Insurance Supervision and Regulation of Climate-Related Risks (June 2023)
_____________________________________________________________________________
FEDERAL INSURANCE OFFICE, U.S. DEPARTMENT OF THE TREASURY
39
residual markets.
177
Residual markets vary in scope, sometimes limiting coverage to narrowly
defined perils.
178
For example, California’s FAIR plan has generally provided “fire only”
premises coverage. While California’s Insurance Commissioner has sought to include a more
comprehensive option in the state’s FAIR plan, which might expand access and thereby
potentially lower premiums, the president of the FAIR plan has stated this change would lead to
higher premiums and would encourage more private insurers to exit the market.
179
After decreasing in the 2010s, more recently the number of policies and amount of premiums
within residual markets have climbed.
180
For example, the California FAIR plan showed a 96
percent increase in the number of property policies (from 126,854 to 248,361) between April
2018 and December 2021, an increase that likely would have been higher had the California
Department of Insurance not placed a moratorium on non-renewals in certain wildfire-affected
areas.
181
The Florida Citizen Property Insurance Corporation, Florida’s residual insurer, has
seen an increase in policy counts from approximately 420,000 reported in June 2019 to over
1,272,815 in April 2023.
182
The number of policyholders in Louisiana’s residual market, the
Louisiana Citizens Property Insurance Corporation, has risen from 47,093 policies in 2021 to
154,507 in 2022, causing the corporation to seek and obtain a 63 percent rate increase.
183
The
Texas Windstorm Insurance Association, the Texas residual insurer for the 14 coastal counties
and part of Harris County that provides wind and hail coverage for residential and commercial
177
See, e.g., “Who We Are,” (Florida) Citizens Property Insurance Corporation, https://www.citizensfla.com/who-
we-are; “Company Overview,” Louisiana Citizens Property Insurance Corporation (Louisiana Citizens),
https://www.lacitizens.com/AboutUs/CompanyOverview.
178
Property Insurance Plans Service Office, PIPSO Reports (June 2022), 4, available at pipso.com/publications/.
179
See, e.g., California Department of Insurance, “Court Upholds Insurance Commissioner Lara’s Order to Expand
FAIR Plan ‘Last Resort’ Coverage to Better Protect Homeowners,” news release, July 20, 2021,
http://www.insurance.ca.gov/0400-news/0100-press-releases/2021/statement073-2021.cfm; Timothy Darragh,
“California FAIR Plan Says CDI Demands Would Harm Consumers,” AM Best Information Services, July 14, 2022,
https://news.ambest.com/newscontent.aspx?altsrc=108&refnum=242889.
180
See, e.g., “ A Firm Foundation,” III; III, 2021 Insurance Fact Book, 98–100,
https://www.iii.org/sites/default/files/docs/pdf/insurance_factbook_2021.pdf (providing data for 2010–2019);
California Department of Insurance, Data on Insurance Non-Renewals, FAIR Plan, and Surplus Lines (2020),
https://www.insurance.ca.gov/0400-news/0100-press-releases/2021/upload/nr117DataNon-
RenewalsandFAIRPlan12202021.pdf.
181
California Department of Insurance, Operational Assessment Report: California FAIR Plan Association (June 15,
2022), http://www.insurance.ca.gov/0250-insurers/0300-insurers/0400-reports-examination/upload/CFPA-
Operational-Assessment-Report.pdf.
182
“Policies in Force,” (Florida) Citizens Property Insurance Corporation, www.citizensfla.com/policies-in-force.
183
Louisiana Citizens, Annual Statement for 2022 (2023), 350, https://www.lacitizens.com/docs/default-
source/financial-reports-and-statements/2022-annual-statement.pdf?sfvrsn=7264ee03_2; Louisiana Department of
Insurance, “Louisiana Department of Insurance Approves Citizens Rate Increase and Offers Tips for Policyholders,”
news release, October 10, 2022, https://www.ldi.la.gov/news/press-releases/10-10-22-ldi-approves-citizens-rate-
increase-and-offers-tips-for-policyholders. Louisiana Citizens must charge more than private insurers. Id. It
represented less than one percent of direct written premiums in the homeowners multi-peril line in Louisiana in 2021
based on S&P Global data.