Federal tax break for insurers after disasters—no requirement to lower premiums

What it does

This bill allows insurance companies to exclude from their taxable income all profits from selling real property insurance in federally declared disaster areas for the first five years after a disaster. An insurance company that sold homeowners or commercial property insurance before a disaster can now keep all the premiums it collects (minus direct costs) tax-free during the recovery period, creating a direct federal subsidy to insurers operating in disaster zones.

Why we flagged it

The bill's operative mechanism is a five-year federal income-tax exemption for insurance companies' disaster-recovery profits. It is structured as a tax exclusion, not a rate reduction or credit, and applies only to a narrow class of beneficiaries (property insurers in declared disaster areas). The framing as 'restoring competitive availability' masks a direct revenue transfer to the insurance sector.

What the text implies

• The bill does not require insurers to lower premiums, expand coverage, or improve service—it simply exempts them from federal income tax on disaster profits, allowing them to retain full after-cost revenue while other taxpayers subsidize the exemption.
• By exempting only insurers that operated in the disaster area before the incident, the bill creates a barrier to new market entry and competitive pressure, potentially entrenching incumbent insurers and reducing long-term market competition.
• The five-year recovery period is defined by the bill itself, not by actual recovery timelines, meaning the tax benefit persists even if a disaster area has fully recovered and insurers face normal market conditions.
• The bill applies to all federally declared disasters with incident dates after December 31, 2024, creating an open-ended, recurring subsidy that will apply to every future disaster without sunset or review.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Ordinary citizens and taxpayers lose federal revenue that would otherwise fund public services, while insurance companies receive a direct tax subsidy on disaster-recovery profits. The bill does not lower insurance premiums, improve coverage, or mandate affordability—it simply exempts insurers from taxation on disaster-related income, transferring public resources to private firms.

Who stands to gain

• property and casualty insurance companies
• homeowners insurance carriers
• commercial property insurers

Named in the bill

Internal Revenue Code of 1986, IRC § 836, IRC § 7508A(d)(3), property and casualty insurers, federally declared disaster areas

Where it stands

• Feb 6, 2025 — Introduced · Congress.gov: “Introduced in House”
• Feb 6, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

2 lobbying clients named this bill on 3 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $3,590,000 in lobbying spend. A filing names 123 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 41% of bills with at least one filing.

Clay Higgins, the sponsor, reported $138,570 in PAC receipts in the 2026 cycle.

• American Property Casualty Insurance Association — $3,540,000 on 2 filings
• American Property Casualty Insurance Association Fka Property Casualty Insurers — $50,000 on 1 filing

Lobbying Disclosure Act filings through Jul 22, 2026. A filing shows who paid to lobby on a bill it names, not what changed.