INSURE Act
- Sponsor
- Rep. Kamlager-Dove, Sydney [D-CA-37]
- Committees
- Financial Services Committee (primary)
- Last action
- Jul 17, 2025
Bottom line
The INSURE Act seeks to stabilize property insurance markets by creating a federal reinsurance backstop for catastrophic perils, encouraging comprehensive coverage and risk mitigation, while establishing a new federal financial mechanism and data oversight.
What it actually does
This bill establishes a federal catastrophic property loss reinsurance program within the Department of the Treasury. It aims to provide reinsurance to primary insurance companies for various catastrophic perils, phased in over several years. To participate, insurers must offer all-perils property insurance policies and engage in loss prevention partnerships with policyholders. The program includes a Federal Catastrophe Reinsurance Fund, a premium structure for participating insurers, and robust data collection requirements. It also mandates a pilot program for multi-year all-perils property insurance policies.
Proponents argue
Supporters argue that the bill is a critical response to the escalating crisis in property insurance markets, where climate change-driven catastrophic events have made comprehensive coverage unaffordable or unavailable in many regions. They contend that a federal reinsurance program will stabilize markets, ensure access to essential insurance for homeowners and businesses, and incentivize crucial loss prevention investments, ultimately reducing the economic impact of disasters.
Opponents contend
Critics might argue that establishing a federal reinsurance program creates a new, potentially massive, contingent liability for U.S. taxpayers, effectively socializing catastrophic risk and potentially distorting private insurance and reinsurance markets. Concerns could also be raised about the federal government's role in an area traditionally regulated by states, and the potential for moral hazard by subsidizing development in high-risk areas.
The bill is moderately complex due to its technical nature and the establishment of a new federal program, but its structure is clear, making it accessible for an informed reader to understand its core provisions within a reasonable timeframe.
Section 3(a)-(d)
Establishment and Phased Implementation of Federal Reinsurance Program
This section mandates the Secretary of the Treasury to establish a catastrophic property loss reinsurance program within four years of enactment. It outlines a phased approach for covering different perils: wind and hurricane initially, followed by severe convective storm and wildfire, then flood, and finally earthquake after a feasibility report. Insurers must offer all-perils property insurance policies and loss prevention partnerships to qualify for the program.
Supporters argue
Supporters argue that this phased implementation allows for careful program development and integration, ensuring market stability and broader coverage for critical perils over time, while giving insurers time to adapt.
Critics contend
Critics might contend that a phased approach delays critical relief for some perils, leaving vulnerable communities exposed for longer, and that the federal government should not be involved in these markets at all.
Tradeoffs
The provision balances the urgency of addressing catastrophic risks with the need for careful program design, administrative capacity building, and market adaptation over time.
Section 3(e)
Reinsurance Payment Threshold
The Secretary, after consulting with an advisory committee, must establish a financial threshold at which a participating insurer can receive payments from the Federal Catastrophe Reinsurance Fund. This threshold cannot exceed 40% of an individual participating insurer's probable maximum loss for each covered catastrophe peril. The goal is to reduce insurer costs, encourage states to require all-perils policies, promote competitive private reinsurance markets, and incentivize loss reduction investments.
Section 3(f)
Quarterly Premium Requirements for Insurers
Participating insurers are required to pay quarterly premiums to the Secretary. These premiums are calculated based on the insurer's expected average annual losses under the reinsurance coverage, administrative costs of the program, and a trend factor for increasing losses. The Secretary must consult the advisory committee and cannot set premiums below 50% of the sum of expected average annual losses and administrative costs. Premiums can be adjusted quarterly for material changes in exposure and increased annually by no more than 7% (excluding exposure adjustments).
Section 3(g)
Mandated Loss Prevention Partnerships
The Secretary, in coordination with the advisory committee and state/federal emergency management agencies, must develop a list of activities that qualify as loss prevention partnerships. These partnerships can include insurers identifying steps that make properties eligible for coverage or renewal, or making coverage contingent upon a policyholder implementing a loss prevention activity. Excluded activities are premium discounts without insurer investment and the mere provision of general information about loss prevention.
Section 3(h)
Establishment of Program Advisory Committee
This section mandates the establishment of an advisory committee to counsel the Secretary on the design and management of the catastrophic property loss reinsurance program. The committee will have a broad membership, including representatives from consumer organizations, various types of primary insurers and reinsurers, state insurance regulators, state legislators, independent insurance agents, mortgage lenders, banks, and numerous federal agencies such as HUD, HHS, FHFA, VA, USDA, FEMA, OMB, EPA, and the Financial Stability Oversight Council.
