The Florida Hurricane Catastrophe Fund and Florida CitizensProperty Insurance Corp. have more than $2 trillion in totalexposures, exceeding the exposures of eight other similar stateprograms combined, according to a new report by the GovernmentAccountability Office (GAO).

The report reviewed the status of state natural catastropheinsurance programs in Alabama, California, Florida, Louisiana,Mississippi, North Carolina, New Jersey, South Carolina andTexas.

The GAO found that the insurance programs in Mississippi, Texas,and Florida had the most growth in total exposures from 2005-2009,with increases of 495 percent, 147 percent and 146 percent,respectively.

The report also notes that in 2009, gross written premiums amongstate programs ranged from a high of about $2.2 billion for FloridaCitizens to a low of $10 million in New Jersey.

Additionally, the report reviewed state programs' support ofpublic policy goals identified in prior GAO reports, includingcharging premium rates that reflect the risk of loss.

GAO found that 6 of the 10 states charged rates that do notfully reflect the risk of loss.

In Florida, rates had been legislatively frozen at 2006 levelssince January 1, 2007. But Florida Citizens started phasing inrates that more fully reflect the risk of loss on Jan. 1, 2010, GAOsaid.

The report also found that 7 of 10 state programs are takingsteps to encourage private market participation.

In 2008, more than 385,000 Florida Citizens' policies wereplaced with 14 private market insurers who agreed to assume thepolicies, the report said. But the GAO said there is concernregarding whether some of these insurers are adequately capitalizedto assume the risks.

The report also identifies four proposals contained previouslyin national legislation that would increase the federal role innatural catastrophe insurance.

The proposals include the facilitation of risk transfer fromstates to reinsurance or capital markets, or to the federalgovernment; federal guarantees of state pre and post event bonds; afederal lending facility for qualified state natural catastropheinsurance programs; and a federal reinsurance program.

The GAO concluded that these proposals involve trade-offs thatwould have to be balanced, and explained that while the proposalscould lower premium rates and increase public participation instate natural catastrophe programs, they could also discourageprivate participation and mitigation efforts and expose taxpayersto the potential cost of a state failure to repay its debt.