Since 2001 these last-resort insurers has doubled and, over the same five-year span, their total liability for potential claims has increased three-fold, reaching $650 billion. A separate federal flood-insurance program has seen its liability increased by two-thirds since 2001 to more than $1 trillion. As result, much of the risk associated with hurricane coverage is shifting to the broader public and away from private companies and coastal homeowners.
Last-resort companies are set up as associations to write policies that cover hurricane damage from wind, among other standard perils. Any insurer that sells property insurance in the state must also be a member of the association. Yet these carriers don’t have deep financial reserves, leaving other private insurers, and at times taxpayers, to help pay the bill for huge claims.