Taxpayers for Common Sense has released an issue brief recommending risk-based wildfire insurance rates and stronger mitigation measures to maintain coverage options in California.
According to the organization, wildfire risk presents both safety challenges and long-term fiscal questions for California and the federal government, specifically regarding who ultimately pays when fires damage homes and infrastructure. The issue brief emphasizes that insurance should be priced accurately and paired with serious mitigation efforts so that private capital, rather than taxpayers, bears most of the financial burden from catastrophic losses. Within this framework, reciprocal insurance exchanges are highlighted as tools that keep responsibility close to local communities, reward risk-reducing behavior, and provide lawmakers with a way to strengthen coverage while limiting pressure for future taxpayer-backed bailouts.
Recent industry research indicates that reciprocal insurance exchanges have become a significant part of the U.S. property market. By the end of 2024, 72 companies operating as pure reciprocals wrote approximately $51 billion in direct premiums—around 5% of total U.S. property-casualty volume—and 36 new exchanges were launched between 2017 and 2025. Many of these new entities focus on catastrophe-exposed homeowners business, showing that investors and policyholders are willing to commit capital to member-owned structures that can expand coverage options in riskier regions without expanding government programs or taxpayer exposure.
Reciprocal exchanges allow policyholders (subscribers) to pool funds to cover each other’s losses, with an attorney-in-fact managing operations under full regulatory oversight. Subscribers benefit directly from efficient claims and surplus preservation; therefore, reciprocals emphasize lean operations, wildfire-mitigation incentives, and private capital partnerships instead of taxpayer support. Examples such as Kin’s Florida reciprocal and Tower Hill’s exchange demonstrate how this model attracts new funding to protect high-risk homes while maintaining policyholder control and community resilience through disciplined underwriting and catastrophe management.
Taxpayers for Common Sense is a nonpartisan federal budget watchdog based in Washington, D.C., founded in 1995 as an independent voice for American taxpayers. Organized as a 501(c)(3) nonprofit, it focuses on exposing wasteful federal spending, scrutinizing subsidies, and advancing reforms relying on market signals rather than open-ended government commitments. The group is recognized for its work on earmarks and disaster policy and often collaborates with broad coalitions to promote fiscally conservative approaches to infrastructure, flood and wildfire risk management, and insurance programs.
