Which item is identified as an obstacle to wind coverage by GAO?

• A. Adverse selection
• B. Public awareness campaigns for wind risk
• C. Substantial funding for private wind insurers
• D. Wind hazard detection systems

Answer: (A)

Adverse selection is at the heart of the obstacle to wind coverage. When wind risk is highly concentrated in certain areas, higher-risk households are more inclined to buy and keep wind insurance, while lower-risk households may opt out or accept exposure. This skews the insurer’s risk pool toward high-risk policies, pushing premiums up and making coverage harder to price and sustain. GAO identifies this dynamic as an obstacle because it can lead private markets to restrict or withdraw wind coverage in high-risk regions. The other options would either help or inform buyers, reduce losses, or support insurers, thereby easing coverage rather than hindering it.