NU Online News Service, Nov. 18, 3:51 p.m. EDT
The U.S. residual property insurance marketplace continued to grow despite the economic downturn, according to a report issued by the Insurance Information Institute.
The report prepared by I.I.I. President Robert P. Hartwig and Claire Wilkinson, I.I.I.'s vice president of global issues, said that the residual, shared or involuntary market programs "make basic insurance coverage more readily available."
The report, titled "Residual Market Property Plans: From Markets of Last Resort to Markets of First Choice," found that the exposure to loss is down slightly from its high point in 2007 when it stood at $772 billion, to $703 billion in 2009. That number is up slightly from 2008, when the exposure dropped to $696 billion.
However, since 1990, the residual market has shown steady growth, from $55 billion in 1990 to the excess of $700 billion as of 2009. The market took its most significant jump in 2006, after Hurricanes Katrina, Rita and Wilma in 2005, going from $420 billion to $657 billion.
This growth in the residual market comes "despite a collapse in the housing sector that has brought development in many catastrophe-prone areas to a near standstill," I.I.I. said in a statement.
Comparing FAIR (Fair Access to Insurance Requirements) Plans and Beach Plans earned premium as a percentage to the overall property market, the top five states are Florida, Massachusetts, Louisiana, Rhode Island and Texas.
Florida has the highest percentage at 13 percent in 2009, growing from more than 11 percent in 2002.
Massachusetts was second at 8 percent, growing from close to 4 percent in 2002.
Louisiana, the third largest percentage, came in at 6.5 percent, growing from 4 percent in 2002.
Rounding out the top five, Rhode Island stood at 5 percent, growing from 2 percent in 2002, and Texas, with its Texas Windstorm Insurance Association, came in at 3 percent, growing from slightly more than 1 percent in 2002.
Looking into the future, as an indicator of potential growth in these plans, Florida and Texas are projected to see their state's population exceed an increase of 12 million residents in each state by 2030. The U.S., as a whole, is expected to have a population increase of 82 million during that period.
Turning to total value of insured coastal exposure, the report says that in 2007, Florida and New York had the highest exposure value, at $2.5 trillion and $2.4 trillion, respectively. Texas is third at $895 billion. Massachusetts and New Jersey round out the top five at $773 billion and $636 billion, respectively.
Florida has the highest residential coastal exposure at $1.24 trillion, as of 2007, while New York is a distant second at $660 billion. Texas is third at $388 billion.
On the commercial side, however, New York tops Florida with $1.7 trillion in exposure compared to Florida's $1.22 trillion. Texas is third at $507 billion.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.