State exposure to last-resort property insurers has grown 12-fold over the 16 years ending in 2006, to a whopping $656.7 billion, according to a new economic study by the Insurance Information Institute.

Equally staggering, the number of residential properties insured by these so-called "fair access to insurance requirements" programs has soared 140 percent from 1997 to 2006, the study found.

And the number of commercial properties added to the state's risk has grown even greater in the 1997-2006 period, up almost 300 percent, according to the study.

Florida's exposure, the study said, is the greatest, but it and other states have used the recent, relatively calm hurricane period to reduce liability somewhat.

The study, "Residual Market Property Plans: From Markets of Last Resort to Markets of First Choice," was written by Robert Hartwig, an economist who also serves as the institute's president, and Claire Wilkinson, vice president-Global Issues for the institute. The study is based on data from the Property Insurance Plans Service Office, they said.

According to the survey, property insurers of last resort are housed in these FAIR programs as well as beach and windstorm plans. There are FAIR plans in 32 states and the District of Columbia, while Texas, Mississippi and South Carolina have sizable beach and windstorm plans.

FAIR, beach and windstorm plans are run by state insurance regulators in conjunction with private insurers and basically operate as pools, combining public and private resources to finance economic recovery from accidental losses.

The pool acts as a single insuring entity, and premiums, losses and expenses are shared among pool members in agreed-upon amounts.

"In contrast to the private market, state-run insurers concentrate risks on the state itself--its property owners, business owners, even its drivers, and in some cases the state's taxpayers," Mr. Hartwig and Ms. Wilkinson said in the study.

"While private insurance transfers and spreads risk ensuring that sufficient funds will be available in the event of a loss, state-run plans act as a conduit to pass along their cost to other insurance buyers, even those who have never filed a claim, live nowhere near the coast, and in some cases have no property exposure at all," they said.

The study said states have used what is called the "relatively calm" hurricane seasons of 2006 and 2007, along with state legislative efforts, to reduce the exposure of their state-run property insurers.

That has contributed to either a flattening or a slight decrease in the number of homeowners and businesses purchasing property insurance policies through a state-run insurer since January 2007.

For example, so far in 2008, the Florida Office of Insurance Regulation (OIR) has approved plans to remove 500,000 policies from Florida's state-run plan, the study said.

"Nevertheless, Florida's state-run Citizens Property Insurance Corporation has become the largest homeowners insurer in the Sunshine State," the study said.

In fact, Florida Citizens accounts for the vast majority (68 percent) of the total FAIR plans' exposure to loss, and 60 percent of the total policy count nationwide.

Of the 2.6 million total policies insured by U.S. FAIR plans in 2006, just over 1.5 million were in Florida Citizens. Massachusetts had the next largest number of policies, with 217,056, or 8.5 percent of total policies, according to the institute's study.

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