Federal backstop for property insurers shifts catastrophe risk to taxpayers
H.R. 4504 — INSURE Act · Filed by Sydney Kamlager-Dove (D-CA) · 7 cosponsors · Introduced Jul 17, 2025 · Referred to committee
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What it does
This bill directs the Treasury Secretary to establish a federal reinsurance program that backs up private property insurers when they face catastrophic losses from wind, hurricanes, wildfires, storms, floods, and eventually earthquakes. Participating insurers pay premiums into a federal fund; when their losses exceed a threshold (capped at 40% of their probable maximum loss), the federal government covers the excess. The program phases in over 4–8 years, requires insurers to offer loss-prevention partnerships with policyholders, and creates an advisory committee with consumer advocates, state regulators, and federal agencies to oversee design and data collection.
Why we flagged it
The bill's core mechanism is a federal fund that reimburses private insurers for catastrophic losses above a threshold, effectively socializing tail risk while allowing insurers to retain premium revenue and control underwriting. This is a direct subsidy to the insurance industry, not a consumer protection or market-stabilization measure in the traditional sense.
What the text implies
- The federal fund is backed by Treasury notes and bonds guaranteed by the US government, meaning taxpayers ultimately bear catastrophic losses; if the fund is depleted, the federal government must borrow to cover insurer payouts.
- The loss-prevention partnership requirement and multi-year policy pilot allow insurers to condition coverage on policyholders making capital improvements (e.g., roof hardening, flood mitigation), which may exclude renters, low-income homeowners, and those without access to credit.
The full analysis lists 5 implications of this text.
Who stands to gain
Primary property insurers (admitted and non-admitted); Reinsurance companies (as the federal program reduces their exposure); Mortgage lenders and banks (stabilized insurance markets reduce lending risk)