study from the Insurance Research Council (IRC).
The study comes just months after a Government Accountability Office (GAO) report that found that most state-run plans do not charge premium rates that reflect the full risk of loss.
Insurance Information Institute (I.I.I.) research and analysis has also found that over the last four decades, state-run property insurers have experienced explosive growth both in terms of the number of policies issued and the exposure value covered.
The combination of burgeoning exposure growth and inability to charge rates that are commensurate with the risk means that a number of residual market property plans in hurricane-exposed states are in a precarious financial situation.
The IRC study focuses on the role of beach and windstorm plans and explains how state-run plans interact with voluntary homeowners insurance markets.
It also describes how each of the five state beach and windstorm plans Ã¢â‚¬“ Alabama, Mississippi, North Carolina, South Carolina and Texas Ã¢â‚¬“ and two state wide plans (Louisiana and Florida) would weather a hurricane catastrophe.