Incorporating National Support for Unprecedented Risks and Emergencies Act; INSURE Act
Summary
The INSURE Act aims to establish a federal catastrophic property loss reinsurance program managed by the Secretary of the Treasury. This program would provide reinsurance to primary insurance companies offering all-perils property insurance policies, covering damage from events like wind, hurricanes, wildfires, severe storms, and floods. The goal is to stabilize the insurance market and encourage broader coverage against catastrophic events.
Expected Effects
The Act would create a Federal Catastrophe Reinsurance Fund to hold premiums and issue bonds if needed. It mandates data collection and reporting by participating insurers to assess financial risks and promote loss prevention partnerships. The Act also requires reports on the feasibility of relocation funds and inclusion of earthquake coverage.
Potential Benefits
- Increased availability and affordability of property insurance in high-risk areas.
- Incentivizes loss prevention measures by insurers and policyholders.
- Provides financial stability to insurance companies during catastrophic events.
- Improves data collection and risk assessment related to natural disasters.
- Could lead to more resilient communities better prepared for disasters.
Potential Disadvantages
- Potential for increased government debt through the issuance of bonds.
- Risk of moral hazard if insurers take on excessive risk knowing they are reinsured by the government.
- Administrative costs associated with establishing and managing the program.
- Potential for premiums to increase for policyholders.
- The program's effectiveness depends on accurate risk assessment and premium setting.
Most Disadvantaged Areas:
Constitutional Alignment
The INSURE Act's alignment with the U.S. Constitution is primarily rooted in the General Welfare Clause (Article I, Section 8), which grants Congress the power to provide for the general welfare of the United States. By establishing a reinsurance program for catastrophic property losses, the Act seeks to mitigate financial risks associated with natural disasters, thereby promoting economic stability and community resilience.
However, concerns may arise regarding the Necessary and Proper Clause (Article I, Section 8), as the scope of federal intervention in the insurance market could be debated. The Tenth Amendment, reserving powers not delegated to the federal government to the states, also comes into play, as insurance regulation has traditionally been a state responsibility. The Act attempts to address this by requiring state approval of insurance policies and consultation with state insurance agencies.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).