The devastation caused by Hurricanes Helene and Milton has sharpened concerns about the financial stability of state-run insurance plans and the escalating climate risks they are taking on.
Increasingly intense hurricanes, wildfires and other climate disasters have forced these so-called insurers of last resort into a role typically assumed by the private sector as the primary insurer within their borders. This has left these backstop insurers holding more risky policies for property in vulnerable locations.
And lawmakers and finance experts fear these state programs might not be able to carry that burden for much longer, looking toward the federal government to step in to deal with the rising costs of these disasters.
“There is a sense that there might need to be some broader response here than just state-level programs,” said Thomas Zemetis, a director and analytical lead at S&P Global Ratings with expertise in public finance. “It seems that some of that is coming forth in the federal view and the lens to say, ‘Do we need something that’s more broadly supportive as these risks continue to rise and there’s the increased exits or reduction in policy coverage at an affordable level?'”