Section 3(i)
Federal Catastrophe Reinsurance Fund and Treasury Backstop
This section establishes the Federal Catastrophe Reinsurance Fund to hold and invest premiums paid by participating insurers. Crucially, if the Fund's amounts are insufficient to cover obligations to participating insurers, the Secretary is authorized to issue notes and bonds. These notes and bonds are fully and unconditionally guaranteed by the United States government, both as to interest and principal. Investment revenue from the Fund will be used to satisfy any issued notes or bonds.
Section 3(j)
Comprehensive Data Collection and Sharing
The Secretary must establish a statistical plan for quarterly reporting of policy-level claim transaction data by participating insurers, consulting with the advisory committee and the National Association of Insurance Commissioners (NAIC). This data, anonymized to protect personally identifiable information, will be shared with key federal financial and emergency management agencies (e.g., Office of Financial Research, Federal Insurance Office), state insurance departments, and other relevant government entities. The collected data will also be made publicly available online. The Secretary will contract with a statistical agent for data collection, or the Office of Financial Research will assume this role if no agent is identified.
Section 5
Multi-Year All-Perils Property Insurance Pilot Program
The Secretary, in consultation with states and the NAIC, will establish a pilot program for all-perils property insurance policies with terms of at least five years. Insurers in this program can increase premiums based on construction costs, home value, and optional coverages, but are explicitly prohibited from increasing premiums based on changes in catastrophe peril risk assessment. They can require property maintenance and loss mitigation investment partnerships. Policyholders can continue policies upon property sale or switch insurers (with prior mitigation investments considered). Policyholders canceling early after receiving loss prevention funds must return a pro-rata share of such funds.
The definition of "all-perils property insurance policy" specifies that it includes coverage for "catastrophe perils as those perils are added to the Program." This means the scope of "all-perils" expands over time as the program phases in different risks.
Section 2(1)
Why it matters:This is standard legislative practice to define terms upfront, but the phased nature of the program makes this particular definition highly consequential for initial implementation.
Case for: Supporters would argue this definition ensures clarity and aligns the required coverage with the program's phased implementation timeline, preventing premature requirements on insurers for perils not yet integrated into the federal backstop.
Case against: Critics might argue that this phased definition could lead to confusion for policyholders who might expect "all-perils" to mean all listed perils from the program's inception, rather than a gradual expansion of coverage.
Estimated impact: Clarifies the initial scope of required coverage for participating insurers and the extent of protection policyholders can expect during the program's early years, directly impacting market offerings.
The Secretary may not establish any premium that is less than 50 percent of the amount equal to the sum of the expected average annual losses for the participating insurer and the administrative costs to administer and manage the Program.
Section 3(f)(4)
Why it matters:This is a critical fiscal guardrail, often placed in detailed financial sections to ensure a minimum level of financial contribution from participants, reflecting standard legislative practice for program solvency.
Case for: Supporters would argue this minimum premium ensures that insurers bear a significant portion of the risk and contribute meaningfully to the fund's solvency, preventing the program from becoming a pure subsidy and promoting market discipline.
Case against: Critics might argue that even a 50% minimum could be insufficient to cover truly catastrophic losses, potentially leaving taxpayers exposed, or that it still represents a substantial federal subsidy that could distort market pricing.
Estimated impact: Directly impacts the financial sustainability of the Federal Catastrophe Reinsurance Fund and sets a floor for the financial burden on participating insurers, influencing their business models.
For multi-year policies in the pilot program, insurers may not increase premiums based on a change in the assessment by the insurer of the catastrophe peril risks associated with the insured property.
Section 5(b)(2)
Why it matters:This is a significant policy choice embedded within the pilot program's design, intended to provide stability to policyholders but with direct implications for insurer risk management, which could be seen as a subtle but impactful intervention.
Case for: Proponents would argue this restriction provides policyholders with crucial premium stability over the multi-year term, incentivizing participation in the pilot and long-term mitigation efforts without fear of sudden, risk-based price hikes.
Case against: Opponents might contend that this restriction prevents insurers from accurately pricing evolving risks over time, especially as climate change impacts intensify, potentially leading to underpricing and financial instability for insurers in the pilot program.
Estimated impact: Directly impacts the risk management and pricing strategies of insurers participating in the multi-year policy pilot, and significantly affects the financial predictability and stability for policyholders in that program.