INSURE Act
The INSURE Act would create a new federal reinsurance program to backstop catastrophic property losses. Through the Treasury, it would establish the Federal Catastrophe Reinsurance Fund to provide reinsurance for qualifying primary property insurers against defined catastrophe perils. The program would roll out in phases, starting with wind and hurricane, then adding severe convective storms and wildfires, then flood, and finally earthquake (subject to feasibility reporting). Insurers would pay quarterly premiums, and the Secretary would set financial thresholds and premium rules intended to curb costs while encouraging a stable private reinsurance market and loss prevention efforts. The bill also creates an advisory committee, a data-collection system, and a pilot program for long-term, multi-year all-perils policies, along with feasibility studies on a relocation fund and broader earthquake coverage. Overall, the measure aims to reduce catastrophe risk for insurers and promote resilience, while expanding a federal backstop for extreme losses.
Key Points
- 1Establishes the Federal Catastrophe Reinsurance Fund and a Treasury-administered catastrophic property loss reinsurance program, with authority to issue US-guaranteed notes/bonds if funds are insufficient to pay obligations.
- 2Phased inclusion of catastrophe perils: wind/hurricane first (within 4 years), then severe convective storm and wildfire (within 5 years), then flood (within 6 years), and earthquake after a feasibility report or by year 8 (whichever comes first).
- 3Eligibility and loss-prevention: participating insurers must offer all-perils property policies and operate loss-prevention partnerships with policyholders to reduce catastrophe losses.
- 4Premiums and financial mechanics: insurers pay quarterly premiums based on expected losses, admin costs, and a trend factor; there is a minimum premium floor (not less than 50% of expected losses plus admin costs) and annual premium increases capped at 7%, with quarterly adjustments for exposure changes; a threshold for program payouts is set at up to 40% of a participating insurer’s probable maximum loss per peril.
- 5Governance, data, and pilots: an advisory committee with broad representation (consumers, insurers, reinsurers, regulators, legislators, independent agents, mortgage lenders, federal agencies) guides the program; a statistical plan governs quarterly data reporting by insurers, with data shared (in a way that protects personal information) with multiple safety and oversight agencies; a long-term, multi-year policy pilot enables all-perils policies of at least 5 years; feasibility studies on a relocation fund and from earthquake coverage are required.