NATURAL DISASTERS: Public Policy Options for Changing the

1,52
MB Federal Role in Natural Catastrophe Insurance

90
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6165
ID United States Government Accountability Office

2007
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Contents

Letter 1

Results in Brief 5

Background 8

Government Natural Catastrophe Insurance Aims to Provide

Affordable Protection but Often Requires Postfunding after Large

Natural Catastrophes 17

Because Many Americans Are Inadequately Insured for Natural

Catastrophes, Federal Programs Play a Significant Role in

Recovery 25

Options for Changing the Federal Role in Natural Catastrophe

Insurance Attempt to Address Market Issues but May Not Limit

Federal Exposure 33

Agency Comments and Our Evaluation 46

Appendixes

Appendix I: Objectives, Scope, and Methodology 49

Appendix II: Selected State Natural Catastrophe Insurance Programs 55

Appendix III: Comments from the National Association of Insurance

Commissioners 79

Appendix IV: GAO Contact and Staff Acknowledgments 81

Related GAO Products 82

Figures Figure 1: Catastrophic Risk in the United States—Earthquake,

Hurricane, Tornado, and Hail 9

Figure 2: Insured Property Value, by County 11

Figure 3: Estimated Federal Disaster Assistance Obligated for

Homeowners and Renters Lacking Adequate Insurance in

Five Gulf Coast States after the 2005 Hurricane

Season 30

Figure 4: Advantages and Disadvantages of Seven Public Policy

Options for Changing the Federal Role in Natural

Catastrophe Insurance 34

Figure 5: Comparison of Selected State Natural Catastrophe

Insurance Programs in 2005 56