Natural Catastrophe Insurance Coverage Remains a Challenge for State Programs

Natural catastrophes can adversely affect U.S. residents and businesses by causing extensive property damage. The 2005 hurricanes and other recent natural disasters have had significant effects on the cost of obtaining insurance against such risks, especially in high-risk areas. As private market insurers have raised their premium rates, an increased number of residents have obtained coverage through state-sponsored natural catastrophe programs. In a previous report, GAO identified public policy goals for government involvement in natural catastrophe insurance and applied those goals to potential changes in the federal government's role. To assist Congress as it considers legislative proposals that would increase the federal role in natural catastrophe insurance coverage, Congress asked us to provide a briefing on (1) the current status of key state natural catastrophe insurance programs, and the extent to which the state programs support public policy goals identified in prior GAO reports; (2) the extent to which proposed changes to federal involvement in natural catastrophe insurance support policy goals identified in prior GAO reports; and (3) how natural catastrophe insurance is provided in selected other countries.