Restoring Competitive Property Insurance Availability Act
- Bill Number
- H.R. 1070
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-02-06: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-06-30T14:16:17Z
AI-Generated Summary
Purpose
The "Restoring Competitive Property Insurance Availability Act" (H.R. 1070) aims to encourage insurance companies to provide real property insurance in areas affected by federally declared disasters by offering them a tax break. This is intended to improve insurance availability and affordability in disaster-prone regions, helping homeowners and businesses recover more effectively after events like hurricanes or floods.
Key Provisions
- Tax Exclusion for Insurance Income: Adds a new section (Section 836) to the Internal Revenue Code (IRC), excluding "qualified real property insurance income" from an insurance company's gross income (the total income subject to tax) during a "recovery period."
- Qualified Income Defined: This is the excess of premiums (payments from policyholders) received for real property insurance in a disaster area over the deductions (business expenses) properly linked to those premiums.
- Real Property Insurance: Covers risks to buildings and land; it also includes personal property (like furniture or appliances) if insured under the same policy and located on the real property.
- Who Qualifies: Applies to "specified insurance companies," which are non-life insurance providers that offered real property insurance in the disaster area right before the disaster started.
- Recovery Period: The first five taxable years after the "incident date" (the start date of the disaster as declared by the federal government).
- Disaster Area: Uses the existing definition from IRC Section 7508A(d)(3), referring to areas designated by the President as needing federal disaster assistance.
- Effective Date: Applies to disasters with an incident date after December 31, 2024.
Significant Changes to Existing Law
- Introduces a new tax exclusion specifically for post-disaster insurance income, which does not currently exist in the IRC.
- Amends Part II of Subchapter L (insurance company taxation rules) by adding Section 836 and updating the table of contents.
- This creates a targeted incentive not previously available, shifting how certain disaster-related insurance earnings are taxed from fully taxable to partially or fully excluded.
Potential Impacts
- On Government Agencies: The Internal Revenue Service (IRS) will need to administer the new exclusion, potentially reducing federal tax revenue from insurance companies in affected areas. No direct impact on other agencies like FEMA (Federal Emergency Management Agency), though it could indirectly support faster recovery by stabilizing insurance markets.
- On Citizens: Homeowners and businesses in disaster areas may benefit from increased insurance options and lower premiums, as companies are incentivized to re-enter or expand coverage. This could reduce financial burdens during rebuilding.
- On International Relations: Minimal to none, as the bill focuses on domestic tax policy and U.S.-based disasters.
- Broader Economic Effects: Could promote competition in the property insurance market, especially in high-risk areas like coastal regions, but might lead to forgone tax revenue estimated in the billions over time depending on disaster frequency.
Main Stakeholders Affected
- Insurance Companies: Primary beneficiaries, particularly property and casualty insurers operating in disaster zones, as they gain tax savings on premiums earned during recovery.
- Policyholders and Residents: Individuals and businesses in disaster areas who rely on real property insurance for protection and recovery.
- Federal Government and Taxpayers: The U.S. Treasury and IRS face reduced revenue; general taxpayers may see indirect benefits through stronger economic recovery in affected communities.
- State Regulators: Insurance departments in states with frequent disasters (e.g., Louisiana, Florida) could see improved market stability.
Notable Legal, Constitutional, or Political Implications
- Legal: The provision is straightforward and builds on existing IRC definitions, minimizing litigation risks. It treats insurance income as non-taxable during recovery, which aligns with prior disaster relief tax breaks but is more narrowly focused on insurers.
- Constitutional: No apparent issues; it involves Congress's power to regulate taxation and commerce, without infringing on states' rights or individual liberties.
- Political: Sponsored by a representative from Louisiana (a state prone to hurricanes), it reflects efforts to address insurance market challenges post-disasters like Hurricanes Ida or Katrina. Could spark debate on tax incentives for industries versus broader fiscal responsibility, but it promotes economic resilience without mandating government spending.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2025-02-06: Referred to the House Committee on Ways and Means.
- 2025-02-06: Introduced in House
- 2025-02-06: Introduced in House
Bill Versions
- Restoring Competitive Property Insurance Availability Act — issued 2025-02-06 — PDF (4 pages)