High-risk markets

What makes a market "high-risk"

"High-risk market" isn't a legal term with a fixed threshold. It describes what happens when private insurers decide the wind, hurricane, or wildfire exposure in an area is too costly to price profitably, and they stop bidding on new business there. If your community sits on the Gulf Coast or in a California wildfire zone, your board has probably already felt the practical version of this: fewer insurers quote the master policy renewal, and the ones that do come back with higher premiums, lower limits, or both.

California's own insurance regulator has described the retreat directly: its FAIR Plan, the state's coverage of last resort, grew from roughly 140,000 policies in 2015 to about 4 percent of the entire state's residential market by 2023, as private insurers pulled back from wildfire-distressed areas. Whether your specific area is currently considered high-risk, and by how much, changes year to year. Ask your broker where your community stands today, not where it stood at the last renewal.

Where high-risk coverage actually comes from

When no standard, licensed insurer will write your master policy, a broker typically has two paths left. The first is the excess and surplus lines market, coverage placed with an insurer that isn't licensed in your state but is legally permitted to write there because the licensed market won't.

"Excess and surplus (E&S) lines insurance is any type of coverage that is placed with a nonadmitted insurer (an insurer not licensed to do business in a given state) but legally allowed to provide coverage under certain conditions."

Source: IRMI Glossary of Insurance and Risk Management Terms, International Risk Management Institute

The second path is a state-created insurer of last resort: Florida's Citizens Property Insurance Corporation, or California's FAIR Plan, both created specifically to write coverage the private market won't touch. The FAIR Plan is explicitly available to homeowners associations and condo associations, not just individual homeowners, when the normal market has nothing to offer. But a FAIR Plan dwelling policy is a named-peril policy: it pays only for the specific causes of loss it lists, not an all-risk policy. A board that treats it as a full substitute for standard coverage, without adding flood, earthquake, or other supplemental protection, is leaving a real gap. Confirm exactly what your state's last-resort insurer covers and doesn't.

What this means for your board

The numbers back up what boards are feeling. In a Community Associations Institute member survey of nearly 900 respondents, over 90 percent reported a premium increase at their most recent renewal, and 11 percent had coverage canceled or not renewed outright. In Florida specifically, the average residential property insurance premium reached $3,023 in early 2025, a 34 percent increase from late 2022, well above general inflation over the same stretch.

That said, a high-risk market isn't a one-way ratchet. Florida reinsurance pricing was reported down 22.8 percent at the June 2025 renewal, credited in part to 2022 legislative reforms, and Citizens has been shedding policies back to private insurers as the market stabilizes. A board that assumes premiums only ever go up, or that its state's insurer of last resort is a permanent fixture, is working from an outdated picture either way.

Practically, this means starting your renewal shopping earlier than you think you need to, understanding how nonrenewal notices work in your state, and reading up on rising premiums before you build next year's budget.