The INSURE Act requires the Secretary of the Treasury to create a Federal Catastrophe Reinsurance Fund and run a reinsurance Program that offers backstop coverage to qualifying primary property insurers. The Program phases in disaster perils over several years (starting with wind and hurricane), sets payment thresholds tied to an insurer’s probable maximum loss, and funds operations with insurer premiums held in an investment Fund backed by U.S.-guaranteed notes and bonds if needed.
The bill pairs financial support with mandates: participating insurers must sell an all-perils policy as perils are added, establish loss-prevention partnerships with policyholders, submit quarterly, policy-level claim and exposure data to a central statistical plan, and participate in an advisory committee structure. It also launches a pilot for multi-year (5+ year) property policies and requires feasibility reports on a relocation fund and adding earthquake coverage.
At a Glance
What It Does
Creates a Treasury-administered catastrophic property loss reinsurance Program and a Federal Catastrophe Reinsurance Fund to accept quarterly premiums from participating insurers and pay reinsurance claims when losses exceed a Treasury-set threshold. The Fund can issue U.S.-guaranteed notes or bonds if Fund assets are insufficient.
Who It Affects
Primary property insurers that offer State-approved all-perils policies and opt into the Program, State insurance regulators, reinsurers, mortgage lenders, and homeowners and commercial property owners in catastrophe-exposed areas. The Office of Financial Research and Federal insurance-related agencies receive Program data.
Why It Matters
It creates an explicit federal backstop for property catastrophe risk, centralizes high-resolution exposure and claims data, and attempts to pair financial support with loss-mitigation incentives—potentially reshaping private reinsurance demand, pricing, and market capacity for catastrophe coverage.
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What This Bill Actually Does
The bill directs the Treasury to stand up a catastrophic property reinsurance Program within four years. Insurers qualify by offering an all-perils property policy (as defined and phased in), and by running loss-prevention partnerships that encourage investments to reduce insured losses.
The secretary may use outside reinsurance brokers or consultants to help design and run the Program.
Perils enter the Program on a timetable: wind and hurricane at the four-year mark, severe convective storm and wildfire the following year, flood the year after, and earthquake only after a feasibility report—no later than eight years after enactment. When losses occur, participating insurers can draw from the Federal Catastrophe Reinsurance Fund only after they meet a Treasury-established threshold; that threshold cannot exceed 40 percent of an insurer’s probable maximum loss for a given peril.Participating insurers pay quarterly premiums into the Fund.
Premium calculations must reflect each insurer’s expected average annual losses, administrative costs, and a trend factor; the statute sets a floor so premiums cannot be lower than half of expected losses plus admin costs and limits non-exposure adjustments to a 7 percent annual increase. The Fund holds and invests premiums; if Fund assets fall short the Secretary may issue notes or bonds fully guaranteed by the United States.
The law also mandates quarterly, policy-level claim and exposure reporting under a statutory statistical plan, with a contracted statistical agent to validate data and mechanisms to share de‑identified data with regulators and federal financial stability offices.Governance and incentives are central. An advisory committee with consumers, insurers (large, medium, small), reinsurers, state regulators and legislators, agents, lenders, banks, and federal agency representatives advises the Secretary.
The bill excludes certain activities from counting as loss-prevention partnerships—simple premium discounts or generic information do not qualify. Separately, Treasury must report to Congress on the feasibility of a relocation fund for properties that become uninsurable and on adding earthquake to the all-perils coverage.Finally, the bill creates a pilot that allows insurers, at state and NAIC coordination, to offer multi-year (at least five-year) policies.
Participating insurers may tie permitted premium adjustments to external indexes (construction costs, home value) and optional coverages but not to changes in the insurer’s internal assessment of catastrophe risk for the insured property; policyholders can move properties between insurers with rules about credit for mitigation efforts and prorated repayment of improvement funds if they cancel early.
The Five Things You Need to Know
The Program must be operational for wind and hurricane within four years, with other perils phased in through year eight and earthquake contingent on a feasibility report.
Treasury must set a payment threshold for Fund access that cannot exceed 40% of an individual insurer’s probable maximum loss for each covered peril.
Participating insurers pay quarterly premiums; Treasury cannot set premiums below 50% of (expected average annual losses + administrative costs) and may raise premiums no more than 7% per year excluding exposure-driven adjustments.
If Fund assets are inadequate, the Secretary can issue notes and bonds whose principal and interest are fully and unconditionally guaranteed by the United States.
The Act requires quarterly, policy-level claim and exposure reporting under a statutory statistical plan and creates a competitive contract for a statistical agent to validate data for federal and state use.
Section-by-Section Breakdown
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Creates Program and sets basic eligibility and design supports
Sections 3(a)–(c) direct Treasury to establish a catastrophic property reinsurance Program within four years and allow Treasury to contract with reinsurance brokers or consultants. To participate, an insurer must offer an all-perils policy as perils enter the Program and run a loss-prevention partnership with policyholders. Practically, that means insurers will need to align product offerings with State-approved policy forms and document mitigation partnerships to remain eligible.
Phased-in perils and strict timetable
Section 3(d) sequences peril coverage: wind/hurricane first, then convective storms and wildfire, then flood, and earthquake only after a feasibility report. For compliance teams and product managers, this creates a multi-year rollout of new coverage obligations and actuarial considerations tied to distinct peril models and data requirements.
