INSURE Act
- Bill Number
- S. 2349
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2025-07-17: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- Last Updated
- 2025-12-05T22:52:54Z
AI-Generated Summary
Purpose of the Legislation
The INSURE Act (S. 2349) aims to create a federal reinsurance program to help property insurers cover massive losses from natural disasters, such as hurricanes and wildfires. This would make insurance more available and affordable in high-risk areas by providing a government backstop, while encouraging loss prevention measures to reduce future damages.
Key Provisions
- Program Establishment: The Secretary of the Treasury must set up the Catastrophic Property Loss Reinsurance Program within 4 years of enactment. It offers reinsurance (a form of insurance for insurers) to qualified primary property insurers for damages from specified "catastrophe perils" like wind, hurricanes, wildfires, severe storms, floods, and potentially earthquakes.
- Eligibility and Participation: Insurers qualify if they offer "all-perils" property insurance policies (covering multiple disaster types, approved by states) for homes or businesses and partner with policyholders on loss prevention activities, such as property upgrades to reduce risks.
- Phase-In Timeline:
- Year 4: Covers wind and hurricanes.
- Year 5: Adds severe convective storms and wildfires.
- Year 6: Adds floods.
- Year 8 or earlier (based on a feasibility report): Adds earthquakes.
- Reinsurance Thresholds and Payments: Insurers can access federal funds once losses exceed a threshold (no more than 40% of their estimated maximum loss per peril). The threshold considers factors like reducing insurance costs, maintaining private market competition, and promoting alternatives like catastrophe bonds (investments that cover disaster risks).
- Premiums: Participating insurers pay quarterly premiums to the federal program, calculated based on their expected annual losses, administrative costs, and trends in rising risks. Premiums must be at least 50% of expected losses plus admin costs, with annual increases capped at 7% (excluding adjustments for changes in insurer exposure).
- Loss Prevention Partnerships: The program requires insurers to collaborate on activities like requiring property maintenance or tying coverage to risk-reducing investments. Excludes simple premium discounts or general advice without insurer investment.
- Advisory Committee: A diverse group (including consumer advocates, insurers, reinsurers, state regulators, legislators, agents, lenders, and federal agency reps) advises on program design, premiums, and operations.
- Federal Catastrophe Reinsurance Fund: Holds premiums and invests them. If funds are short, the Treasury can issue government-backed notes or bonds (tax-exempt, with interest rates tied to U.S. market rates) to cover claims, repaid from fund investments.
- Data Collection and Sharing: Insurers report quarterly data on exposures and claims via a standardized plan. Data is shared (anonymously) with federal offices, states, and others to assess financial stability, under-insurance risks, and market competition. A statistical agent handles collection.
- Required Reports:
- Within 2 years: Feasibility of a fund to relocate uninsurable homes/businesses due to disasters.
- Within 3 years: Feasibility of including earthquakes in coverage.
- Long-Term Policy Pilot Program: Tests 5+ year "multi-year" all-perils policies. Premiums can rise only for construction costs, home value changes, or added coverages—not for reassessed disaster risks. Allows policy transfers on home sales, considers prior loss mitigation for new insurers, and requires repayment of improvement funds if canceled early.
Significant Changes to Existing Law
This bill introduces a new federal role in property insurance reinsurance, which is currently handled mostly by private markets and state regulators. Unlike the existing National Flood Insurance Program (limited to floods), this expands to multiple perils and phases in coverage. It mandates data reporting and loss prevention, which aren't federally required for most property insurance, and creates a dedicated fund with borrowing authority, similar to but broader than mechanisms in federal crop insurance.
Potential Impacts
- Government Agencies: The Treasury gains new responsibilities for program management, fund oversight, and bond issuance, potentially increasing administrative workload and federal debt if claims exceed premiums. Other agencies (e.g., FEMA, EPA) contribute to data sharing and loss prevention, fostering inter-agency coordination on disaster resilience.
- Citizens: Could stabilize insurance markets in disaster-prone areas, reducing premium spikes and coverage gaps, especially for underserved communities. Encourages safer building practices, potentially lowering long-term recovery costs, but may involve higher taxes or borrowing if the fund needs bailouts.
- International Relations: Minimal direct impact, but could influence global reinsurance markets by competing with private international providers, possibly stabilizing U.S. property risks that affect worldwide investors in catastrophe bonds or reinsurance.
Main Stakeholders Affected
- Insurers and Reinsurers: Primary property insurers (especially in high-risk states) benefit from reinsurance but must pay premiums and report data; reinsurers may see reduced demand.
- Policyholders (Citizens/Homeowners/Businesses): Gain access to more comprehensive, stable coverage and incentives for property upgrades, particularly in vulnerable or underserved areas.
- State Governments and Regulators: Involved in policy approvals, data access, and consultations; could see pressure to mandate all-perils coverage.
- Federal Agencies: Treasury leads implementation; others (e.g., HUD, FEMA, FHFA) provide input and use data for risk assessment and housing/finance policies.
- Consumer and Environmental Groups: Represented on the advisory committee, influencing fair access and climate-related protections.
- Financial Institutions: Banks and lenders benefit from reduced mortgage risks in insured properties.
Notable Legal, Constitutional, or Political Implications
- Legal: Shifts some insurance oversight from states to federal level, potentially challenging the McCarran-Ferguson Act (which reserves insurance regulation to states). Data privacy rules must protect policyholder info under laws like HIPAA or privacy statutes.
- Constitutional: Raises federalism concerns, as disaster insurance has been state-domain; the spending power (via the fund) justifies involvement, but could face lawsuits over interstate commerce impacts.
- Political: Positions the federal government as a backstop for private insurance amid climate change, sparking debates on taxpayer risk versus market stability. Bipartisan sponsors (Schiff and Hirono) suggest appeal in disaster-vulnerable regions, but funding/borrowing could fuel fiscal conservative opposition.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Recent Actions
- 2025-07-17: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- 2025-07-17: Introduced in Senate
Bill Versions
- Incorporating National Support for Unprecedented Risks and Emergencies Act — issued 2025-07-17 — PDF (18 pages)