REALITY: Government proposals that transfer risk from insurers to taxpayers won’t reduce the risk or cost, but will diminish the private market and encourage further development in hazardous areas leading to increased risk and cost in the future.

• Spreading the riskof natural catastrophes to the private sector, rather than using debt to finance risk in federal and state insurance programs, is the best long-term solution to addressing catastrophe exposures and cost issues. 

Most states, in fact, embrace this same goal of reducing the size of their state wind programs and residual market mechanisms.  The growth in residual markets in a state often reflects a market that is not permitted to properly spread risk or which does reflect a premium based on risk exposure.