A new study from the Insurance Research Council concludes that state-run residual markets have unintentionally provided the means for development in vulnerable coastal areas while some plans face an increasing risk of insolvency.

The study provides a detailed look at the residual market plans in Alabama, Florida, Louisiana, Mississippi, North Carolina, South Carolina and Texas and is meant to serve as a reference for public policy regarding coastal homeowners insurance markets, the IRC said.

Although the programs were created to be markets of last resort with actuarially sound rates, they have grown to become “viewed as tools for promoting economic development in coastal areas and providing low-cost insurance,” the study stated. “As these residual markets grew, prices in the voluntary market were suppressed, and the gap between demand and supply widened as insurers were willing to insure fewer risks using artificially low rates.”