Additionally, the report reviewed state programs' support of public policy goals identified in prior GAO reports, including charging premium rates that reflect the risk of loss.

GAO found that 6 of the 10 states charged rates that do not fully reflect the risk of loss.

In Florida, rates had been legislatively frozen at 2006 levels since January 1, 2007. But Florida Citizens started phasing in rates that more fully reflect the risk of loss on Jan. 1, 2010, GAO said.

The report also found that 7 of 10 state programs are taking steps to encourage private market participation.

In 2008, more than 385,000 Florida Citizens' policies were placed with 14 private market insurers who agreed to assume the policies, the report said. But the GAO said there is concern regarding whether some of these insurers are adequately capitalized to assume the risks.

The report also identifies four proposals contained previously in national legislation that would increase the federal role in natural catastrophe insurance.

The proposals include the facilitation of risk transfer from states to reinsurance or capital markets, or to the federal government; federal guarantees of state pre and post event bonds; a federal lending facility for qualified state natural catastrophe insurance programs; and a federal reinsurance program.

The GAO concluded that these proposals involve trade-offs that would have to be balanced, and explained that while the proposals could lower premium rates and increase public participation in state natural catastrophe programs, they could also discourage private participation and mitigation efforts and expose taxpayers to the potential cost of a state failure to repay its debt.