H.R. 827: Homeowners’ Defense Act of 2025

This bill, known as the Homeowners' Defense Act of 2025, aims to improve the availability and affordability of homeowners' insurance coverage specifically for catastrophic events. It includes several key components designed to create a more robust safety net for homeowners in areas prone to natural disasters.

Findings and Purposes

The bill acknowledges the increasing risk and costs associated with catastrophic events such as hurricanes, floods, and wildfires due to climate change and rising property values. To address these challenges, the bill intends to:

• Provide federal support for state-sponsored insurance programs.
• Encourage homeowners to prepare for and recover from damages caused by disasters.
• Promote mitigation efforts to prevent damage before disasters occur.
• Facilitate faster claims payments to improve recovery experiences for affected homeowners.

National Catastrophe Risk Consortium

The bill establishes a new entity called the National Catastrophe Risk Consortium. This consortium will:

• Gather information on catastrophe insurance obligations held by insurers.
• Analyze gaps in the insurance sector affecting affordability for policyholders.
• Ensure consistent disclosure of catastrophic risk information.
• Provide annual reports to Congress on its activities and recommendations.

Catastrophe Obligation Guarantees

Under this section, the bill sets up a program allowing the Secretary of the Treasury to guarantee debts for eligible state programs that provide catastrophe insurance. Key features include:

• Guarantees for up to $3.5 billion for earthquake-related insurance and $17 billion for all other natural disasters.
• Assurance that the full faith and credit of the United States will back these guarantees.
• Requirements for eligible state programs to submit reports and establish plans for repaying any debts incurred.

Reinsurance Coverage for Eligible State Programs

The bill also allows the Secretary of the Treasury to offer reinsurance contracts to state programs. This section outlines that:

• The contracts will be priced based on actuarial soundness.
• They will cover significant portions (80%-90%) of insured losses exceeding a certain threshold.
• Each contract will have a specified duration and conditions regarding claim payments.

Mitigation Grant Program

This program aims to provide grants for initiatives to mitigate losses from natural catastrophes. It includes provisions for:

• Public education campaigns to promote disaster preparedness.
• Financial assistance for homeowners to fortify their properties.
• Support for disaster response readiness by local organizations.
• Prioritizing aid for lower-income individuals and communities.

General Provisions

The bill sets standards for what qualifies as an "eligible state program," including requirements for operation, tax status, emphasis on prevention and mitigation, and risk-based capital requirements. It also allows the Secretary of the Treasury to oversee the implementation of rules and regulations relevant to the bill's provisions.

Relevant Companies

• AIG - The American International Group may be impacted due to its involvement in the insurance sector, particularly if it offers coverage in states prone to catastrophic events.
• Prudential Financial - As a provider of insurance products, Prudential could face shifts in demand and pricing strategies in response to the changes proposed by this legislation.
• Citizens Financial Group - The bill may influence the financial conditions of state-sponsored programs that offer catastrophe insurance, which could involve banks like Citizens in financing strategies.