The INSURE Act would require the Secretary of the Treasury to set up a federal catastrophic property loss reinsurance program within 4 years. The Program would offer reinsurance to qualifying primary insurers that sell all-perils property insurance for homes or businesses and that run loss prevention partnerships with policyholders. The Secretary may hire brokers and consultants to help design the Program.
The Program would be phased in by peril: wind and hurricane (year 4), severe convective storm and wildfire (year 5), flood (year 6), and earthquake no later than year 8 or after a feasibility report. The Secretary must set a payment threshold for each insurer, not greater than 40 percent of that insurer's probable maximum loss for each covered peril.
Participating insurers must pay quarterly premiums into a Federal Catastrophe Reinsurance Fund. Premiums are to reflect expected average annual losses, administrative costs, and a trend factor. The Secretary may set a minimum premium equal to at least 50 percent of the sum of expected losses and administrative costs and may limit non-exposure premium increases to 7 percent per year. If the Fund lacks enough money to meet obligations, the Secretary may issue U.S.-guaranteed notes and bonds; investment revenue from the Fund would be used to repay those obligations.
The bill requires quarterly, policy-level reporting of claims and exposures under a statistical plan. The Secretary must share collected data (without revealing personally identifiable information) with the Office of Financial Research, the Federal Insurance Office, State insurance heads, and other relevant agencies, and post non-identifying data online. The Secretary must contract with a statistical agent to collect and review data, or the Office of Financial Research will build the system if no agent is identified.
The Secretary must create an advisory committee with members from consumer groups, insurers, reinsurers, regulators, state legislators, independent agents, lenders, banks, and several federal agencies to advise on Program design and premiums.
The bill also requires two reports to Congress: a feasibility report on a fund to relocate homes and businesses that become uninsurable (within 2 years) and a feasibility report on adding earthquake coverage (within 3 years).
Finally, the bill creates a pilot program for multi-year (at least 5-year) all-perils policies. Insurers in the pilot may adjust premiums for construction cost indexes, home value changes, and optional coverages, but may not raise premiums based on a changed assessment of catastrophe risk. The pilot includes rules for property maintenance, loss mitigation partnership conditions, policy transfers when a property sells, and repayment rules if a policyholder cancels after receiving improvement funds.
No publicly available information on total costs to the federal government or to insurers is in the bill text. The bill does specify how money would flow:
Based only on the bill text, the sponsors propose the bill to create a federal reinsurance backstop to expand reinsurance capacity for catastrophe perils, encourage insurer-led loss prevention partnerships, collect detailed data on property insurance exposures and claims, test 5-year multi-year property insurance policies, and study relocation support and earthquake coverage feasibility.
No publicly available information.