That’s what reinsurance is for…
Often when a government acts as the insurer of last resort, it does not (have to / choose to / know how to) operate according to actuarial standards. :(((((
But I'm just a guy, I can't really support that statement with details of a government operation -- do you know more?
No expertise on my side either and maybe it is possible that states cannot reinsure or issue catastrophe bonds or do other forms of risk spreading…
Jan 23, 2026 15:42Catastrophic risk is hard but not impossible to manage at the state level because of a lack of diversification. National insurance companies have national all peril reinsurance which is more affordable and available than say, California specific wildfire reinsurance (not generally available).
