The federal bill was proposed by state Representative Adam Schiff (D-Burbank) last week.
Last Wednesday, California Representative Adam Schiff (D-Burbank) introduced a new federal bill with the intention of leaving behind the crisis in the homeowners insurance market and propping it back up again following the exit of several insurers from markets across the country.
The legislation is called the INSURE Act and would correct the issue through federal reinsurance.
The INSURE Act stands for Incorporating National Support for Unprecedented Risks and Emergencies Act. The idea behind it is to use federal reinsurance to overcome the issue in several states across the country that is leading homeowners insurance companies to stop selling there.
The newly introduced act would require that insurers taking part in the program to cover their policyholders for all natural disasters. Those insurers would also be required to participate in loss prevention and risk mitigation strategies to make it possible for their policyholders to be better prepared for those circumstances.
The INSURE Act would also build stronger market monitoring by way of the Office of Financial Research and the Federal Insurance Office, which would collaborate with the insurance regulators in each state.
The hope is that it will stop homeowners insurance companies from leaving high-risk markets.
“My INSURE Act addresses the urgent crisis in the home insurance market, particularly in California, where the cost of insurance has gone through the roof and insurers have stopped writing new policies,” said a statement by Rep. Schiff.
“Climate change has significantly increased the risk of natural disasters and insurance companies are shifting the costs to consumers who struggle to purchase disaster coverage,” he added. “My bill is a critical step forward in the effort to ensure homeowners and communities have access to affordable and accessible coverage. I’ll keep working to get this across the finish line and bring the cost of insurance down.”
In California last year, major homeowners insurance companies including Allstate and State Farm announced that they would no longer accept property coverage applications. They both cited rising risks of natural disasters (the wildfires in particular) and increased business costs in that market as the reason for their departures.