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. This program would provide reinsurance to primary insurance companies for all-perils property insurance policies, phased in over several years, starting with wind and hurricane coverage. The Secretary of the Treasury would oversee the program, establish a Federal Catastrophe Reinsurance Fund, and consult with an advisory committee.
Expected Effects
The act would likely lead to more affordable and accessible property insurance in areas prone to natural disasters. It could also incentivize loss prevention measures and promote the development of capital market alternatives to reinsurance. The federal government would assume a significant role in backing catastrophic risk.
Potential Benefits
- Increased availability of property insurance in high-risk areas.
- Potential reduction in insurance premiums for homeowners and businesses.
- Incentives for property owners to invest in loss prevention measures.
- Greater financial stability for insurance companies during catastrophic events.
- Improved data collection and risk assessment related to natural disasters.
Potential Disadvantages
- Potential for increased federal debt due to the issuance of notes and bonds to cover insurer obligations.
- Risk of moral hazard, where insurers or property owners take on more risk knowing the federal government will provide reinsurance.
- Complexity and administrative costs associated with establishing and managing the program.
- Potential for the program to distort private reinsurance markets.
- Uncertainty regarding the long-term effectiveness and financial sustainability of the program.
Most Disadvantaged Areas:
Constitutional Alignment
The INSURE Act's constitutional alignment is rooted in the General Welfare Clause (Article I, Section 8), which allows Congress to provide for the general welfare of the United States. The act's focus on mitigating the economic impact of natural disasters and ensuring the availability of property insurance could be argued as promoting the general welfare. However, the extent of federal intervention in the insurance market and the potential for creating unfunded liabilities could raise concerns about the scope of federal power.
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).