Insurance Information InstituteResidual MarketProperty Plans: From Markets of Last Resort to Markets of FirstChoice

Florida's Citizens Property InsuranceCorp., the largest property insurer of last resort in the U.S.,provides insurance to residential and commercial property ownersunable to purchase coverage in the standard market. Yet FloridaCitizens saw the number of its total policies in force drop to 1.2million at year-end 2009, down 14 percent from 1.4 million atyear-end 2008. Meanwhile, Louisiana Citizens Property InsuranceCorp., the fourth largest state-run property insurer of last resortin the U.S. in terms of total policies in force behind Texas andMassachusetts, has seen an even more dramatic reduction in itstotal policy count. Louisiana Citizens had about 165,000 policiesin force in June 2008, a figure that dropped to 127,000 policies asof June 2010, a reduction of around 40 percent.

"However, this year's report by the Insurance InformationInstitute, like the reports of the last two years, records theongoing growth in the exposure base of the residual market propertyinsurers along with the still-precarious financial condition ofsome plans. This growth comes despite a collapse in the housingsector that has brought development in many catastrophe-prone areasto a near standstill," write the report's co-authors, Dr. RobertHartwig, president of the I.I.I. and an economist, and ClaireWilkinson, vice president of Global Issues at the I.I.I.