Payment threshold and premium rules
Treasury must set the eligibility threshold for Fund payouts—capped at no greater than 40% of an insurer’s probable maximum loss for each peril—and must factor in market capacity and incentives for private retention when choosing the level. Premiums are quarterly, must reflect expected average annual losses, admin costs and a trend factor, and cannot be lower than half of expected losses plus admin costs; non-exposure-related increases are limited to 7% annually. These mechanics constrain Treasury’s actuarial discretion and create predictable floors and caps that insurers and regulators can model in advance.
Loss-prevention partnerships and advisory committee
The Secretary must, with state and federal partners, publish what counts as a loss-prevention partnership; simple premium discounts or generic advice don’t qualify. The advisory committee is broadly constructed—consumer advocates, a range of insurers, reinsurers, state regulators and legislators, agents, lenders, banks, and multiple federal agencies—so stakeholder input is institutionalized but also complex to manage, increasing coordination needs for Treasury and State regulators.
Federal Catastrophe Reinsurance Fund, debt backstop, and data collection
Treasury establishes the Fund to hold and invest premiums; if assets are insufficient it may issue U.S.-guaranteed notes and bonds and use Fund investment revenue to service that debt. The statute also mandates a quarterly, policy-level statistical plan with a competitively contracted statistical agent to validate reports; sharing is allowed with the Office of Financial Research, the Federal Insurance Office, state insurance chiefs and other entities, using de‑identification to protect personal data. Operationally, the Fund is both a capital vehicle and a source of rich exposure data—each with separate implementation burdens.
Feasibility reports and multi-year policy pilot
Section 4 requires Treasury to report within two years on a potential relocation fund for properties rendered uninsurable and within three years on adding earthquake to the Program. Section 5 launches a pilot for multi-year (≥5-year) policies, allowing limited indexed premium adjustments (construction cost indexes, home value) while barring premium increases tied to insurer reassessment of a property’s catastrophe risk; it also sets rules about property transfers, credit for mitigation investments, and repayment of improvement subsidies if a policy is terminated early.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Homeowners and commercial property owners in catastrophe-prone regions: By enlarging reinsurance capacity and encouraging all-perils coverage, the Program aims to preserve or expand access to primary property insurance where markets have been withdrawing.
- Smaller and regional insurers that participate: The Fund’s backstop reduces tail risk exposure relative to potential PMLs, which can stabilize solvency metrics and reduce the need for expensive private reinsurance.
- Mortgage lenders and the housing finance market: Broader availability of insurance reduces collateral risk and may support lending and property transactions in exposed areas.
- Capital markets seeking catastrophe instruments: The Program’s set thresholds and premium signals could catalyze private capital structures like catastrophe bonds by clarifying the remaining private retention and reinsurance slices.
Who Bears the Cost
- Participating insurers: They must pay quarterly premiums (subject to a statutory floor), comply with data reporting and loss-prevention partnership requirements, and potentially face administrative and actuarial costs to align products to the Program.
- Federal government / taxpayers: Because Treasury may issue U.S.-guaranteed notes and bonds to meet obligations, taxpayers bear contingent liability for catastrophic shortfalls in the Fund.
- State insurance departments and other agencies: States must coordinate on policy forms, data sharing, and loss-prevention definitions—imposing regulatory, staffing and coordination costs.
- Statistical agent and data infrastructure operators: Building and maintaining the policy-level reporting system and ensuring de‑identification will demand investment and ongoing operational expense, likely contracted or charged to Program participants indirectly.
Key Issues
The Core Tension
The central dilemma is trade-off between reducing uninsured catastrophe risk (and preserving property markets) and creating a federal guarantee that can weaken private-market discipline and expose taxpayers to large, concentrated losses; the Act tries to mitigate that by underwriting rules, premium floors, and a phased peril rollout, but those constraints force difficult choices about whom to protect, at what price, and for how long.
The bill creates a blunt but ambitious federal backstop for catastrophic property losses while trying to thread the needle between affordability and market discipline. Key implementation challenges include calibrating the access threshold and premium-setting mechanics so the Program meaningfully reduces insurer tail risk without crowding out private reinsurance or diminishing incentives for insurers to price and underwrite risk accurately.
The statutory 40% cap on the threshold and the 50% premium floor limit Treasury’s discretion, but setting those numbers in ways that reflect heterogeneous exposure across regions and companies will be difficult in practice.
Data obligations improve transparency but raise operational and privacy questions. Quarterly, policy-level reporting will produce valuable exposure and claims granularity for federal and state oversight, but collecting, validating, and sharing that volume of sensitive data—while ensuring de‑identification—creates technical and legal burdens.
The Fund’s explicit ability to issue U.S.-guaranteed debt solves liquidity risk but creates a visible contingent fiscal liability that may induce political pressure around premium levels, payout eligibility, and the scope of perils covered, especially over the eight-year peril phase-in. Finally, the relocation-fund feasibility study highlights a deeper policy gap: the program may preserve insurance where private markets would otherwise retreat, but it does not by itself resolve long-term land-use, buyout, or managed retreat decisions.
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