Summary: Fair Access to Insurance Requirements Plans, authorized under Federal law, are privately-owned organizations which operate like private insurance companies but are established primarily by State legislation. They provide property insurance to areas where the insurance industry will not provide coverage. The Federal Riot Reinsurance Program provides private insurance companies who participate in Fair Access Plans with riot reinsurance to protect them against excess losses during riots.
Arson-for-profit is considered a serious problem in the plans, as well as in private insurance. Factors cited as contributing to the problem were: inadequate investigations of arson cases; overinsurance of property, exceeding market value; and provision of insurance coverage to almost anyone requesting it. The amount of coverage given to property owners varies with the plans--some base it on market value but some provide any amount requested. The plans can refuse to insure for the full amount requested, but three of nine visited do not. Plans may refuse coverage, but reasons for doing so are limited. Depreciation is considered in paying claims but, in some States, deterioration is not considered in settlements for total property losses.
