REALITY: Florida’s reinsurance catastrophe fund benefits insurance companies by giving them taxpayer-backed reinsurance while providing little relief to consumers for the cost of homeowners insurance.

• State catastrophe funds concentrate risk instead of spreading risk, a fundamental principle of insurance. The Florida fund has $1.8 trillion of insured values (Florida now retains nearly two-thirds of the reinsured property catastrophe risk within its borders). Instead of spreading that risk globally, the Florida fund concentrates that risk within the state and shifts the catastrophe costs from the private insurers to insurance-buying consumers including those not covered by the fund itself. The reality is low-risk policyholders pay for high-risk policyholders.