State insurance programs serve as critical safety nets. When residents struggle to obtain coverage from private insurers, these programs step in. Private insurers can find a different type of opportunity when willing to take the risk.
WaterStreet Company empowers insurers to leverage next-generation technology for rapid growth and greater market share.
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What is a FAIR Plan?
State insurance programs are commonly known as FAIR Plans, which stands for Fair Access to Insurance Requirements.
FAIR Plans are offered in each state, but not all states participate in takeout programs regularly. When a state experiences a sudden catastrophe, such as a derecho, the state program may step in. Texas, Louisiana, and Florida regularly offer takeouts through their FAIR Plans.
These plans offer coverage options for properties that private insurers typically avoid due to higher risks. Natural disasters and property insurance costs are on the rise, leading many states to expand these programs to meet growing demand.
Why States Offer FAIR Plans
- FAIR Plans make sure every property owner has access to basic insurance coverage. This is especially important in high-risk areas prone to natural disasters such as hurricanes, floods, or wildfires.
- Without these state-backed programs, many homeowners and businesses would struggle to find coverage, putting them at serious financial risk.
- By stepping in as insurers of last resort, state programs help stabilize the insurance market. They provide access to essential coverage and protect property owners from financial devastation.
Opportunities with Private Insurer Takeouts
A “takeout” is when a private insurance company acquires policies from a state-backed insurance program.
For example, Florida provides state-backed insurance through the program, Citizens. Private insurers can apply to takeout policies with Citizens in Florida, transitioning these policies back into private insurance coverage.
Why Insurers Participate
Private insurers can grow their audience quickly by participating in takeouts.
Insurers that participate in takeouts gain access to a large pool of pre-vetted, high-risk customers. Though these policies may present higher risks, they also offer insurers a chance to diversify their portfolios and increase market share.
The goal of each state’s FAIR Plan is to transition policyholders from state-managed plans back into the private insurance market. These programs are important for high-risk property owners, but they place a heavy burden on each state. They are used only until private insurers can provide coverage. Takeouts reduce the burden on state programs while enabling private insurers to expand their customer base.
Startup Insurers and Takeouts
Startup insurers especially benefit when participating in takeouts.
By acquiring existing policies from state insurance programs, startups can rapidly build a customer base without incurring high marketing costs. This strategy offers reliable premium revenue, which is essential for startups in the early stages.
Takeouts also provide startups with an opportunity to demonstrate risk management capabilities, which can help build credibility and attract further investments.
State Insurance Programs
| State | Program Name | Website URL |
|---|---|---|
| Alabama | Alabama Insurance Underwriting Association | https://www.aiua.org/ |
| California | California FAIR Plan Association | https://www.cfpnet.com/ |
| Connecticut | Connecticut FAIR Plan | https://www.ctfairplan.com/ |
| Delaware | Delaware FAIR Plan | https://www.defairplan.com/ |
| District of Columbia | District of Columbia Property Insurance Facility | https://www.dcpif.org/ |
| Florida | Citizens Property Insurance Corporation | https://www.citizensfla.com/ |
| Georgia | Georgia Underwriting Association | https://www.georgiaunderwriting.com/ |
| Hawaii | Hawaii Property Insurance Association | https://www.hpiaplan.com/ |
| Illinois | Illinois FAIR Plan Association | https://www.illinoisfairplan.com/ |
| Indiana | Indiana Basic Property Insurance Underwriting Association | https://www.ibpia.com/ |
| Iowa | Iowa FAIR Plan Association | https://www.iowafairplan.com/ |
| Kansas | Kansas FAIR Plan | https://www.ksfairplan.com/ |
| Kentucky | Kentucky FAIR Plan Reinsurance Association | https://www.kyfairplan.com/ |
| Louisiana | Louisiana Citizens Property Insurance Corporation | https://www.lacitizens.com/ |
| Maryland | Maryland Joint Insurance Association | https://www.mdjia.org/ |
| Massachusetts | Massachusetts Property Insurance Underwriting Association | https://www.mpiua.com/ |
| Michigan | Michigan Basic Property Insurance Association | https://www.mbpia.com/ |
| Minnesota | Minnesota FAIR Plan | https://www.mnfairplan.org/ |
| Mississippi | Mississippi Windstorm Underwriting Association | https://www.msplans.com/ |
| Missouri | Missouri Property Insurance Placement Facility | https://www.mpiua.org/ |
| New Jersey | New Jersey Insurance Underwriting Association | https://www.njiua.org/ |
| New Mexico | New Mexico Property Insurance Program | https://www.nmpropertyinsurance.com/ |
| New York | New York Property Insurance Underwriting Association | https://www.nypiua.com/ |
| North Carolina | North Carolina Joint Underwriting Association | https://www.ncjua-nciua.org/ |
| Ohio | Ohio FAIR Plan Underwriting Association | https://www.ohiofairplan.com/ |
| Oregon | Oregon FAIR Plan Association | https://www.orfairplan.com/ |
| Pennsylvania | Insurance Placement Facility of Pennsylvania | https://www.insurance.pa.gov/ |
| Rhode Island | Rhode Island Joint Reinsurance Association | https://www.rijra.com/ |
| South Carolina | South Carolina Wind and Hail Underwriting Association | https://www.scwind.com/ |
| Texas | Texas FAIR Plan Association | https://www.texasfairplan.org/ |
| Virginia | Virginia Property Insurance Association | https://www.vpia.com/ |
| Washington | Washington FAIR Plan | https://www.wafairplan.com/ |
| West Virginia | West Virginia Essential Property Insurance Association | https://www.wvepia.com/ |
| Wisconsin | Wisconsin Insurance Plan | https://www.wisinsplan.com/ |
WaterStreet Company & Takeouts
As the frequency and severity of natural disasters increase, state insurance programs are likely to expand.
Here at WaterStreet Company, we have extensive experience supporting insurers through takeouts. In Florida alone, we have successfully supported our clients in over 15 Citizens takeouts since 2005.
Reach out to WaterStreet Company today to request a consultation and demo.
