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Insurer of Last Resort

Trading Term

An insurer of last resort is a state-created entity that provides property coverage to owners who have been declined by private carriers, sometimes called a residual market mechanism. Citizens Property Insurance Corporation in Florida is a prominent example, alongside the Florida Hurricane Catastrophe Fund which supplies subsidized reinsurance to both Citizens and private insurers. When regulators hold premiums below actuarially indicated levels, private capacity tends to withdraw and policy counts migrate toward the residual market, concentrating catastrophe exposure on a public balance sheet.

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