H.R. 4504: Incorporating National Support for Unprecedented Risks and Emergencies Act

This bill, known as the Incorporating National Support for Unprecedented Risks and Emergencies Act or the INSURE Act, aims to create a federal program that provides reinsurance for property insurance companies that cover catastrophic losses. Here are the key points of the bill:

Program Establishment

The Secretary of the Treasury is required to establish a catastrophic property loss reinsurance program within four years of the bill's enactment. This program is designed to support primary insurance companies that offer all-perils property insurance policies, which cover a range of catastrophe-related damages.

Definitions

The bill defines several terms, including:

• All-perils property insurance policy: A state-approved insurance policy that covers catastrophic perils.
• Catastrophe peril: Includes damage caused by wind, hurricanes, wildfires, severe storms, floods, and potentially earthquakes and other perils as determined by the Secretary.
• Insurer: A company authorized to sell primary property insurance.

Eligibility for Participation

To qualify for the program, an insurer must:

• Offer an all-perils property insurance policy for either residential or commercial properties.
• Engage in loss prevention partnerships that promote activities to reduce losses from catastrophic risks.

Program Phasing

The implementation of coverage for various perils will be gradual:

• Wind and hurricane coverage will begin four years after the bill's enactment.
• Severe storms and wildfires will be covered starting five years after.
• Flood coverage will start six years after.
• Earthquake coverage will either start eight years after enactment or when a feasibility report is submitted, whichever comes first.

Financial Thresholds and Premiums

To access funds, the Secretary will establish a financial threshold that an insurer must reach, which will be no greater than 40% of the maximum probable loss for each peril covered. Additionally, participating insurers will pay quarterly premiums to the program, which will be calculated based on expected average losses, administrative costs, and a trend factor to account for rising costs.

Loss Prevention Activities

The program encourages insurers to engage in activities that help prevent losses from catastrophes. However, it explicitly excludes certain actions, such as providing general information about loss prevention without active participation in such initiatives.

Establishment of an Advisory Committee

The Secretary will create an advisory committee that includes representatives from consumer organizations, insurance companies, reinsurers, state regulators, and various agencies. This committee will provide advice on managing the program effectively.

Data Collection and Reporting

The Secretary is tasked with developing a statistical plan for reporting data from insurers, including the types of losses and the coverage provided, ensuring that personal information of policyholders is protected. Reports will be shared with entities responsible for financial stability assessments.

Feasibility Reports

The Secretary will also submit feasibility reports on topics such as establishing a fund for relocating properties that cannot be insured and including earthquakes in the program.

Long-term Policy Pilot Program

A pilot program for multi-year all-perils property insurance policies will be established. These policies may include provisions for premium adjustments based on specific criteria and require certain loss mitigation activities.

Relevant Companies

None found