In the first instance, the money used to reimburse insurers for the federal share of insured losses comes out of the government’s general revenue. There is no existing fund or other pre-event source for the financing of the backstop.
The Act establishes a post-event financing scheme through which a large portion or potentially all of the backstop’s liabilities are passed on to the broader community of the nation’s property and casualty policyholders. If one thinks of the backstop as reinsurance, then the premium for this reinsurance is paid after the event rather than before it.
12.2 – Discretionary Recoupment
12.5 – Remittance of the Surcharge
12.6 – Timing Issues